Necessity entrepreneurship and competitive strategy

Joern Block, Karsten Kohn, Danny Miller and Katrin Ullrich

Small Business Economics, 2015, vol. 44, issue 1, 37-54

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 start-up 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, socioeconomic attributes, and start-up project characteristics that correlate with necessity entrepreneurship. Copyright Springer Science+Business Media New York 2015

Keywords: Necessity entrepreneurship; New venture strategy; Competitive strategy; Cost leadership; Product differentiation; Decomposition analysis; L10; L26 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (73)

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Working Paper: Necessity Entrepreneurship and Competitive Strategy (2014)
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DOI: 10.1007/s11187-014-9589-x

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