The effect of social exclusion and aggregation on firm performance: Empirical evidence from entrepreneurial teams managed by minority Italian entrepreneurs

Abstract

Minority entrepreneurs, belonging to marginalised communities/groups, are at risk of experiencing social exclusion, that is, being outside the dominant social group. Whether this is structural – due to unintended events – or intentional – due to explicit choices, they struggle to escape their situation; for example, by creating direct ties with other members of the same community/group (aggregation). Focusing on social exclusion and aggregation, this article asks the following research question: whether and to what extent does social exclusion and aggregation experienced by entrepreneurial teams affect the performance of startups launched by minority entrepreneurs. Based on data retrieved from the Italian Ministry of Enterprises and Made in Italy website on 11,985 entrepreneurial firms, stochastic frontier analyses reveal that minority entrepreneurs’ aggregation improves the performance of their startups. Trust and reciprocity have a positive impact on performance, but they may fuel even greater social exclusion. This creates several implications for entrepreneurs, policymakers and scholars.