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A contingent model of network utilization in early financing of technology ventures

Zhang, J., Souitaris, V., Soh, P-H. and Wong, P-K. (2008). A contingent model of network utilization in early financing of technology ventures. Entrepreneurship Theory And Practice, 32(4), pp. 593-613. doi: 10.1111/j.1540-6520.2008.00244.x

Abstract

Most of the entrepreneurship literature has addressed the benefits and necessity of using social network ties as opposed to market methods in early venture finance, but it has largely understated the potential limitations and costs of doing so. Specifically, very sparse research has examined the factors that influence entrepreneurs' choice between using networks versus market methods. In this study, we propose a contingent model of network utilization when approaching initial investors, based on the dimensions of human capital of the entrepreneurs. We test this model with primary field survey data from 226 new high-tech ventures in Singapore and Beijing. The results show that high occupational status and relevant industrial work experience are positively associated with the entrepreneurs' propensity to utilize existing networks by enhancing the resourcefulness of their network ties (social capital); however, such influences are alleviated by entrepreneurs' marketing or managerial experience, which increases the entrepreneurs' ability to interact with strangers (an aspect of social competence).

Publication Type: Article
Additional Information: This is the peer reviewed version of the following article: Zhang, J., Souitaris, V., Soh, P.-h. and Wong, P.-k. (2008), A Contingent Model of Network Utilization in Early Financing of Technology Ventures. Entrepreneurship Theory and Practice, 32: 593–613. , which has been published in final form at http://dx.doi.org/10.1111/j.1540-6520.2008.00244.x. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HG Finance
Departments: Cass Business School > Management
URI: http://openaccess.city.ac.uk/id/eprint/7165
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