Entrepreneurs’ networks: Size, diversity and composition shaped by cultures of rationality and trust Thomas Schott Maryam Cheraghi Department of Entrepreneurship and Relationship Management Department of Information Technology University of Southern Denmark University of Tarbiat Modares Engstien 1, 6000 Kolding, Denmark. Tehran, Iran. tsc@sam.sdu.dk pe.cheraghi@gmail.com Abstract - The network around an entrepreneur is conceptualized as having structural properties of size, diversity and composition as network components of varying prominence in the entrepreneur’s network. These properties are important by impacting entrepreneurs’ performance in terms of innovation, exporting and expectations for growth. In our research-consortium Global Entrepreneurship Monitor, a sample of 35430 entrepreneurs in 42 countries reported on relations with up to 20 advisors. Cluster analysis of their relations discerned five components: a private network of advice relations with spouse, parents, other family and friends; a work-place network of boss, coworkers, starters and mentors; a professional network of accountants, lawyers, banks, investors, counselors and researchers; a market network of competitors, collaborators, suppliers and customers; and an international network of advice relations with persons abroad and persons who have come from abroad. Entrepreneurs’ networking is embedded in their cultures with the dimension of trust and the dimension of traditionality versus rationality. Rationality and trust are hypothesized to enhance size and diversity of networks and prominence of the work-place network, of the professional network, of the market network and of the international network, but to reduce prominence of the private network; that is, the private network is hypothesized to be more prominent in a culture of traditionality and in a culture of distrust in others beyond family and friends. Cultural effects on networking are tested as macro-to-micro effects in two- level mixed linear models with fixed effects of national levels of rationality and trust and individual-level variables as controls and random effects of country, where the dependent variables are the properties of the networks. We find that rationality promotes diversity of networks and prominence of work-place network, professional network, market network and apparently also international network, but reduces prominence of the private network. Trust increases size of the networks, diversity of networks, prominence of market network and apparently also work-place network and professional network, but reduces prominence of the private network. These cultural effects are larger than most effects of entrepreneurs’ individual characteristics. Key words – Entrepreneurs, networks, culture, Global Entrepreneurship Monitor. I. INTRODUCTION A person’s networking is embedded in the culture. In traditional culture a person is in every-day life networking extensively with the family, typically, whereas in rationalistic culture a person networks more with professionals [1]. In a culture of distrust in strangers, a person networks much within the family, typically, whereas in a culture of generalized trust a person networks more widely, outside the family. These aspects of culture may also affect networks around entrepreneurs [2]. Entrepreneurs’ networking is especially interesting for two reasons. First, entrepreneurs face considerably uncertainty in their endeavors and therefore are likely to depend heavily on their network for resources. Second, entrepreneurs typically assemble a wide spectrum of resources, including many kinds of knowledge, so their networks may be especially diverse and bridging many environments. Indeed, entrepreneurs’ networks are their social capital from which they may benefit in the form of competitive advantage compared to those whose networks provide fewer benefits [3] [4]. These are good reasons for here analyzing entrepreneurs’ networking with advisors across several environments. A. The network around an entrepreneur: size, composition and diversity The network around an entrepreneur has structural properties such as size, composition and diversity. Size of the network around an entrepreneur refers to the entrepreneur’s number of advisors or number of different kinds of advisors, as a more qualitative range [5]. Composition of the network around an entrepreneur refers to the networking with distinct environments and the prominence of each environment in the network [6]. Diversity of the network around an entrepreneur refers to the spread of relations across the environments, the similarity of their prominences [6]. B. Cultures of trust/distrust and cultures of traditionality/rationalism Two dimensions of culture seem especially important when examining networking. The first dimension of culture is traditional culture versus rationalistic culture (also termed secular-rational culture; [7]). A traditional culture is a culture in which tradition is the 2012 IEEE/ACM International Conference on Advances in Social Networks Analysis and Mining 978-0-7695-4799-2/12 $26.00 © 2012 IEEE DOI 10.1109/ASONAM.2012.46 220 2012 IEEE/ACM International Conference on Advances in Social Networks Analysis and Mining 978-0-7695-4799-2/12 $26.00 © 2012 IEEE DOI 10.1109/ASONAM.2012.46 220