Catalyzing Strategies: How Entrepreneurs Accelerate Inter-Organizational Relationship Formation to Secure Professional Investments
Benjamin L. Hallen
London Business School
Kathleen M. Eisenhardt
Stanford University - Management Science & Engineering
May 5, 2008
Although network ties are crucial for firm performance, the strategies by which executives actually form ties are relatively unexplored. In this study, we introduce a new construct, tie formation efficiency, and clarify its importance for superior network outcomes. Building on fieldwork in 9 Internet security ventures seeking investment ties, we unexpectedly identify two equifinal paths for how executives form ties efficiently. One relies on existing strong direct ties and is only available to privileged firms. The other relies on a second new concept, catalyzing strategy, by which executives advantageously shape opportunities and inducements to form ties, and is available to many firms. Overall, we add insights to the network and signaling literatures, and to the nascent literature on how strategic action, especially by low-power actors such as entrepreneurs, shapes critical network outcomes.
Keywords: Entrepreneurship, Venture Capital, Social Networks
JEL Classification: M13, G24
Date posted: April 3, 2009 ; Last revised: January 23, 2012
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