Evolution of Social Networks in New Ventures: A Longitudinal Research

Both strategy and entrepreneurship research has documented the importance of social networks to the survival and growth of new ventures (e.g., Baum et al., 2000; Stuart et al., 1999; Yli-Renko et al., 2001). It is through these networks that new ventures acquire information and resources to shape a firm’s strategic choices and mobilize resources conducive to the firm’s growth. However, extant studies have primarily taken a static view and considered a firm’s networks more as given, rarely discussing how networks develop and evolve. Organizational lifecycle theory suggests that as firms progress from emergence toward growth, they require new and additional resources to support continued expansion (Churchill & Lewis, 1983; Dodge et al., 1994). This dynamic nature of firm resource needs suggests that a more dynamic approach to understanding the firm’s social networks is required. Only with such a dynamic view, entrepreneurs can understand how their firms can better respond to the changing competitive environment and how to increase their firms’ success possibility.

To fill the gap, this project is designed to conduct a longitudinal study on the evolution of social networks in new ventures with three specific research objectives. First, based on both qualitative and quantitative examination, we hope to map out the evolution of a new venture’s social networks from its emergence. We propose that along the growth of a new venture its networks tend to evolve from path-dependent towards intentionally managed ones (Hite & Hesterly, 2001). Second, to address the bottom-line importance of firms’ network transition, we will take lead to operationalize new ventures’ path- dependent and intentionally managed networks and examine the effect of timely network transition on venture performance. Finally, we aim to integrate the research about entrepreneurship and social networks to identify and test a group of key entrepreneurial and strategic contextual factors that facilitate the network evolution.

Our research will make multiple contributions. It will enrich entrepreneurship literature by identifying the evolution pattern of new ventures’ networks and testing the proposed impact of such evolution on venture performance. This project will also extend social networks literature by taking a dynamic view of firm networks, and methodologically contribute to the literature by proposing and validating measures of path-dependent and intentionally managed networks. More importantly, it will pay attention to the factors fostering the evolution of firm networks, while the antecedents of firm networks in general have been underdeveloped in the social network literature.