Entrepreneurial Spawning from Remote Work

Alan Kwan; Ben Matthies; Richard R. Townsend; Ting Xu

doi:10.3386/w33774

Entrepreneurial Spawning from Remote Work

Alan Kwan, Ben Matthies, Richard R. Townsend & Ting Xu

Working Paper 33774

DOI 10.3386/w33774

Issue Date May 2025

Using a novel firm-level remote work measure created from big data on Internet activity, we show that firms with higher remote work during the pandemic are more likely to see their employees becoming entrepreneurs. This effect holds both unconditionally and relative to other types of job turnovers. We establish causality using instrumental variables and a panel event study. The marginally created businesses are higher quality than the average new firm. The effect is not driven by employee selection, preference change, or forced turnover. Rather, remote work increases spawning by providing the time and downside protection needed for entrepreneurial experimentation.

We thank Tania Babina, Jose Maria Barrero, Jun Chen, Fabrizio Core, Isaac Hacamo, Yael Hochberg, Vikram Nanda, Toomas Laarits, Fangyuan Ma, Adair Morse, Matthew Pecenco, Kaushik Vasudevan, and conference and seminar participants at the ITAM Finance Conference, HEC Paris Entrepreneurship Workshop, TAMU Young Scholar in Finance Consortium, CUHK-RCFS-RAPS Conference, Winter Finance Summit in Asia, MFA, CMU Tepper, Alberta, CKGSB, Notre Dame, KAIST/Korea University, Univ. of Ottawa, and HKU (Applied Econ) for helpful comments. We thank the anonymous data provider for support. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

Alan Kwan
Consults with ExtractAlpha. ExtractAlpha does not have a formal relationship with any company dataset used in the paper currently but monetizes alternative data in general.
MARC RIS BibTeΧ

Entrepreneurial Spawning from Remote Work

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