Starbucks, highly popular for its coffee, also stirs up a wave of entrepreneurship in the regions where it’s established. Research indicates a 5 to 11.8% rise in entrepreneurship, particularly in areas with no other large-scaled coffee house. This leads to approximately 1.1 to 3.5 new ventures every year that might not have been otherwise.
This impact, known as the “Starbucks Effect”, leads to increased local business innovation and higher residential prices. The company’s arrival can subsequently indicate neighborhood development or untapped potential. However, the effect may also contribute to income disparity and potential gentrification, causing long-term residents to face surging living costs.
The concept of a “third place”, a welcoming environment separate from home and work, seems to help stimulate entrepreneurial efforts. Starbucks provides such a space: a comfortable hub for networking, with Wi-Fi and caffeinated beverages that encourage productivity, idea-sharing, and strategizing. This nurturing atmosphere aids in fostering entrepreneurial activity in nearby areas.
A comprehensive seven-year research project studied this phenomenon.
Starbucks’ significant influence on local entrepreneurship
It analyzed both successful neighborhoods and areas where Starbucks failed to establish due to factors like zoning laws and resistance from community organizations. The researchers extracted patterns that influenced Starbucks’ success or failure, and its subsequent impact on property values and local economies. Importantly, they also found a 29.7% increase in startups in regions where Starbucks had collaborated with basketball player turned businessman, Earvin “Magic” Johnson.
The Starbucks-Johnson partnership influenced local entrepreneurial spirit, possibly inciting a rise in startup activity through the inspirational merging of Starbucks’ corporate success with Johnson’s sporting legacy. This unexpected motivation ignited business enthusiasm in the local economy, suggesting that nearly one in three startups in these regions owe their existence to this partnership.
The influence of Starbucks on communities is far from temporary. For up to seven years, Starbucks has been fostering the idea of the “third place”, promoting social exchange, and creating community bonds. Despite changes in its business model, Starbucks continues to serve as an essential catalyst for dialogue and collaboration. By cultivating spaces for interaction and exchange, Starbucks confirms its lasting influence on communities worldwide.
