Abstract

By not benefitting from agglomeration economies, spatially isolated firms and new ventures in particular are at a competitive disadvantage relative to their counterparts located in highly concentrated areas (cf. McCann and Folta, 2008). While mounting evidence supports this premise, McCann and Folta (2008) posit that entrepreneurs have options to offset the disadvantages of their venture’s spatial isolation, one of which may be the act of seeking to acquire resources located within more highly concentrated areas. We investigate the conditions under which entrepreneurs resort to formal (i.e., contractual) arrangements to access the resources needed for venture creation. Specifically, we hypothesize that spatially isolated entrepreneurs are more likely to pay other organizations to assist with starting their ventures because the needed resources are less abundant locally than they are in densely concentrated areas.

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