The Democratization of Entrepreneurship: a case for coworking and collaboration.

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My undergraduate research thesis that examines if coworking spaces impact entrepreneurs and create environments to be successful.

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The Democratization of Entrepreneurship: a case for coworking and collaboration.

  1. 1. 1 The Democratization of Entrepreneurship: a case for coworking and collaboration Jonathan El Kordi-Hubbard Hofstra University Undergraduate Thesis jelkor2@pride.hofstra.edu December 2013 I argue that coworking has a direct impact on entrepreneurs and start-up companies, and creates an environment in which entrepreneurs can succeed. There are many mechanisms of coworking that show its positive benefits. These mechanisms surround coworking creativity, coworking behavior, coworking design and more. Coworking can provide business opportunities that can help individuals with limited intellectual capital succeed. I propose that the social, educational, and collaborative factors of the coworking experience can help to explain positive patterns in coworking. This paper describes a study of 11 academic articles, 23 surveyed coworkers, and 2 interviewed subjects that test this hypothesis of coworking impacting entrepreneurship and creating an environment for individuals to succeed. Keywords: cowork, coworker, coworking, coworking space, coworking environment 1. Introduction If coworking has an incubator-like function, what impact does it have on the economy? Coworking is a growth engine and helps foster entrepreneurial activities. It affects individuals creativity and has a relation to innovation, motivation, personality, and environment. As Albert Einstein stated, "the combinatory play seems to be the essential feature in productive thought." This is an activity that appears in coworking, collaboration by people for increased productivity. Much of this increase in productivity is due to rapid advances in technology. Technological advancements have changed the way in which people work. Physical barriers have been eroded, and individuals can choose to work from anywhere. This telecommuting has led to many entrepreneurs and start-up companies working from home during the early stages of their business. Although this reduces costs, many home workers report feelings of isolation and a lack of concentration. To combat these feelings, these individuals can engage in the activity of coworking, or working together. Coworking directly impacts these entrepreneurs and start-ups in the early stages of their companies. This is because coworking spaces contain a diverse set of mechanisms that help entrepreneurs and start-up companies become successful.
  2. 2. 2 This model shows the main mechanisms that exist within coworking. Each of the mechanisms can be found in the academic papers analyzed in the Literature Review section of this paper. Other papers were also examined in this thesis, and were used to provide additional background information on coworking. This coworking mechanism model will be used to evaluate the data collected from my research of the 23 surveys and 2 interviews of coworkers. The five mechanisms above can be viewed as integral parts of coworking that impact entrepreneurs and start-up companies. These factors help create the environments within coworking spaces. The coworking environment creates conditions for individuals to succeed. The coworking mechanism model is used to show the five most common coworking processes that impact entrepreneurs and start-ups within coworking spaces. The model is broken down into five parts: swarming theory, serendipitous encounters, knowledge acquisition, coworking space design, and networking. The swarming theory, also known as collective intelligence or collaboration, is the idea that swarms of people with different backgrounds from quickly to attack and complete a problem or opportunity. Serendipitous encounters, also thought of as social encounters, are social learning experiences that create and inspire sharing of knowledge. Knowledge acquisition occurs with time spent exposed to different people in coworking spaces. Coworking space design helps facilitate conversations due to spatial circumstances. Networking occurs at coworking spaces to help individuals broaden their universe of contacts. These five coworking mechanisms help entrepreneurs and start-ups learn, teach, and collaborate with one another to increase their overall social capital and maximize the chance to impact the economy. Following the review of the literature, the research methods and data are described. The research findings, organized around the coworking mechanism model, are then presented and followed by an alaysis, conclusion, and suggested areas of future research.
  3. 3. 3 2. Literature Review To understand why and how coworking positively impacts start-up companies, independent workers and entrepreneurs, it is necessary to go back to the literature that explores the concepts of coworking. Goals of this literature review section include examining how coworking can be a growth engine for the economy, as a result of creating more entrepreneurs. If and how coworking has an effect on creativity, and exploring coworking in relation to innovation, motivation, personality, and environment. Each research piece is reviewed and related back to coworking and entrepreneurship. Below are defined terms used throughout the section: cowork ‒ co: with / together (Latin base) work: to perform or execute (OED) cowork = to perform or execute together coworker ‒ one who works within a coworking space coworking space ‒ the environment that allows for coworking activity 2.1 Global Entrepreneurship Monitor Report Babson College and the London School of Business ran the Global Entrepreneurship Monitor Report with the goal of identifying the goals and aspirations of individuals across many countries. The report explores entrepreneurship from nearly 100 countries, with Babson focusing its efforts on the United States. A few key statistics presented were that U.S. entrepreneurship is at an overall record high. 59% of established businesses are home-based. 16% of first generation immigrants started or ran start-ups in 2012. 43% of Americans believe there are good opportunities for entrepreneurship. 56% of adults say they had the ability to start a business, which shows an increase in confidence level for potential business owners. 69% of new businesses in the U.S. start at home. 13% of adults in 2012 were involved in start-ups. This data reveals a few high-level coworking trends including: coworking growth alongside entrepreneurship growth, former home workers are now coworkers, and coworkers represent a diverse group of individuals. 2.2 Deskmag Global Coworking Survey Since launching in 2010, Deskmag has published three global coworking studies aimed at supporting coworking s growth. The Deskmag survey is distributed online to over 1,500 people from 52 countries and is translated into English, French, and Spanish. The Global Coworking study hopes to provide insight into who is coworking, what the benefits of coworking are, and coworking s overall growth. According to Deskmag s 3rd Annual Coworking Study there are 797 coworking spaces in the United States, an increase from 749 spaces in 2012. Around the world there are nearly 2,150 coworking spaces. The table below represents how coworking sites have nearly doubled each year internationally since 2006. An average yearly growth rate of 105% shows the growth opportunities for coworking into the future.
