A Note on Necessity Entrepreneurship and Competitive Strategy

22 Pages Posted: 2 Jul 2013

See all articles by Jorn H. Block

Jorn H. Block

University of Trier - Faculty of Management; Erasmus University Rotterdam (EUR) - Institute of Management (ERIM)

Karsten Kohn

Kreditanstalt für Wiederaufbau (KfW), KfW Development Bank; IZA Institute of Labor Economics

Danny Miller

HEC Montreal

Katrin Ullrich

Center for European Economic Research (ZEW)

Date Written: July 2, 2013

Abstract

Many start-ups chose to compete with incumbent firms using one of two generic strategies: cost leadership or differentiation. Our note demonstrates how this choice depends on whether the start-up was founded out of necessity. Our results, based on a representative dataset of 4,568 German start-ups, show that the start-ups of necessity entrepreneurs are more likely than others to pursue a cost leadership strategy, and less likely to pursue a differentiation strategy.

Keywords: necessity entrepreneurship, competitive strategy, cost leadership, product differentiation, KFW/ZEW Start-up Panel, new venture strategy

JEL Classification: L10, L26

Suggested Citation

Block, Jorn Hendrich and Kohn, Karsten and Miller, Danny and Ullrich, Katrin, A Note on Necessity Entrepreneurship and Competitive Strategy (July 2, 2013). Available at SSRN: https://ssrn.com/abstract=2288745 or http://dx.doi.org/10.2139/ssrn.2288745

Jorn Hendrich Block (Contact Author)

University of Trier - Faculty of Management ( email )

D-54296
Germany

Erasmus University Rotterdam (EUR) - Institute of Management (ERIM) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

Karsten Kohn

Kreditanstalt für Wiederaufbau (KfW), KfW Development Bank ( email )

Palmengartenstr. 5-9
Frankfurt, 60325
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Danny Miller

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H2X 2L3 H3T 2A7
Canada

Katrin Ullrich

Center for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

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