Does the Strategy of Hyper-Growth New Ventures Matter?

Does strategy really matter for fast growing entrepreneurial firms? Can some firms, on the basis of their strategy, sustain high returns over time? Or are superior rents a short-lived anomaly, destined to be eroded by environmental dynamism? This paper answers these questions, which lie at the heart of a long-standing debate across three bodies of literature, strategic management, industrial organization economics (IO), and organizational ecology (OE). The debate has endured, at least in part, because strategy, IO, and OE rely on theories, concepts, and measures that focus on different units of analysis (e.g., respectively, firm, industry, and population). Building on a longitudinal dataset that brings these three perspectives together, we find that strategy does play an important role. Specifically, some firms, by virtue of their strategy, attain and sustain superior performance that is beyond that which could be explained by industry or population-level effects.