  4. 4. 4 Within these coworking spaces the average coworker is 34, university educated and earns an above average income. Males outnumber females 2:1. Many coworkers can be labeled as independent workers, or flexible workers, who are not dependent on physical location. A few examples of potential coworkers include: freelancers, creatives, lawyers, entrepreneurs, accountants, and coders. 53% of Deskmag respondents agreed, Most coworkers are freelancers. Before working out of coworking spaces many coworkers worked from home. 58% worked at home before using a coworking space. This means that coworking s main competitor is the home space, and considering the growth of entrepreneurship many home workers could likely become coworkers. A few additional insights into who coworks included that 22% worked in an office before using a coworking space, 6% had no fixed location and are always changing, and 1% used coffee shops prior. This enforces the idea that coworkers are in fact flexible independent workers. In addition it shows that many coworkers are not coffee shop frequenters, a common misconception amongst the coworking community. Many coworkers state feelings of isolation and a lack of concentration when working from home, and look to be a part of a larger community. To become a part of that community coworkers look for a few things: 84% say interaction with people is important coworking feature, 83% say flexible work times 82% say serendipitous (random discoveries) counters and opportunities, and 77% say sharing of knowledge. Low cost and price are not the highest priority, but certainly a function as to why people cowork (69%). These are items that coworkers have identified as being important to work and the work environment. There are many benefits to coworking illustrated by the following image.
  5. 5. 5 Deskmag respondents state that increased social circles, business networks, productivity, health and private life, and less isolation lead to success in coworking. The actual numbers include: 92% say an increase in social circle while coworking, 80% increase in business network, 75% say increase in productivity, 60% say increase in private life, and 86% say less isolation as compared to working from home. An important advantage of the coworking spaces is the meaningful relationships made with other coworkers. This leads to new clients and business introductions, and could lead to increased income as a result of productivity and business network increase. 89% of Deskmag respondents forecast having a higher income as a result of coworking. Many new coworking spaces have blossomed in cities with more than 1 million inhabitants. 54% of coworkers live in cities of that size (Deskmag). The second largest area for coworking growth, as reported by Deskmag, is in rural areas of less than 50,000 people. Rather than a business orientation, these spaces look to connect the local community members around them. As the world continues to move towards a global economy global interaction between coworking spaces may begin to occur. Currently 83% of coworking spaces report interaction with other spaces on a local and regional level. The introduction of items like the coworking passport, (Deskmag and JP Hurry) which allow coworkers to travel and use coworking spaces in the same network, may become popular and could be an interesting item for future research. 2.3 Coworking, Swarming, and the Agile Workplace In 2011 Herman Miller, a major office furniture manufacturer, conducted an independent research study on the idea of swarming in the workplace. Swarming is identified in the study as a natural process that occurs in nature by birds, bees, and ants. In each case it is a social group that collaborates with in the moment decision making that leads them to success. One of the research contributors Bill Coleman notes, the most powerful inflection points in history of mankind have come when tools were developed to leverage and expand collective intelligence. This collective intelligence can be found in coworking. Collective intelligence, or swarm intelligence, contributes to coworking success. Similar to collective behavior of social insects like ants and bees, swarms of people form quickly to attack and complete a problem or opportunity. Swarms typically encompass a diverse group of professionals and experts who may not have worked together before. This sharing of knowledge, or knowledge diversity, is a normal occurrence at many coworking locations.
