Cluster status and new venture creation

We examine how the social status of a cluster contributes to new venture creation. The key thesis of this paper is that cluster status facilitates new venture creation by providing positive decision cues for entrepreneurs; and it serves as a boundary condition of the relationship between cluster size and new venture creation. Based on a sample of township industrial clusters in China's Guangdong Province from 2005 to 2013, we demonstrate that a higher-status position of the focal cluster or status spillover from related clusters (i.e., geographically proximate or domain-overlapped clusters) results in higher levels of new venture creation in the focal cluster. We also find that the relationship between cluster size and new venture creation is stronger for lower-status clusters and for clusters with a lower level of status spilled from geographically proximate clusters. Our research has implications for both entrepreneurs and policy makers.