Online Social Network Matters to Entrepreneurial Performance: diverse actors are critical

Yang Song, University of Amsterdam, Y.Song@uva.nl

Social network approach has attracted researchers’ attention to uncover the complex relationships among groups and communities. As social network analysis focuses more on relationships rather than attributes of the research objects, it also has become a prominent theoretical perspective within the literature on entrepreneurship and has been suggested as a relevant method for explaining why some entrepreneurs are more successful in starting and maintaining businesses than others (Aldrich & Zimmer, 1985; Johannisson, 1986). Despite some work on entrepreneurial network dynamics and evolution (Larson, 1992; Greve, 1995; Minguzzi & Passaro, 2000; O’Donnell et al., 2001;Greve & Salaff, 2003), most of the research on entrepreneurship adopting a longitudinal network-based approach tends to be descriptive rather than explanatory (Hoang & Antoncic, 2001; Greve & Salaff, 2003). However, in order to understand network dynamics and evolution and the effect on entrepreneurial performance, we need to move beyond descriptive accounts of network structures to indepth explanations of structural dynamics of entrepreneurial networks. As ubiquitous usage of Internet has increased human interaction and opportunities for the emergence of social networks, which makes it possible for us to analyze entrepreneurs’ behavioral data by collecting entrepreneurs network data and understand their behaviors from their online communications. Online social networks can not only offer multiple types of data but also allow access to social (e.g. family, friends, acquaintances) and professional (e.g. partners, funders, business contacts) networks simultaneously. We find that different types of network data can be extracted from online social networks, such as friendship networks, advice networks, kinship networks, business networks etc. In this study we aim to explore the impact of entrepreneurs’ online social network on their performance by analyzing entrepreneurs’ network diversity. Previous work on the impacts of network diversity on entrepreneurial performance is still controversial. On one hand, entrepreneurs tend to get more successful if they can get access to diverse information and resources in their network (Bruderl and Preisendorfer, 1996). In other words, the diversity of social network can enhance the breadth of perspective, cognitive resource, and overall problem-solving capacity of the group (Hambrick, Cho, and Chen, 1996) thus can enhance entrepreneurial performance and the whole network performance. On the other hand, the diversity of social networks may enhance communication problems and conflicts among different actors thus can also decrease the performance of the networks. Entrepreneurs are embedded in different online social networks. We propose that all the online social networks are connected with each other, which can be combined as one big online social network for entrepreneurs. The more diverse are entrepreneurs’ online social network, the more likely they will survive and have higher performance. In order to answer our research question, we integrated entrepreneurs’ online social network by combining 4 online social networks, which are LinkedIn, Facebook, Twitter and Hyves. We designed an online survey to collect entrepreneurs’ online social network data. The survey website uses official API to collect data from the different online social networks. Using the official API, we were able to collect actual entrepreneurs’ behavioral data—including profile information as well as connection information—from different social network sites rather than relying on self-reported network data. Furthermore, the survey included a set of questions for 1

measuring entrepreneurial performance in terms of employee growth and revenue growth. The survey was distributed to entrepreneurs from different industries in the Netherlands. We got 160 entrepreneurs attending our online social network survey with more than 3000 nodes in the whole online networks. We analyzed entrepreneurs’ online social network structure and tried to identify the role of network diversity on performance. In order to answer our research question, we (1) visualized multiple online networks of entrepreneurial start-ups based on behavioral data from LinkedIn, Facebook, Twitter and Hyves, (2) measured the corresponding online network structures through calculating several network measures, (3) compared the diversity difference between entrepreneurs’ and non-entrepreneurs’ online social networks, (4) analyzed in what way do entrepreneurs’ online social network diversity can contribute to entrepreneurial performance. Finally, we reflect on implications for a future research that will be conducted to uncover the structure of entrepreneurs’ online social networks.

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