  6. 6. 6 Collective intelligence at coworking spaces helps people succeed. This process of swarming can help explain the natural activity of people that arises at coworking spaces. Brian Green senior research at Herman Miller states, agility may be the single highest priority for workplaces now and in the future. Agility in the workplace can help lead to success. Agility for entrepreneurs in coworking spaces can mean the process of swarming, which can lead to quicker problem solving and higher chance of success. 2.4 The Rise of Coworking Office Spaces Anne Kreamer, an American journalist who specializes in business, published this coworking article on The Harvard Business Review on September 19th, 2012. She examines the rise of coworking office spaces and provides real world examples from coworking spaces she has visited. From her time at coworking space Grind, in New York City, she identified three trends of the space. The first being that the space offers a collaborative network, second that the space fosters innovation, and third that the space makes business simpler. To support this she uses an example of Martin Ruef, a sociologist at Princeton who studied entrepreneurs. He found that those who broadened their universe of contacts to larger connected networks were far more innovative. Coworking spaces offer those opportunities to have chance encounters, collaborate, and grow one s network. Her research at Grind concludes with stating the ballpark of monthly fees in coworking range from $150 - $600, and daily fees range from $15 to $50. Some spaces are sector-specific or educationally oriented such as General Assembly. The rise of coworking and coworking spaces are flexible workforce trends that may continue into the future. 2.5 Libraries as Coworking Spaces This study examines how libraries can be seen as places where coworking activity occurs. Their data is based off a five-month research period at The Edge bookless library space in Brisbane, Australia. Design strategies are discussed in relation to The Edge to enhance the library experience and allow for informal social learning, which is a similar behavior pattern at coworking spaces. In short the researchers focus is on gaining insight on user motivations, behaviors, and activities at The Edge location. The researchers acknowledge today s knowledge-based economy where core skills include creativity, interdisciplinary thinking, problem solving, and the ability to collaborate with others. These are in nature collaborative activities, and coworking helps facilitate the transition from a traditional production-based economy to the knowledge-based of the 21st century. They identify The Edge as a community where users help teach, learn, and collaborate with each other. This contributes to a coworkers, or library users, overall social capital. Social capital, intellectual value, is increased with the amount of time spent in coworking. Using The Edge as an example the design elements of coworking spaces can include making way for infrastructure and natural lighting using lounge areas, couches, meeting rooms, whiteboards, projectors, video consoles, cafes, and food bars. Ultimately to provide a coworking space and environment where social learning emerges as a result. Spaces assembled like this can expose individuals to a diversity of people, activities, and
  7. 7. 7 information that they would not encounter if they worked at home or in a regular office. In the context of knowledge economy in 21st century having a place for discourse, peer collaboration, social learning, and chance inspiration happens by learning from people that are different to us. Coworking and space design helps foster this acquisition of knowledge and social capital. For example wide-open physical architecture elements that lower barriers for making new connections that can lead to being inspired by others. The intention of design setups, like The Edge , is to facilitate the serendipitous discoveries and inspiration among people that work sideby-side. Simply working next to each other, gaining inspiration and a learning experience as a result of coworking and social encounters. The researchers found that the design strategies of the library they studied led to an idea of spatial thinking that enhances social learning and collaboration in public spaces. This was drawn from the design elements of The Edge and its emphasis on being a third place. A thirdplace (Oldenburg 2001) is a public place that is away from the distractions and procrastination traps and home and pleasures at work, and is an area that maximizes creativity and social encounters. From the study of The Edge third-place the researchers were able to determine that social encounters happen within these spaces. These same ideas can be applied to the social encounters within coworking spaces. 1. Encounters between regular users 2. Encounters between participants in events 3. Encounters in shared zones like cafe 4. Encounters to help another users 5. Encounters for personal benefit These examples show that social interaction types in libraries and coworking spaces can be facilitated through social and spatial circumstances. These strategies and elements of design lead to more conversations, more sharing of knowledge, and higher chance of success due to the creation and acquisition of knowledge within the space. 2.6 Working Alone Together: Coworking as Emergent Collaborative Activity University of Texas at Austin professor Clay Spinuzzi provides one of the first formalized researched papers on coworking in 2012. Within his 20-month study he examines the open-plan office environments of coworking spaces where unaffiliated professionals work alongside one another. He attempts to find what service coworkers are actually benefiting from the space, how they describe the activity of coworking, and from an activity theory perspective what are the objects and outcomes of coworking activity. He notes that theses spaces differ in ambience, amenities, location, and clientele. Spinuzzi begins by with the idea of electronic cottage from Toffler in 1980, which predicted that due to technology, workers would begin doing work from home. Working from home is potentially quite isolating and erodes the boundaries between home and work life (Gurstein, 2001). The U.S. Census Bureau notes that there has been a 32% increase of businesses in the IT sector. Due to this rapid adoption of technology more people can work from anywhere ‒ telecommuting, collaborating, electronically, running a business with mobile phones and laptops.
  8. 8. 8 Yet this rise in technology and telecommuting allows for more people to work alone. This cuts them off from networking and trust-building opportunities that are crucial for entrepreneurs starting out. This ability to work anywhere could lead to isolation. A solution to this is coworking, and knowledge-based work. The theory of knowledge work and how it relates to coworking: Based on Spinuzzi s research coworking could be characterized in three types of coworking spaces: community workspaces, unoffices, or federated spaces. He then examines which is most valuable for entrepreneurs. The community workspace is coworking that benefits and serves the local community. Its purpose is serving the local communities and to work alongside, but not with, others. Examples of these community workspaces can include libraries and coffee shops where individuals work like Starbucks. The unoffice is a coworking space that provides space for those who do not work in an office but miss the interactions and amenities of the office environment. The unoffice encourages discussions and interaction between coworkers. In this type of space independent professionals share a working environment yet perform independent business activities. The unoffice is thought of as a cheap office, with a bonus of community, and shared knowledge. In these spaces an incubator-like sharing of ideas can occur, which can influence avenues like financials. In short, the flexible is an office space that allows workers to interact and network to recreate characteristics of the office environment. The federated workspace is a coworking space whose mission is to foster more active connections between coworkers that can lead to contracts and referrals. They emphasize entrepreneurs and entrepreneurship. The federated workspaces encourage interaction, but what is just as important is formal collaboration amongst the members. This allows people to be a part of a community of like-minded individuals whom they can share ideas, trade business leads, foster partnerships, and creates businesses.
