Necessity Entrepreneurship and Competitive Strategy

Joern Block, Karsten Kohn, Danny Miller () and Katrin Ullrich ()
Additional contact information
Danny Miller: HEC Montreal

No 8219, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Many start-ups chose to compete with incumbent firms using one of two generic strategies: cost leadership or differentiation. Our study demonstrates how this choice depends on whether the startup was founded out of necessity. Our results, based on a representative data set of 4,568 German start-ups, show that necessity entrepreneurs are more likely than other entrepreneurs to pursue a cost leadership strategy, and less likely to pursue a differentiation strategy. Decomposition analyses further show that up to half of the difference in choice of strategy can be attributed to distinct endowments of human capital, socio-economic attributes, and start-up project characteristics that correlate with necessity entrepreneurship.

Keywords: competitive strategy; new venture strategy; necessity entrepreneurship; product differentiation; decomposition analysis; cost leadership (search for similar items in EconPapers)
JEL-codes: L10 L26 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2014-05
New Economics Papers: this item is included in nep-cse, nep-ent, nep-ppm and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published in: Small Business Economics, 2015, 44 (1), 37-54

Downloads: (external link)
https://docs.iza.org/dp8219.pdf (application/pdf)

Related works:
Journal Article: Necessity entrepreneurship and competitive strategy (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp8219

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().