From subcontractors to company owners: modeling firm-type choices in industrial clusters

Babur Wasim Arif () and Sana Ullah ()
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Babur Wasim Arif: Iqra University
Sana Ullah: Quaid-i-Azam University

Journal of Global Entrepreneurship Research, 2021, vol. 11, issue 1, 153-161

Abstract: Abstract The importance of industrial clusters in industrial development in developing countries is increasingly recognized in the literature. In industrial clusters, division and specialization of labor established under subcontracting arrangements permit less exceptional and ordinary entrepreneurs to enter the industry without much initial capital investment and technical skills and grow in small risk-able steps. Although existing literature is substantiated by empirical evidence, a theoretical framework explaining entrepreneurs’ choices to enter the industry as a subcontractor or as an independent firm is missing. The present study proposes a mathematical model that explains how entrepreneurs choose the firm type at the time of entry and as they grow over time.

Keywords: Industrial cluster; Subcontracting; Human and financial capital; Social ties (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:jglont:v:11:y:2021:i:1:d:10.1007_s40497-021-00262-5

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DOI: 10.1007/s40497-021-00262-5

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