  9. 9. 9 Spinuzzi studied coworking spaces in the Austin area and found many characteristics or commonalities between coworking spaces including: - a conference room - a kitchen - open plan rooms - coffee bar/access - fast Wi-Fi - printers/photocopiers - library - desk space - phone rooms - offices that may be leased - business services like legal, accounting, finance, and creative - some have a specific niche/industry - host events, workshops, meetups, and networking Another way to think of a coworking space is the formal collection of all independent workers in one designated location, with amenities. With these amenities coworking is viewed in ways such as space to work, an inexpensive office alternative, a social hub, and a collaboration space. They are places to get work done specifically knowledge or service work that originates outside of other activities. It is how coworkers perceive coworking that affects how they construct it. This leads to which amenities are most important to them. Entrepreneurs, freelancers, and consultants utilize coworking spaces to meet clients. This is an amenity, or feature of the space, that is important to them. Spinuzzi discusses two ways that coworking spaces can be structured, inward and outward facing. An inward facing space has a focus on functionality and comfort. An outward facing space has a focus on facilitating professional interactions. It is important for coworkers to identify which space fits their wants and needs. He notes that coworkers seek flexibility of schedules, which can lead to an increase in productivity. Coworkers look for interaction, feedback, trust learning, partnerships, encouragement and referrals. Coworkers get a better idea of what people think outside of the industry they re in. The space allows for the potential of nimble (agile) business collaboration, and is where Spinuzzi introduces the Objects and Outcomes theory. Objects and Outcomes theory can be thought of as collaborations and engagements with a shared object in and for relationships of interaction between multiple activity systems. (Yamazumi 09)
  10. 10. 10 The illustration depicts multiple activities (coworkers) and how they act within the object (coworking spaces). What occurs with neighborly coworking is the outcome of parallel work. Each activity (coworker) does work for clients, each client is or can meet within a coworking space, these clients and working near one another can lead to an increase in business because of the outcome of parallel work.
  11. 11. 11 This illustration shows how coworkers link up to attack problems and create more business. This is similar to the theory of swarming theory. The coworkers link up inside coworking spaces to attack common work problems for current or future clients. The object is team collaboration and the outcome is cooperative work. Coworking is not a single activity; it is many activities by different people in a shared space. Coworking is an example of collaborative knowledge work. 2.7 Coworking A Creative Workspace Anton Muhrbeck examines if and how coworking has an effect on creativity. His main research points include the personal traits of motivation and the environment in respect to creativity. The main finding from the study is that coworking does result in having a positive effect on creativity. He notes that this is due in large part to the mix of people participating in coworking. The creative process is built on knowledge and requires an open community of collaboration where people are given the opportunity to elaborate and evaluate with each other s ideas. This allows for knowledge acquisition to occur, and impacts how coworkers solve problems. These are also known as aha experiences, or problem-solving and creative ideas that come about as a result of leaps of insight. Coworkers solve problems suddenly, very much like an aha experience. Secondly they solve problems after a situation has no progress, and thirdly coworkers think of new ways to approach problems. Murhbeck then relates two research examples of how coworkers solve problems using creativity. Amabile's (1983) componential theory of creativity illustrates that creativity is the result of several components that are interlinked with each other: person, environment, and social environment. This is a blend that occurs in coworking. Campbell (1960) the initial part of the creative process is a random or blind creation of ideas as a response to a problem or issue, similar to the swarming theory. Once this is complete he then examines how new ideas are formed. The creative process starts with conscious work on a problem, followed by a period of unconscious work, which if followed successfully is followed by sudden illumination a.k.a the aha moment. This is a common entrepreneurial experience that occurs while coworking. Illustrated below is Sawyer s 2006 Creative Process Theory, which be explained as an entrepreneurial process. The work environment is the fundamental growing ground for innovation and creativity.
  12. 12. 12 Muhrbeck uses the Work Environment Theory of Amabile (1997), which can illustrate why coworking spaces are beneficial for entrepreneurs. The work environment plays a crucial role in the development of creativity and innovation. Group sharing and group thinking influence innovation for entrepreneurs and coworkers. Muhrbeck continues to discuss that ideas rise in crowds, and the creative collisions that happen during the process create new combinations of related elements. These creative collisions are serendipitous, and are associative elements that may be brought to consciousness by exposing yourself to new environments. Chesbrough s Open Innovation Paradigm, and how it relates to coworking spaces, is also addressed. The fundamental idea of this theory is that people should make use of both external and internal knowledge to create opportunities. Using both external and internal environments can increase innovation and creativity and lead to new products and markets. This is the type of environment that can be found in coworking. Internal is thought of as one coworker, where as external represents the many different types of people that occur within a coworking space. The structure of the workspace can increase probability of a chance conversation. The theory is illustrated below:
  13. 13. 13 The work environment can inspire creativity and these types of processes. Coworking spaces are virtuous in applying work environment theory into their daily activities. This comes in the form of space design that is open, comfortable, and allows for freedom. The layout of the coworking office is important because it impacts frequency, intervals, and duration that colleagues communicate with each other. The more often the coworker interacts with a mixture of informal and formal communication the more creative he or she can be. 2.8 The Hub Halifax: A Qualitative Study on Coworking Christopher J.P. Hurry conducts a qualitative study on coworking based on the relatively new business model of coworking. He focuses on the Hub-Halifax, a coworking space in Nova Scotia. He examines literature, traditional media and social media to build his study. His main findings include that coworking decreased isolation, offers networking opportunities, and assists with ideation and productivity. He notes from his research that coworking spaces tend to focus on micro and small businesses. Micro businesses have about 1-4 employees, and small businesses have about 5-49 employees. Another way to think about the difference in micro and small business is seed-stage and early-stage companies. Seed-stage companies generally have less revenue and employees than small businesses, and also have less capital raised and customers.
