ABSTRACT
This chapter seeks a good measure of new business performance (e.g. Zimmerman et al., 2002), and then explains this measure by various dimensions of business strategy.1 Three criteria are used to create a one-dimensional ordinal ranking of high, medium and low performance for new business starts-ups: employment growth; return on capital employed and labour productivity. It is shown that statistical cluster analysis provides a convincing separation of a sample of new business start-ups into high, medium and low performance categories, using a minimum distance criterion for clustering.2 The technique of cluster analysis introduced here will also be relevant to the use of cluster analysis in Chapter 14, where a morphology of firm types is developed.
