Entrepreneurs Rarely Possess All of the Resources Needed for a Successful Venture They Cultivate and Use Social Networks for Access to Resources (Granovetter, 1995; Greve & Salaf, 2003; Jack & Anderson, 2002; Kim & Aldrich, 2005; Starr & MacMillan, 1990; Stuart & Sorenson, 2007) Research Suggests that the Use of Social Networks Is Influenced by the Institutional Contexts (Brass, Galaskiewicz, Greve & Tsai, 2004)
Research Has Shown that the Size and Types of Social Networks Vary between Women and Men Entrepreneurs (Aldrich, Reese & Dubini, 1989; Baron & Tang, 2008; Keupp & Gassman, 2009; McPherson, Smith-Lovin & Brashears, 2006; Renzulli & Aldrich, 2005) Additionally, Family Ties Are often an Important Conduit of Resources for Entrepreneurs (Birley, 1985; Hite & Hesterly, 2001) and Are a Constant Component of Entrepreneurs’ Networks Globally (Anderson, Jack & Drakopoulou Dodd, 2005)
Emerging Markets Have Become Increasingly Important as Much of the World’s Recent Economic Growth Has Come from Emerging Economy Countries The Economic Summit of the G6 Countries Began in 1975. Over Time, It Evolved to the G8. In 2008, It Became the G20. Eleven of these Countries Could Be Classified as Emerging Economies These Changes Heighten the Value of Understanding the Effects of Institutional Environments on Firm Strategy and Entrepreneurial Actions Institutions Refer to the Formal and Informal Rules and Norms that Provide Order and Structure in Society and Guide Individual and Organizational Actions (North, 1990; Scott, 1995)
While there Has Been Considerable Research on the Effects of Specific Institutions (e.g., Political Risk, Intellectual Property Protection), Institutions Are Complex (e.g., Formal and Informal Institutions) (Kogut & Ragin, 2006) and Polycentric (Ostrom, 2005; Batjargal, 2010) Furthermore, Institutions Are partly Interdependent and also Have Collective Influences on Entrepreneurial Decisions (Delmas & Toffel, 2009; Hitt, Ahlstrom, Dacin, Levitas & Svobodina, 2004) Institutions Are Diverse, Multilevel and Interdependent. They Emanate from Multiple Sources such as Societal and Industry Norms and National, Regional and Local Rule-making Bodies (Ostrom, 2005, 2010). Thus, Institutions Are Polycentric.
Sample: 637 New Ventures (Maximum of 8 years of Age) 205 China 105 France 172 Russia 155 U.S. Structured Telephone Interviews Variables: Formal Institutions — Regulatory, Political Democracy, Capital Availability, Market Liquidity (Holmes, Miller, Hitt & Salmador, 2013) — (Manifest Variable: Institutional Polycentrism) Culture (Informal Institutions): In-Group Collectivism, Institutional Collectivism and Humane Orientation (GLOBE; House et al, 2004) — (Manifest Variable: Relational Culture) Gender
Network Variables: Structural Holes: Distant Relationships as a Percentage of All Relationships in the Network (Burt, 1992) Network Size Network Type Business Advice Business Resource Emotional Support Family Ties (Percentage in Each Network) Venture Performance: Growth in Sales Control Variables: Firm Age, Entrepreneur’s Age, Education , Managerial Experience, Network Density, Industry Munificence and Dynamism
When National-level Formal Institutions Are Weak and Inefficient, Lower-level Formal Institutions (e.g., State and Municipal) and Informal Norms and Networks Become more Important (Holmes et al, 2013; Ostrom, 2005) Thus, Lower-level and Informal Institutions Serve as Substitutes for Weak and Inefficient Higher-level Formal Institutions (Ostrom, 2005) When This Occurs, however, the Authority for Rule Development and Enforcement Is more Diffused and sometimes Difficult to Identify
These Conditions Produce Uncertainty and Ambiguity, especially for Entrepreneurs with New Ventures, Motivating Them to Build Strong and Diverse Networks Rich in Structural Holes for Information, Resources and Social Support We Found that in a Configuration of Weak and Inefficient Institutions, Entrepreneurs with Social Networks Rich in Structural Holes Were Able to Achieve Higher Performance in their Ventures
Structural Holes + Confluence of Weak Venture and Inefficient Performance Formal Institutions
Batjargal, Tsui, Hitt, Arregle, Miller & Webb, 2013 Women Entrepreneurs Had Larger Social Networks and More Women in their Networks Social Network Size Is Positively Related to New Venture Performance Relational Culture Enhances the Positive Effect of Network Size on New Venture Performance Men Entrepreneurs’ Social Networks Have a More Positive Effect on New Venture Performance in High Relational Cultures than Do Women Entrepreneurs’ Social Networks
However, Women Entrepreneurs in High Relational Cultures Gain More Value from their Social Networks than those in Low Relational Cultures Women Entrepreneurs Experience a Network Disadvantage from the Costs of Building and Maintaining a Large Network. Perhaps Men Entrepreneurs Are Able to Build More Instrumental Networks
Arregle, Batjargal, Hitt, Webb, Miller & Tsui, in press Family Ties Can Have both Positive and Negative Consequences (e.g., Aldrich & Cliff; Renzulli, Aldrich & Moody, 2000) Family Embeddedness Suggests that Family Has a Strong Influence on Business Decision Processes (Cruz, Justo & DeCastro, 2010; Steier, Chua & Chrisman, 2009) Findings: Family Ties in Entrepreneurs’ Business Advice Networks Have an Inverted U-shaped Influence on New Venture Performance for Developed Economies only
Findings (cont’d) : Family Ties in Entrepreneurs’ Business Resource Network Have a U-shaped Relationship with New Venture Performance Family Ties in Entrepreneurs’ Emotional Support Network Have an Inverted U-shaped Influence on New Venture Performance Family Ties Were Greater in France and U.S. than in China and Russia But Country largely Had No Effect on the Results except for the Business Advice Network
While Extremely Important to New Venture Success, the Effects of Entrepreneurs’ Social Networks Are Complex The Importance and Influence of Entrepreneurs’ Social Networks Are Affected by their Institutional Context (Formal Institutions and Culture), Entrepreneurs’ Gender and the degree of Family Embeddedness in the Networks
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