Necessity entrepreneurship and competitive strategy

Joern Block, K Kohn, D Miller, K Ullrich

Research output: Contribution to journalArticleAcademicpeer-review

101 Citations (Scopus)

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.
Original languageEnglish
Pages (from-to)37-54
Number of pages18
JournalSmall Business Economics
Volume44
Issue number1
DOIs
Publication statusPublished - 2015

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