More than a decade ago, Low and MacMillan identified three elements indispensable to an understanding of entrepreneurial success: process, context, and outcomes. Since their critique, three important advances include (a) a shift in theoretical emphasis from the characteristics of entrepreneurs as individuals to the consequences of their actions, (b) a deeper understanding of how entrepreneurs use knowledge, networks, and resources to construct firms, and (c) a more sophisticated taxonomy of environmental forces at different levels of analysis (population, community, and society) that affect entrepreneurship. Although our knowledge of entrepreneurial activities has increased dramatically, we still have much to learn about how process and context interact to shape the outcome of entrepreneurial efforts. From an evolutionary approach, process and context (strategy and environment) interact in a recursive continuous process, driving the fate of entrepreneurial efforts. Thus, integrating context and process into research designs remains a major challenge. Such integration constitutes a necessary step to a more complete evolutionary approach and a better understanding of entrepreneurial success.
Purpose -The purpose of this paper is to explore how cohesive/diverse networks affect entrepreneurial activities. In particular, an interest is shown in how cohesion and diversity may affect entrepreneurial outcomes like survival, profitability, innovation and efficiency. Design/methodology/approach -The paper organizes the literature and presents conclusions about the effects of cohesion and diversity using three stages of entrepreneurial activity: opportunity development, technology and organizational creation, and exchange. Findings -At the opportunity stage, strong ties with entrepreneurs increase the likelihood of becoming one, but are associated with lower levels of innovation. Diverse ties increase self-efficacy and innovation. At the technology and organizational creation stage, most entrepreneurial teams are homogeneous whereas team diversity is associated with better organizational outcomes. Using strong ties to recruit potential employees provides price and commitment advantages, but may interfere with efficiency. At the exchange stage, entrepreneurs must strike a balance between weak (market based) and stronger (embedded) ties to gain preferential access to resources and customers, while maintaining diverse sources for information and market opportunities. Overall, cohesion through strong ties provides entrepreneurs with hard to find resources very early in the development of new ventures, but those resources are limited in scope and have a high cost. By contrast, diversity is more common and more important later in a venture's life cycle. Originality/value -Guidelines are suggested regarding the best networking strategies at the different stages and in different instrumental areas, offering an overall evaluation of the evidence in the cohesion v. diversity debate. Directions for future research on the effects of networks on entrepreneurial outcomes are also provided.
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