  14. 14. 14 He uses an example from Zedtwitz (2003) who states that the survivability of start-up companies is positively affected by leveraging contact networks. This leveraging occurs in coworking spaces through introductions and events, and can push a start-up farther along the start-up lifecycle. 2.9 Two Heads are Better Than One Claudia M. Deijl assesses the economic impacts that coworking has on the community in the Netherlands. She recognizes coworkers as self-employed individuals that enjoy sharing knowledge and joining forces on common projects. These individuals can be thought of as independent workers, and joining forces can be thought of as swarming. The transfer of knowledge that occurs in coworking can cause knowledge spillovers that foster innovative activities. She uses an example by Thurik and Wennekers (1999) that stresses the importance of the entrepreneur in the economy.
  15. 15. 15 Thurik and Wennekers (1999) theory of the hypothesized number of self-employed and of real entrepreneurs shows that the more business owners there are the further along they spur economic development. Fundamentally this economic development can be attributed to the increase in human capital that leads to higher productivity. As coworking spaces unite entrepreneurs, students, and other knowledge workers in a professional environment, and encourage the exchange of ideas, interaction, knowledge spillovers and increased economic development are the result. 2.10 Economic Development Policies Through Business Incubation and Co-Working Jordan Harrison Sallinger s research describes how cities that have facilitated entrepreneurship and economic growth have positively impacted business incubation and coworking. The growth of spaces is rapid in the United States with nearly 1400 incubator and coworking facilities operating in the U.S. He also examines the developments within New York City. In March of 2012 Mayor Bloomberg announced a $22 million fund, the New York Entrepreneurial Fund, which is proof of growth and promotion of entrepreneurship. Between 2007 and 2011 more than 1,000 web-based start-ups have emerged in New York City. Growing proof of technology and coworking spaces and new jobs. 486 of these start-ups have received some sort of funding (angel, seed, and venture capital). As of 2013 New York supports 46 coworking spaces. In 2009 New York had just 1. Many coworking spaces were created after the recession in 2008. Real state was far cheaper and landlords needed to find new ways to make money. This proves the rise of growth of coworking, and how coworking is used as an instrument for economic development. 2.11 Coworking Theodora Doulamis researches how design creates community within coworking. She states that the proliferation of coworking is due to the mobility of today s workforce. The workforce today allows for an entrepreneurial hub where an architect sits next to a programmer, next to a journalist, and graphic designer. This is the activity that occurs within a coworking space. Many different people can sit and work next to one another. This allows for individuals to share information, networks, and ideas. The paper also describes the characteristics of coworking spaces with moveable whiteboards, hiding places for people to rest, brainstorming places to throw around ideas, interactive spaces for creative collisions, and openness where people everywhere can cross paths and interact. Steve Jobs believed, "the best ideas come from informal conversations. Coworking promotes those types of informal collisions that can spark new ideas and lead to business success. Design has a large impact of productivity and creativity, which factor into success. Doulamis introduces an idea of the in-between places that eliminate divisions between people. These places are the unity points, the atrium, kitchen, and hallway conversations where private and public points meet. This is where serendipitous activities and creative collisions can occur. An example of public, private, flexible, and fixed locations within coworking spaces:
  16. 16. 16 It is because of these papers, sources, and theories that coworking can be seen as creating the environment and conditions for entrepreneurs and start-ups to be successful. 3. Research Introduction This study, outlined below, seeks to provide insight into how coworking impacts entrepreneurship and creates an environment for individuals to be successful. This section will explain the approach and methodology of the thesis, as well as the tools used in the analysis of empirical findings. The coworking mechanism model will be the main analysis model used to evaluate the data collected during this thesis. The coworking mechanism model is used to show the most common activities that occur within coworking spaces that impact entrepreneurs and start-ups. These mechanisms help them succeed. For a reference of the model see below:
  17. 17. 17 Methodology This paper is an exploratory study of how coworking impacts entrepreneurship. A survey of 23 coworkers and interviews of 2 coworkers of a coworking location in Providence, Rhode Island were conducted to obtain actual perspective of activities and behaviors inside of coworking spaces. The two interviewees will be referred to as Owner 1 and Employee 1. The answers and comments were analyzed for common themes in relation to the coworking mechanism model. Data Collection This was a qualitative and quantitative mix study relying on interview and survey data from coworking users, owners, and employees. It was decided to try and reach a wide array of users to not bias the sample data. To do so, coworking users can be defined by general groups: • • • • • A coworker who is currently using a space (independent workers) A coworker who is an employee of an entrepreneur A coworker who is an entrepreneur A coworker who is an employee of the space A coworker who owns the coworking space I intended to gather qualitative data about: if and how coworking impacts individuals who are working in a coworking space. Quantitative data was gathered around specific items such as demographics of coworkers, how coworking affects income levels, and how time in coworking affects knowledge acquisition. The benefit of a mix of qualitative and quantitative data lies within the chance to gain a deeper insight of the relatively new phenomenon of coworking and obtaining a richer quality of data. The relevance of the data is evaluated to the hypothesis of the paper, where it is important to determine how and why the particular data points are significant.
