Social Influence and Entrepreneurship: The Effect of University Peers on Entrepreneurial Entry

Abstract

Theories of entrepreneurship have proposed that universities play an important role in fostering entrepreneurial rates. While extant research has mainly focused on universities’ structural and institutional influences on entrepreneurship, relatively less attention has been devoted to universities’ social environments and interpersonal influences. This paper examines the social transmission of entrepreneurial behavior across university peers. Based on the unique data on hedge fund foundings between 1979 and 2006, the study documents that entrepreneurial behaviors of university peers are an important driver of individual rates of entrepreneurship. Additional analyses show that social influence has a stronger effect on an individual’s transition to entrepreneurship when exerted by spatially proximate university peers, and university peers who share gender with the focal individual. These findings provide additional evidence that the similarity of entrepreneurial behavior across university peers arises due to social influence, rather than the institutional impact of universities. Together, the results strengthen evidence for the role of universities in shaping entrepreneurial entry and uncover novel pathways of social transmission of entrepreneurship.

Keywords: entrepreneurship, social influence