The importance of studying networks in entrepreneurship and internationalization is emphasized on the one hand by the collaborative nature of many industries, ranging from car manufacturing, to venture capital (VC) and biotechnology, and on the other hand by the increasing recognition of the importance of accessing external resources and legitimacy for the resource-constrained new ventures. The role of networks in this process is dual. First, by providing access to resources and information, networks are vital to the survival and success of entrepreneurial companies. Second, companies’ relations are an important signal of their quality and a predictor of important performance outcomes. Our research addresses both functions of the network.
Network origins and evolution
In terms of network evolution, our findings from biotechnology and venture capital industries confirm the importance of the first alliance partner’s characteristics for the development of the venture’s network size and future status (Milanov & Fernhaber, 2009; Milanov & Shepherd, 2013). Extending these findings, we now also know that characteristics of the overall industry network at network entry are important in shaping the newcomer’s future status (Milanov, 2010) – indeed, we find that ventures can suffer from a social liability of newness when the industry network they enter exhibits high structural differentiation. Another paper finds that initial conditions are also relevant for long term decision making in the VC industry (Dimov, de Holan and Milanov, 2012). Jointly, this stream of research highlights the importance of specifying the first steps and initial conditions that impact a newcomer’s long-term network position and firm decisions. Moreover, by acknowledging the importance of the first network composition and structure, these papers underscore the importance of initial socio-relational conditions and contribute a network perspective to the literature on initial conditions in entrepreneurship.
Consequences of networks and status
When exploring the origins of network positions, the natural follow-up stream examines their consequences. In this regard, adding to a literature overview of organizational networks (Zaheer, Gozübüyük, Milanov, 2010) we explored the impact of status and networks on a range of factors such as ability to pursue novel, diversified, and international opportunities (Milanov, Dimov & Shepherd, 2006; Dimov & Milanov, 2010; Milanov & Fernhaber, 2014), entrepreneurs’ sales performance (Milanov, Bradley & Justo, 2015), and ultimate organizational returns (Jaaskeleinen & Milanov, 2011). Collectively, this research reveals a series of important contingencies in our understanding when status and networks are more or less potent in shaping firm outcomes.
Milanov, H. Justo, R., Bradley, S. (2015) Making the most of group relationships: The role of gender and boundary effects in microfinance groups. Journal of Business Venturing. (doi:10.1016/j.jbusvent.2015.04.001)
Milanov, H., Fernhaber, S. A. (2014). When do domestic alliances help new ventures abroad? Direct and moderating effects from a learning perspective. Journal of Business Venturing, 29(3), 377 – 391.(http://dx.doi.org/10.1016/j.jbusvent.2013.05.004)
Milanov, H., Shepherd, D.A. (2013). The power of the first relationship: The ongoing influence of initial network on future status. Strategic Management Journal, 34(6), 727-750. (doi: 10.1002/smj.2109)
Dimov, D., Martin de Holan, P., Milanov, H. (2012). Learning patterns in venture capital investing in new industries. Industrial and Corporate Change, 21(6): 1389-1426. (doi: 10.1093/icc/dts010)
Zaheer, A., Gozubuyuk, R., Milanov, H. (2010). It’s the connections: The network perspective in inter-organizational research. Academy of Management Perspectives, 24(1), 62-77.
Dimov, D., Milanov, H. (2010). The interplay of need and opportunity in venture capital investment syndication. Journal of Business Venturing, 25(4): 331-348 - Presented as one of two exemplary Journal of Business Venturing publications at the Academy of Management Entrepreneurship Research Exemplars Conference, University of Connecticut, May, 2009
Milanov, H., Fernhaber, S. A. (2009). The impact of early imprinting on the evolution of new venture networks. Journal of Business Venturing, 24(1), 46-61.