  18. 18. 18 Analysis Technique The analysis is broken down into two sections: surveys responses and interview responses. The answers were examined for themes related to coworking as seen in the literature review section, and the coworking mechanism model: swarming theory, serendipitous encounters, knowledge acquisition, coworking space design, and networking. The results sections summarize the responses in these themes. A final conclusion is then discussed. 4. Empirical Findings and Analysis Survey Results Coworking demographics: Based on the responses from the distributed coworking survey the average coworker's age is 30.23 years, suggesting that many coworkers are tail-end Generation X individuals. These are workers that were around for the birth of the World Wide Web and were the first to have instant communication. Generation X individuals changed the expectations and behaviors of much of what occurs in the office environment. Due to many firms lacking innovation, these office workers began to look for new ways to be inspired, and as a result some began working in coworking spaces. The oldest age in the data set was 50, and the youngest in the data set was 20 years of age showing a growing interest in coworking from Generation Y individuals. Males outnumber females in study 1.56:1 suggesting that males are a more dominant catalyst within coworking spaces. Regarding education levels of coworkers, 61% of respondents cited receiving a undergraduate degree, and 39% cited receiving a masters or PhD leading to believe that coworkers are well-educated workers. The average income for the individuals surveyed is $43,560 showing that coworkers are middle-income workers. Yet like many in Generation X, these coworkers have the entrepreneurial spirit and are ready to make an impact in business. 57% of the respondents reported being entrepreneurial, or being self-employed, and owning a business. This 57% are entrepreneurs that work within coworking spaces. 19% of the sample was self-identified entrepreneurs, 19% were software engineers, 19% were managers, 14% were researchers, 10% were consultants, and 5% were students. This shows the diversity of workers that participate in coworking. Independent workers working alongside, or near, one another helps facilitate coworking activity. When asked what industry their business, or profession, belonged in 43% stated Technology and 14% stated Non-profit. Similar to Clay Spinuzzi's observation that many firms have increased in the information sector, this finding shows that barriers for entry are lower for technology-based business than other traditional industries. Other identified sectors average at 10% each including: Marketing, Finance, Science and Academic. Consulting was last at 5%. Of those that reported being entrepreneurs, most their businesses were started after the recession in 2008 with the average coworker's businesses being started in 2010.6. Starting businesses after the recession mimics the growth of entrepreneurship and coworking spaces across the globe. The earliest business founded was in the year 2000, and only one reported being founded in 2008 proof that the economic conditions were not favorable during that time. Many coworkers anticipate coworking to positively affect their income. 54% of respondents reported that coworking has increased their income, and 50% expect their income to rise due to coworking activity. This shows that coworkers perceive a benefit to coworking, and as a result for some it has increased income.
  19. 19. 19 Relating the coworking mechanism model: Most coworkers that spend 11+ hours a week in a coworking space report directly seeing an impact on their work. Time spent in coworking directly impacts the receiving its benefits and acquiring of knowledge (Theory of Knowledge Work). Coworkers that reported spending less time in coworking spaces did not reap the same benefits as others. Coworkers that worked 10 hours or less during the week did not report coworking have a direct impact on their work. For proper knowledge acquisition to occur, coworkers should spend 11 or more hours in coworking spaces to see the direct impact on their work. As a reference tool: Many coworkers report joining coworking spaces due to a desire to increase their own level of productivity by working alongside other talented individuals. 65% of coworkers reported an increase in productivity while coworking. This increase in efficiency can be linked to the swarming theory in that workers from different backgrounds come together to attack common business problems and collaborate for a solution. This saves times, and increases work-level productivity tremendously. As described earlier, coworkers are a diverse group of independent workers. 82% of this diverse group communicated that exchanging of knowledge and ideas with coworkers helps them learn while coworking. These exchanges are serendipitous encounters that are impacted by coworking space design and expose coworkers to different experiences and individuals. Interactions with divergent people are an important coworking feature. Social encounters happen in coworking with the goal of helping and benefiting the coworker. 82% of coworkers additionally reported that coworking has positively benefited a project they have worked on. Proof that the knowledge acquisition obtained from activities such as serendipitous encounters is impacting and rewarding coworkers. To go one step further, 77% of coworkers note that coworking activity helps them come up with innovative ideas for products and projects, added evidence that coworkers are gaining intellectual capital. This is an important advantage of coworking spaces, building meaningful relationships with other coworkers with the hopes of new client and business introductions. 82% of the surveyed coworkers revealed that they have made a positive business relationship while coworking. Networking within coworking spaces allows coworkers
  20. 20. 20 to be exposed to a diversity of people, activities, and information that can help grow as an entrepreneur or start-up. Lastly, 59% report that their business, or one they are working for, has grown since coworking. This is verification that coworking makes a direct impact. Interview Results When asked about their idea of coworking and its impact, interview respondents had a series of common threads including: interaction, networking opportunities, and a diverse community. 1) Interaction As own of the coworking employees stated in coworking, "talking is beneficial," (Employee 1). Coworking is a social activity where having a place for discourse (coworking space design), peer collaboration (swarming theory), social learning (knowledge acquisition), and inspiration by learning from people that are different to ourselves (serendipitous encounters) are hugely important. Today we live in a knowledge-based economy where core skills include creativity, interdisciplinary thinking, problem solving, and the ability to collaborate. As the coworking employee notes, "collaboration is a normal positive experience of coworking," (Employee 1). Both interviewees in addition mentioned that coworkers tend to energize one another, play ping-ong, and take lunch breaks together to boost camaraderie. The owner of the coworking space stated, "coworking is absolutely a critical business tool. Coworking is serendipitous in nature," (Owner 1). Small chance encounters and discussions are very valuable and can help gain, "more resources, more connections, and the ability to learn from one another," (Employee 1). Interaction is a crucial activity within coworking spaces. 2) Networking Interviewee responses also included that there is a high degree of networking and opportunities for networking that occur within coworking spaces. "Coworking is a personal thing. It is about putting yourself in those networking opportunities," (Owner 1). Coworking allows members to build business and social contacts to grow a business or project that they are working on. The owner additionally said, "My business has thrived off coworking habits and the atmosphere," (Owner 1). Evidence that the connections made while coworking have positively impacted his business. Yet coworking is not only allowing members to connect within the specific coworking space, but also to find new connections within the larger community. "Our space has educational events, creative events, and fun get togethers to give our unique space a sense of camaraderie," (Employee 1). Events are a great way for coworkers to meet new customers and make social and business contacts. Networking has an exponential impact. 3) Diverse Community Coworking is more than an activity at a coworking space it is a diverse community for people of different backgrounds to come together and work on business problems to impact the economy. "We have a community of creative, driven, and like-minded people from web developers, woodworkers, creatives to photographers and various technology start-ups," (Employee 1). Coworking is a diverse group of unaffiliated professionals that work alongside one another for moments of inspiration (serendipitous encounters). "Coworking is a mix of a whole group of people for a whole similar purpose," (Owner 1). Exposure to different points of view helps to acquire new ways of thinking to an existing business or project (knowledge acquisition).
