Entrepreneurship Theory & Practice, 32(4): 593-613, 2008
21 Pages Posted: 23 Apr 2012 Last revised: 8 Feb 2016
Date Written: 2008
Most of the entrepreneurship literature has addressed the benefits and necessity of using social network ties as opposed to market methods in early venture finance, but it has largely understated the potential limitations and costs of doing so. Specifically, very sparse research has examined the factors that influence entrepreneurs’ choice between using networks versus market methods. In this study, we propose a contingent model of network utilization when approaching initial investors, based on the dimensions of human capital of the entrepreneurs. We test this model with primary field survey data from 226 new high-tech ventures in Singapore and Beijing. The results show that high occupational status and relevant industrial work experience are positively associated with the entrepreneurs’ propensity to utilize existing networks by enhancing the resourcefulness of their network ties (social capital); however, such influences are alleviated by entrepreneurs’ marketing or managerial experience, which increases the entrepreneurs’ ability to interact with strangers (an aspect of social competence).
Keywords: Entrepreneurial financing, network utilization, social capital, social skills
Suggested Citation: Suggested Citation
Zhang, Jing and Souitaris, Vangelis and Soh, Pek-Hooi and Wong, Poh-kam, A Contingent Model of Network Utilization in Early Financing of Technology Ventures (2008). Entrepreneurship Theory & Practice, 32(4): 593-613, 2008. Available at SSRN: https://ssrn.com/abstract=2045078