Funded Projects – Internal UNC Small Research Grants

Study of Coworking Spaces

Travis Howell, UNC Kenan-Flagler PhD Candidate, Strategy and Entrepreneurship

Mostly unheard of ten years ago, the global number of coworking spaces has grown dramatically in recent years. Due to its prevalence, popularity, and potential for disruptive change, coworking is increasingly relevant to theory, practice, and policy, yet it is largely unstudied given the rapid rise of the phenomenon. Additional research is needed to catch up with practice, which is increasingly embracing coworking. This study offers exploratory insights into what promises to be an important and impactful phenomenon in the study of entrepreneurship. Specifically, this study addresses the following questions: Why do entrepreneurs choose to work in coworking spaces, and what (if anything) do they gain from it? Overall, the findings suggest that new ventures benefit from coworking in substantive ways. Implications for theory and future research are discussed.

Real Estate Prices, Zoning, and Option Value

David Leather, UNC Chapel Hill PhD Candidate, Economics

We examine the impact zoning restrictions have on property values by utilizing a panel dataset of all properties in New York City from 2003 –present. To identify the effect of zoning restrictions on property values, a methodology is developed that first models the zoning decision, incorporating information of the legislative process set-forth by the City Council’s Uniform Land Use Review Procedure. Finally, a hedonic model of property values is estimated using imputed probabilities of being rezoned given the estimated zoning decision.

Discount Window, Stigma, and Term Auction Facility

Yunzhi Hu, UNC Kenan-Flagler Assistant Professor of Finance

This paper studies how Term Auction Facility (TAF) overcame the stigma associated with Discount Window (DW) borrowing. We construct a model in which banks have private information about their financial strengths. They can either borrow from the always-available DW or bid in the periodically-held TAF. Meanwhile, they face the danger of being detected borrowing and inferred of their financial weaknesses. In equilibrium, weaker banks borrow from the DW immediately, for two reasons. First, they have higher cost of waiting for TAF. Second, the possibility of losing in the auction is more costly for them. We show that the auction setup endogenously generates single-crossing properties that separate stronger banks from weaker ones. Finally, we show that the introduction of TAF encourages participation only during periods of financial stress. We confirm our theoretical findings with data between 2007 and 2010.

How do firms respond to labor shortages due to the opioid crisis?

Paige Ouimet, UNC Kenan-Flagler Associate Professor of Finance

In this paper, the authors, Paige Ouimet and Elena Simintzi, propose to investigate the impact of the opioid crisis on firms. The US has experienced a rapid increase in the use of opioid drugs. Currently, the abuse of opioids has reached epidemic proportions, with annual deaths from opioids of over 1 in 10,000 Americans. These staggering rates of addiction, hospitalization and often death has had a significant impact on the US male labor force participation rate (Krueger 2017). In this paper, we plan to use geographic variation in the timing and scale of the opioid epidemic to identify the consequences for firms. A greater rate of opioid addiction will likely harm the local economy, depressing demand and hence business growth. Thus, to identify the impact specific to the labor channel, we will look for evidence of firms investing more in technology specifically designed to reduce labor needs. In addition, as investment in these labor-saving technologies typically requires a higher up-front cost and lower operating costs, relative to hiring employees to do the same job, we expect pre-existing financial constraints will limit the ability of some firms to adopt the labor-saving technology. Finally, we predict these consequences will be unevenly felt by firms, and will primarily impact high growth firms with large needs for low- and middle-skill labor. Understanding the impact of the opioid epidemic on firms via a labor shortage channel is important to evaluate the total impact of the crisis on the US economy.

Socioeconomic Status and Tail Risk Perceptions

Camelia Kuhnen, UNC Kenan-Flagler Professor of Finance

Recent work in finance has uncovered significant differences across US households in their expectations about the macroeconomy. People with lower incomes or lower education appear to have a more pessimistic assessment of stock market returns or national unemployment, and are less certain in their macroeconomic forecasts. This project investigates whether a driver of these differences may be the different perceptions of tail risk ‐‐ that is, the perceived chance of occurrence of extreme high or low outcomes ‐‐ across individuals based on their socioeconomic status. Documenting whether tail risk perceptions differ in predictable ways across various swaths of the US population would help policy makers and firms better understand which households may be more responsive to changes meant to influence their economic behavior.

The Initiation and Evolution of the Enterprise Blockchain Innovation: A Field Study of Chinese Incumbent Firms’ Adoption of Blockchain

Ling Xiao, UNC Kenan-Flagler PhD Candidate, Strategy and Entrepreneurship

Research from various academic fields has stressed the importance of technological innovation as an engine for economic growth. The adoption and evolution of emerging technologies such as blockchain networks create new opportunities for incumbent firms as well as new organizations, while at the same time disrupting the existing economic structure. Strategy research in prior studies of new technology usually followed after the patterns of evolution evolved, which leads to survival bias in data and limited understanding of the challenges of decision choices in early stages of innovation. This study will trace the current shifts in organization boundaries based on the use of blockchain as an alternative to traditional modes of inter-organizational collaboration, such as horizontal and vertical alliances. The current blockchain activities by Chinese firms offer an opportunity to directly study the interaction between the inventors of the technology and early adopters. This field study will address three main questions regarding the diffusion of blockchain in non-financial firms in China regarding: 1) the reasons for adoption, 2) the impact of blockchain adoption on these firms’ existing capabilities and competencies, and 3) the evolution of the blockchain technology between innovators and adopters. Initial field interviews will serve to identify early adopters and non-adopters as a basis for developing a model to predict evolving patterns of choice and technology diffusion. This will provide field based validity for the design of a companion study on multi-industry diffusion patterns of blockchain adoption and the impact on both new firms and incumbents.

The Kenan Institute’s Small Research Grant Program funds UNC-Chapel Hill research projects that align with the Institute’s mission to advance the understanding of entrepreneurship, economic development, and global commerce for the public good.

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