  21. 21. 21 Sharing that obtained knowledge leads to more conversations and a higher chance of success. Coworking space design elements help to facilitate discourse between different people. Coworking spaces make way for infrastructure and natural lighting elements where social learning emerges as the result. "With any small space the goal is to foster the companies for them to grow," (Owner 1). "It is a design space with private and open areas for members to promote their work." Design helps impact coworking and exposing coworkers to different individuals. Wide open physical architecture elements lower barriers making new connections within the diverse community and to be inspired by others. Intention of design setups is to facilitate collaboration amongst different types of workers (swarming theory) to enhance productivity within spaces. Both interviewees agreed that they had quite a few success stories come from their diverse group. Having a diverse community positively impacts coworkers. 6. Conclusion This exploratory research study into how coworking impacts entrepreneurs and start-up businesses was comprised of 23 survey responses of current coworkers and two one-on-one interviews with a coworking owner and employee. In this paper, I have examined how people collectively interpret the impact that coworking has, and related themes from the responses and literature to the constructed coworking mechanism model. While limited in scope, the comments and findings found during the research and readings both agreed that coworking has a direct positive impact on those that work within the space. To analyze a bit further, the time spent in coworking has a direct correlation to its perceived benefits. More time in coworking amounts to obtaining more that coworking has to offer. To determine this I embarked on creating a methodology that could support this idea and facilitate the analysis of the empirical data and literature reviewed. It was chosen to carry an analysis of qualitative and quantitative data to obtain as much information as possible from the surveys and one-on-one interviews. It was crucial that the methodology was in line with the theoretical framework of the coworking mechanism model, so that understanding the goal and objective of this thesis would be obtained. I created a few new illustrative tables, and used some from preexisting literature, to help guide the reader through the thesis and make in easier to comprehend. Through this I believe that I have targeted the objective of the paper and comprehensively understood 'coworking has a positive impact on entrepreneurs and start-up companies.' Though a brief summary of the evidence I will now proceed with this conclusion. Does coworking actually impact entrepreneurship? There is strong evidence that suggests that coworkers agree coworking positively impacts entrepreneurs. By using the five methods from the coworking mechanism model that influence activity within coworking spaces with the research interpretations, it is able to be confirmed that coworking impacts entrepreneurship within coworking spaces. Does coworking create an environment for entrepreneurs to succeed? The study confirms that coworking spaces create the conditions and environment for entrepreneurs to be successful. This is due to respondents stating that the coworking environment has a positive impact on how they work. The most common reasons behind this
  22. 22. 22 statement include the networking opportunities, collaboration from swarming activity, and diverse group of workers that share knowledge. It serves as a pool for ideas to be tested. Does coworking impact the economy? The study preliminarily confirms that coworking does impact economic growth. This is due to the evidence from the interviews in which both coworking employees described success stories coming from their coworking space. This can be thought of as successful start-ups that outgrew the coworking space to hire more individuals, raise capital, and impact the industry they work in. In conclusion the most reasonable interpretation of these answers in regard to the paper's purpose is that coworking positively impacts entrepreneurs and creates a productive environment for individuals and start-up companies. Yet, this is mainly influenced by the mix of people participating in the activity of coworking, which helps to create a large network of knowledge that facilitates business growth. Coworking is growing, and so is its global impact. 7. Future Work Future research should expand in scope to include larger sample sizes over a number of different coworking regions for a longer period of time. This could assist in continuing to define and examine the true experience of coworking across different areas. How coworking could be a growth engine for the economy was not fully examined here, so future examination could look at the impact coworking activity has on specific regions. The coworking mechanism model could be used to further drill down into coworking activity to help formulate an industry-wide definition. More research into effects of coworking on the economy could guide government policy towards entrepreneurship. This would give coworking considerable credibility across users globally. Examining how entrepreneurial coworkers work in relation to the coworking mechanism model allows us to better understand the activity within coworking and in similar collaborative spaces.
