Entrepreneurial Strategic Groups: How Clustering Helps Nascent Firms

Abstract

Our study examines how strategic groups consisting of nascent ventures outperform other firms. An entrepreneurial strategic group is defined as firms that pursue a similar founding strategy, belong to the same industry, and compete in the same geography. We show that firms belonging to an entrepreneurial strategic group have higher levels of performance in terms of lower exit rates and higher annual growth. In addition, there are diminishing returns to membership in an entrepreneurial strategic group. As group size increases, performance levels decrease.