Ties that (Un)Bind: Interpersonal Networks and Early-Stage Performance Among Silicon Valley Entrepreneurs

Social networks are now deemed a critical element of economic activity. In the study of social networks and new venture creation, immigrant entrepreneurs have received focused attention as exemplary cases illustrating the benefits of social networks. The seemingly tightly woven networks among immigrant entrepreneurs and the cohesion and loyalty created through familiarity, common background, and a sentiment of "common fate" (Portes, 1998) are seen to benefit entrepreneurs by providing information, business experience, and social and financial support among entrepreneurs (Zhou, 1992; Light & Bonacich, 1988; Min, 1988; Portes & Zhou, 1992; Park, 1997) that are inaccessible to those outside the bounds of the community. While frequently referenced to exemplify cohesive networks, studies of immigrant entrepreneurial networks have also drawn criticism (Uzzi, 1996), presumably due to the distinctive features of immigrant experiences that make cohesive, co-ethnic networks more desirable and necessary as well as the unique characteristics of their enterprises, such as operating in small, "exotic," peripheral, and/or undesirable markets (Light & Sanchez, 1987; Min, 1996) and catering to ethnic communities (Portes et al., 1992; Park, 1997; Zhou, 1992). This paper examines the significance of social created and maintained by both immigrant and non-immigrant entrepreneurs, in global, high technology industries and integrates the literature on immigrant entrepreneurship, social networks, and entrepreneurship. By developing and testing a stage-based model of networks and entrepreneurial performance, highlighting commonalities and differences between immigrants and non-immigrants, this paper expands our knowledge of entrepreneurial social networks in several ways. First, while entrepreneurship scholars have increasingly recognized the need to consider networks as dynamic entities that change throughout the evolution of the venture (e.g., Larson & Starr, 1993; Hite & Hesterly, 2001; Steier & Greenwood, 2000), much of these ideas remain yet to be empirically verified and the potential effects of these dynamic networks have not been explicit. My study measures network characteristics at two points in the venture creation process and measure their impact at each time point. Second, as Hite and Hesterly (2001) have noted, the concrete understanding of what types of social networks have what types of effects on entrepreneurial performance, especially at the early stages, is unclear: While predictions regarding network formation in entrepreneurship have been made at the individual level, studies of the effects of networks on performance have focused on later-stage firms and their organizational networks (e.g., Stuart, Hoang, & Hybels, 1999; McEvily & Zaheer, 1999), creating a disjuncture between the formation of networks and their potential impact. By focusing on the very early stages of entrepreneurship and performance, my work fills an area of research that Shane and Stuart (2002)have called elusive, at least partly due to the difficulty in obtaining information (p. 154).