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Networking strategies for entrepreneurs: balancing cohesion and diversity

Networking strategies for entrepreneurs: balancing cohesion and diversity Purpose – The purpose of this paper is to explore how cohesive/diverse networks affect entrepreneurial activities. In particular, an interest is shown in how cohesion and diversity may affect entrepreneurial outcomes like survival, profitability, innovation and efficiency. Design/methodology/approach – The paper organizes the literature and presents conclusions about the effects of cohesion and diversity using three stages of entrepreneurial activity: opportunity development, technology and organizational creation, and exchange. Findings – At the opportunity stage, strong ties with entrepreneurs increase the likelihood of becoming one, but are associated with lower levels of innovation. Diverse ties increase self‐efficacy and innovation. At the technology and organizational creation stage, most entrepreneurial teams are homogeneous whereas team diversity is associated with better organizational outcomes. Using strong ties to recruit potential employees provides price and commitment advantages, but may interfere with efficiency. At the exchange stage, entrepreneurs must strike a balance between weak (market based) and stronger (embedded) ties to gain preferential access to resources and customers, while maintaining diverse sources for information and market opportunities. Overall, cohesion through strong ties provides entrepreneurs with hard to find resources very early in the development of new ventures, but those resources are limited in scope and have a high cost. By contrast, diversity is more common and more important later in a venture's life cycle. Originality/value – Guidelines are suggested regarding the best networking strategies at the different stages and in different instrumental areas, offering an overall evaluation of the evidence in the cohesion v. diversity debate. Directions for future research on the effects of networks on entrepreneurial outcomes are also provided. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Entrepreneurial Behavior and Research Emerald Publishing

Networking strategies for entrepreneurs: balancing cohesion and diversity

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References (234)

Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1355-2554
DOI
10.1108/13552551111107499
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to explore how cohesive/diverse networks affect entrepreneurial activities. In particular, an interest is shown in how cohesion and diversity may affect entrepreneurial outcomes like survival, profitability, innovation and efficiency. Design/methodology/approach – The paper organizes the literature and presents conclusions about the effects of cohesion and diversity using three stages of entrepreneurial activity: opportunity development, technology and organizational creation, and exchange. Findings – At the opportunity stage, strong ties with entrepreneurs increase the likelihood of becoming one, but are associated with lower levels of innovation. Diverse ties increase self‐efficacy and innovation. At the technology and organizational creation stage, most entrepreneurial teams are homogeneous whereas team diversity is associated with better organizational outcomes. Using strong ties to recruit potential employees provides price and commitment advantages, but may interfere with efficiency. At the exchange stage, entrepreneurs must strike a balance between weak (market based) and stronger (embedded) ties to gain preferential access to resources and customers, while maintaining diverse sources for information and market opportunities. Overall, cohesion through strong ties provides entrepreneurs with hard to find resources very early in the development of new ventures, but those resources are limited in scope and have a high cost. By contrast, diversity is more common and more important later in a venture's life cycle. Originality/value – Guidelines are suggested regarding the best networking strategies at the different stages and in different instrumental areas, offering an overall evaluation of the evidence in the cohesion v. diversity debate. Directions for future research on the effects of networks on entrepreneurial outcomes are also provided.

Journal

International Journal of Entrepreneurial Behavior and ResearchEmerald Publishing

Published: Feb 1, 2011

Keywords: Networking; Entrepreneurs

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