The Entrepreneur’s Network and Firm Performance

Victor Nee, Lisha Liu, Daniel DellaPosta

Sociological Science, October 18, 2017
DOI 10.15195/v4.a23

Diverse organizational forms coexist in China’s market economy, adapting and evolving in intensely competitive production markets. We examine the networks of founding chief executive officers of private manufacturing firms in seven cities of the Yangzi River Delta region in China. Through sequence analysis of ties that entrepreneurs relied on for help in the founding and critical events of their businesses, we identify three discrete forms of network governance: traditional kin-based, hybrid nonkin, and rational capitalist. We find that in traditional kin-based network governance, structural holes are linked to higher returns on assets and returns on equity. By contrast, in the rational capitalist form, structural holes and higher firm performance are not linked. We thus show that the content of the tie matters critically in the relationship between structural holes and firm performance.

Creative Commons LicenseThis work is licensed under a Creative Commons Attribution 4.0 International License.
Victor Nee: Department of Sociology, Cornell University
Email: victor.nee@cornell.edu

Lisha Liu: Department of Sociology, Cornell University
Email: ll733@cornell.edu.com

Daniel DellaPosta: Department of Sociology and Criminology, Pennsylvania State University
Email: djd78@psu.edu

Acknowledgements: Victor Nee gratefully acknowledges grants from the John Templeton Foundation (2005–2010; 2015–2018), research assistant support from the College of Arts and Sciences at Cornell University, and the Jan Wallander and Tom Hedelius Foundation (2011–2013). We thank Michael Macy, Anne Tsui, Brett de Bary, Rachel Davis, Mario Molina, Lucas Drouhot, and David Strang for their helpful comments on an earlier draft. Victor Nee received helpful feedback on his presentation of the article at the 2017 Conference of the International Network of Analytical Sociologists in Oslo, Norway, on June 5 and 6 and the Annual Meeting of the Academy of International Business in Dubai, United Arab Emirates, from July 3 to 6. Lisha Liu and Daniel DellaPosta share equal responsibility in their contributions.

  • Citation: Nee, Victor, Lisha Liu, and Daniel DellaPosta. 2017. “The Entrepreneur’s Network and Firm Performance.” Sociological Science 4: 552-579.
  • Received: July 12, 2017
  • Accepted: September 5, 2017
  • Editors: Jesper Sørensen, Olav Sorenson
  • DOI: 10.15195/v4.a23

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