AN EXPLORATORY ANALYSIS OF NEW FIRM FOUNDINGS BY TRADING COMMUNITY MEMBERS AND THEIR SURVIVAL

Prior research shows the importance of trading communities in the Indian economy, and we investigate whether these trading communities have an advantage in firm founding and/or firm survival. Prior theory and qualitative research suggest that trusted within-community networks enable access to resources and knowledge and help support entrepreneurs from these communities. However, some other scholars show that community ties constrain entrepreneurial options and produce lock-in. We rely on prior literature in the emerging market context, which suggests the importance of kinship-based ties in these contexts, and on prior work on Indian trading communities, which describes strong norms, resources, and social ties supporting entrepreneurship. We hypothesise that, compared to non-trading communities, trading communities in India have higher founding and survival rates. Using an economy-wide database of company registrations in India, we find strong support for our hypotheses. Overall, our research contributes to prior work on communities and entrepreneurship. Substantively, we contribute to our understanding of the Indian entrepreneurial context.