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Network Isolates: Entrepreneurial Bootstrapping and the Social Disconnection of New Organizations in the Mobile App Ecosystem

57 Pages Posted: 30 Jan 2017  

Benjamin L. Hallen

University of Washington - Department of Management & Organization

Jason P. Davis

INSEAD

Pai-Ling Yin

Marshall School of Business, University of Southern California

Date Written: January 12, 2017

Abstract

Extensive prior literature has studied how young organizations are impacted by and often benefit from embeddedness in key industry networks. Indeed, some research advises that entrepreneurs “don’t go it alone” (Baum, Calabrese, and Silverman, 2000). This literature has also highlighted a dynamic whereby young organizations with higher quality are most likely to sort into these networks. Yet this perspective often fails to consider the drivers and prevalence of high-quality young organizations not becoming embedded, and instead remaining network isolates. Drawing on resource dependence and exchange theory’s emphasis on network ties arising from mutual and balanced interdependence, we explicate how organizational design decisions, current performance, and competitive pressures influence whether a young organization remains a network isolate. We test and find support for our arguments using an unusually rich, complete, and large “big data” dataset that captures all competitors in the mobile app ecosystem on the Apple iPhone ecosystem over a period of 5 years, showing that a substantial fraction of high-performing mobile app developers remain outside of the venture finance network.

Keywords: Inter-organizational networks, entrepreneurship, resource dependence, big data, mobile apps, venture finance, bootstrapping

JEL Classification: L26

Suggested Citation

Hallen, Benjamin L. and Davis, Jason P. and Yin, Pai-Ling, Network Isolates: Entrepreneurial Bootstrapping and the Social Disconnection of New Organizations in the Mobile App Ecosystem (January 12, 2017). Marshall School of Business Working Paper No. 17-12. Available at SSRN: https://ssrn.com/abstract=2907526

Benjamin L. Hallen

University of Washington - Department of Management & Organization ( email )

Box 353200
Seattle, WA 98195-3200
United States

Jason P. Davis

INSEAD ( email )

1 Ayer Rajah Avenue
Singapore
Singapore

Pai-Ling Yin (Contact Author)

Marshall School of Business, University of Southern California ( email )

United States

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