The Effect Of Entrepreneurial Network On New Firm Performance

Based on reviewing social network theory which is the main support theory in entrepreneurial network research, this paper systematically describes the emergence and development of social network research, the outstanding contribution and relative theory of some representative persons such as Granovetter, Burt, krackhardt in social network research. Subsequently, we build relation model among entrepreneurial network, organizational learning and new firm performance based on relative theory of entrepreneurial network, and verify the hypothesis in this paper through field research in Jilin, Beijing and Fujian. The result shows that, in the cultural backgrounds of China, entrepreneurial network has not only a direct positive impact on new firm performance, but also has an indirect impact on new firm performance through the mediated variable of organizational learning. This paper argues that new enterprises lack the ability of analyzing information and the ability of coping with the changes in the external environment because of their limit knowledge and skill. Organizational learning is an effective way to remedy these weaknesses swiftly and ultimately brings benefits for enterprises. For new enterprises, entrepreneurial network can realize the sharing and transfer of knowledge and skills among entrepreneurs, managers, employees and enterprises in order to promote organizational learning. Compared with marketing measures, there are cost advantages when entrepreneurial network realizing knowledge sharing and transfer, which virtually bring competitive advantage for enterprises and promote the growth of new firm performance. This paper introduces organizational learning into the relationship between entrepreneurial network and performance and attempt to interpret effect mechanism between entrepreneurial network and new firm performance. Through research on organizational learning, we can better understand the impact of entrepreneurial network on new firm performance. Meanwhile, taking particularity of entrepreneurial network under the situation of economic transformation in China into account, this paper shows the characteristics of network subject which are focused by entrepreneurs and venture enterprises when designing relevant scaling.This paper has following contributions. (1) We summarize the researches on entrepreneurial network and propose research framework for entrepreneurial network. This paper introduces some related literatures and some famous scholars such as Birley, Aldrich and Zimmer who introduce social network theory into the field of entrepreneurship. We review literatures based on network in entrepreneurial field and proposed the main research contents and framework which entrepreneurial network research follow in the last ten years. And then, we analyze the insufficiency of existing researches in order to provide direction for future research. (2) To understand organizational learning of new enterprises from process perspective. Based on previous research on organizational learning in SMEs, this paper focuses on features of new enterprises and proposes that organizational learning is not ability but process for new enterprises. Then we analyze the impact of organizational learning on new enterprises in process prospective. (3) Based on the cultural background in China, we introduced organizational learning into the relationship between entrepreneurial network and performance to explain the inward effect of entrepreneurial network on new firm performance. This paper arranges the relationship between entrepreneurial network and firm performance systematically to analyze the understanding of the relationship between the two based on the existing researches. Through the analysis, we find that organizational learning could explain the inward effect of entrepreneurial network on new firm performance, which provide some guidance to better understand the impact of entrepreneurial network on new enterprises.This paper has following implications. As an important effect factor for enterprise, entrepreneurial network has a significant impact on new enterprises. All kinds of networks of entrepreneurs or entrepreneurial enterprises are important channel for access to critical resources and information. As Zhao and Aram have said, it has significant impact on the success of enterprises for entrepreneurs exploiting relationships with cost advantage to access to resources and information. Former scholars focus more on the impact of network relationship on enterprises in entrepreneurial network research. But researches on the mechanism of entrepreneurial network are relatively scarce. The results of this study show entrepreneurs (entrepreneurial enterprises) not only can obtain physical resources such as funds through network relationships, equipment and other facilities, but also can promote the knowledge and information sharing and transfer through communication and exchange among network members. In particular, the establishing of strong ties has a positive impact on obtaining tacit knowledge such as management capability and marketing capability. Therefore, entrepreneurial network has a direct impact on new firm performance through financial resources and market resources acquisition, and also has an indirect impact through improving organizational learning.In the meanwhile, more and more studies have concluded that, under the background of economic transformation in China, entrepreneurs (entrepreneurial enterprises) focus more on relationship utilization. They think it is necessary to build good relationship with government and bank and so on, which can reduce weakness caused by the deficiency of regime and environment turbulence. Because of influenced by Confucian Culture in a long time, entrepreneurs in China attach great importance to the management and utilization of relationship, and take establishing trust relationship with partners as the key to the success of business cooperation. Thus, they praise the balance between formal and informal relationships highly in commercial activities and coordinate the effectiveness of formal relationships through informal relationships. This further confirms that entrepreneurial network has cross-cultural and cross-regional characteristics. Although previous studies have shown that the development and maintenance of entrepreneurial network needs time and cost, but we think we can resolve it according to improve resource efficiency, enhance the knowledge and information sharing and transfer level, that is, enhance the level of organizational learning. The network capacity of entrepreneurs including establishment, management and utilization capacity has a great impact on the efficiency of entrepreneurial network. Entrepreneurs should enhance their network establishing capacity while conducting entrepreneurial activities in order to achieve the coordination capability adapting to entrepreneurial network to maximize the effect of entrepreneurial network.