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The importance of networks

Christina Hernandez Sherwood on August 15, 2013

In an essay for the Kauffman Foundation, business administration professor Toby Stuart described his research examining how the social and business networks in which would-be entrepreneurs and early-stage firms are immersed influence entrepreneurial processes and outcomes.

Here's an excerpt from the piece:

My research begins with one of the foundational assumptions in structural sociology: actors (e.g., firms or individuals) occupy differentiated positions in social structures, and opportunities for entrepreneurial behavior (and, by implication, the constraints that impede it) are systematically linked to these positions. This insight underlies and unifies my work. Evidence suggests that the information available to an actor, the attitudinal influences to which the actor is exposed, the actor's prestige, the quality of the actor's reputation, and the likelihood the actor will receive referrals from others are all influenced by the connections that embed the actor into multiple, crosscutting social networks.

In the contexts I study, this perspective has wide-ranging implications. For example, the chance that a would-be entrepreneur will identify an unexploited opportunity, convince others to invest in a risky undertaking, recruit talented partners, write contracts with favorable terms, and achieve many other core elements of the entrepreneurial process depend on the actor's position in a network. Similarly, the differential positions of firms in the social structure of their markets provide insight into the strategic opportunities available to organizational decision makers.

The full essay is available here.

Weekly Wisdom from Kauffman is a regular feature on eMed highlighting insightful research from the Kauffman Foundation. Do you have a favorite Kauffman research insight that could help life science entrepreneurs? Send it to mailto:emededitor@kauffman.org.

Category:  Creation  Tags:  wisdom, entrepreneur, networks

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