  23. 23. 23 8. Works Cited Bilandzic, Mark, and Marcus Foth. Libraries as Co-working Spaces: Understanding User Motivations and Perceived Barriers to Social Learning. Queensland University of Technology, 2013. Web. 20 Sept. 2013. Cashman, Anna, Joel Dullroy, and Carsten Foertsch. Deskmag's Annual Global Coworking Survey. Rep. no. 3rd. Deskmag, 2012. Web. 21 Sept. 2013. Deijl, Claudia M. "Two Heads Are Better Than One." Thesis. Erasmus University Rotterdam, 2011. Two Heads Are Better Than One. Web. 15 Sept. 2013. Doulamis, Theodora. "Coworking." Thesis. Virginia Commonwealth University, 2012. Coworking. Web. 16 Sept. 2013. Hurry, Christopher JP. "The HUB Hailfax: A Qualitative Study on Coworking." Thesis. St. Mary's University, Hailfax, Nova Scotia, 2012. The HUB Hailfax: A Qualitative Study on Coworking. Web. 2 Oct. 2013. Kelley, Donna, Roland Xavier, Jacqul Kew, Mike Herrington, and Arne Vorderwulbecke. Global Entrepreneurship Monitor 2012 Global Report. Rep. no. 2012. Babson College, Universedad Del Desarrollo, Universiti Tun Abdul Razak, London Business School, 2012. Web. 3 Oct. 2013. Kreamer, Anne. "The Rise of Coworking Office Spaces." HBR Blog Network. Harvard Business Review, 19 Sept. 2012. Web. 12 Sept. 2013.
  24. 24. 24 Miller, Herman. Coworking, Swarming, and the Agile Workplace. Publication no. 2011. N.p., 2011. Web. 17 Sept. 2013. Muhrbeck, Anton. "Coworking A Creative Workspace." Thesis. Junkoping University, 2011. Coworking. Web. 3 Oct. 2013. Sallinger, Jordan H. "Economic Development Policies Through Business and Co-Working: A Study of San Francisco and New York City." Thesis. Graduate School of Architecture, 2013.Economic Development Policies Through Business and Co-Working: A Study of San Francisco and New York City. Web. 16 Sept. 2013. Spinuzzi, Clay. "Working Alone Together: Coworking as Emergent Collaborative Activity." Thesis. University of Texas, 2012. Working Alone Together: Coworking as Emergent Collaborative Activity. Web. 2 Oct. 2012.
  25. 25. 25 9. Appendix Coworking Survey Demographic data 1. What year were you born? 2. What is your gender? 1. Male 2. Female 3. What is the highest level of education you have attained? 3. Secondary – high school 4. Degree or equivalent – post secondary (college, university) 5. Post-graduate – masterʼs or doctorate degrees Income 4. What is your profession? 5. In what industry does your profession/business belong? 6. Are you self-employed and do you own your own business? 6. Yes 7. No 7. In what year was your business founded? 8. What are your sources of income? My business is my only source of income I work in addition to my business I receive benefits in addition to my business Other 9. What is your monthly income? Less than $1,000 $1,001 to $1,499 $1,500 to $1,999 $2,000 to $2,999 $3,000 to $4,999 $500 or more
  26. 26. 26 Donʼt know 10. How has coworking affected your income? Increased Decreased Unchanged Donʼt know 11. Do you expect your income to rise due to coworking? Yes No Donʼt know 12. On average, how much time do you spend coworking during the week? 1-4 hours 5-10 hours 11-19 hours 20-29 hours 30-39 hours 40+ hours Benefits of coworking 13. I am more productive when I cowork rather than the place I used to work Do not agree at all Do not agree Agree Definitely agree 14. I exchange knowledge and ideas with other coworkers that helps me learn Do not agree at all Do not agree Agree Definitely agree 15. Coworking has benefited a project or business I have worked on Do not agree at all Do not agree Agree Definitely agree 16. I have made a positive business relationship since joining a coworking space
  27. 27. 27 Yes No Donʼt know 17. Coworking helps me come up with new and innovative ideas for products and projects Do not agree at all Do not agree Agree Definitely agree 18. The business I own, or am an employee of, has grown since I have been coworking Do not agree at all Do not agree Agree Definitely agree 19. If you have any other remarks on the benefits of coworking, how it has helped your start-up, or a start-up you know, please post them here 20. Please write your e-mail address if you would like updates on the results of this research Many thanks for participating in this study! Coworking Interview Questions 1. Do you think that coworkers earn a higher income and profit than the average entrepreneur? 2. What do you think about the effect of coworking on economic growth? 3. To what extent does knowledge transfer arise between coworkers? 4. Would you recommend co-working to anyone else starting a business? 5. Do you think that coworking had a negative or positive impact upon your business? 6. What positive experiences did you have using coworking? 7. What negative experiences did you have coworking? 8. Does one type of business do better than another in a coworking environment? 9. How do you define coworking? 10. Do you believe start-upss working in, or starting out in, coworking spaces have a higher chance of success? Why or Why not? 11. Do you see coworking as a critical tool for business growth?
  28. 28. 28 12. What type of businesses generally operate out of coworking spaces? 13. Have you seen businesses move on/grow out from/ coworking spaces?

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