Entrepreneurs: Don’t Mess With Your Close Social Ties

Graphic connecting faces in social network
(Image: Mohamed Hassan/pxhere)

It’s sometimes said that it’s not what you know that counts, but who you know. In the essay below, authors Kim Klyver, professor of entrepreneurship at University of Southern Denmark, and Pia Arenius, professor of entrepreneurship and innovation at the school of management at RMIT University, describe the research that they undertook for the paper “Networking, Social Skills and Launching a New Business: A 3-Year Study of Nascent Entrepreneurs” in Entrepreneurship Theory and Practice.

We are fascinated by how entrepreneurs embedded in and in interaction with their social environment create or discover opportunities, obtain resources, and gain legitimacy which help them perform as entrepreneurs. It reminds us that entrepreneurs are both products and producers of the social world; that entrepreneurs are not lonely heroes – “Lucky Lukes” – but still their actions matter.

We have lately been particularly interested in changing the conversation of networks from a deterministic structural approach towards an approach also considering agency and the networking actions completed by entrepreneurship; that is, changing the conversation from structure to agency. In this study, we used data from Danish Panel Study of Entrepreneurial Dynamics, or DaPSED. Particularly, we followed a representative sample of nascent entrepreneurs (N=457) over three years to investigate how entrepreneurs’ networking with close social ties and weak ties influences business launch, and the extent to which social skills strengthened or weakened these influences.

Kim Klyver, left, and Pia Arenius
Kim Klyver, left, and Pia Arenius

In our personal view, the study innovatively combines behavioral and skill perspectives on network agency to fill in the gap of how well entrepreneurs are networking. Prior research has predominately investigated the extent or intensity of networking with various ties, but not considering that some entrepreneurs are better skilled at networking than others. This provides important new insights to the field and helps explain some of the former inconsistencies in prior results.

The most counter-intuitive finding in our study is that networking with strong social ties only is beneficial when entrepreneurs have high social skills; otherwise, more networking is actually harming their business launch. This is because entrepreneurs with low social skills who engage in networking with social ties easily get over-embedded and locked into social ties that prevent them from achieving their goal. Networking with weak ties increases chances of business launch regardless of social skills.

We hope our study will have several effects on the entrepreneurship fields. First, we hope our study will push network agency as an important supplement to network structure. Particularly, that future research to a higher degree acknowledges that entrepreneurs on one hand are products of their social network structure but simultaneously through skilled networking can change their networks; networks are dynamics and can be shaped in ways that helps entrepreneurs achieving their desired outcomes. Second, we hope our study, showing that networking is not always a good thing, would stimulate future studies digging into the dark sides of networks, and particularly when and how networks might be a constrain.

For scholars considering studying entrepreneurs’ social networks, we encourage them to think about all the situations when (and when not) networks and networking help entrepreneurs. There is a lot of new insights to be found understanding the boundaries of these benefits. Find those boundaries, for instance find situations when networking is a bad thing.

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Kim Klyver and Pia Arenius

Kim Klyver (pictured) is a professor in entrepreneurship at University of Southern Denmark. He is also adjunct professor at University of Adelaide and part-time visiting scholar at Stockholm School in Economics. Earlier he has been employed at Swinburne University of Technology and Stanford University. Pia Arenius is professor of entrepreneurship and innovation at RMIT University's School of Management. She is an expert on new venture creation and nascent entrepreneurs.

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