A Contingent Model of Network Utilization in Early Financing of Technology Ventures

Entrepreneurship Theory & Practice, 32(4): 593-613, 2008

21 Pages Posted: 23 Apr 2012 Last revised: 8 Feb 2016

Jing Zhang

Old Dominion University

Vangelis Souitaris

City University London - Faculty of Management

Pek-Hooi Soh

Simon Fraser University (SFU)

Poh-kam Wong

Independent

Multiple version iconThere are 2 versions of this paper

Date Written: 2008

Abstract

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

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

Jing Zhang (Contact Author)

Old Dominion University ( email )

Norfolk, VA 23529-0222
United States

Vangelis Souitaris

City University London - Faculty of Management ( email )

London
United Kingdom
+44 (0) 20 7040 5131 (Phone)
+44 (0) 20 7040 8328 (Fax)

Pek-Hooi Soh

Simon Fraser University (SFU) ( email )

8888 University Drive
Burnaby, British Columbia V5A 1S6
Canada
778-782-7921 (Phone)
778-782-5153 (Fax)

HOME PAGE: http://beedie.sfu.ca/profiles/Pek-HooiSoh

Poh-kam Wong

Independent

No Address Available

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