Early Network Events in the Later Success of Chinese Entrepreneurs

Abstract

We trace the social networks around Chinese entrepreneurs back to their firm's founding to learn about the role early events play in the later success of a business. We use name generator questions paired with career history questions to identify 'event contacts' missed by the usual focus on current business. We draw four conclusions from interviews with a large, stratified random sample of entrepreneurs: (1) Relations with event contacts stand out for guanxi qualities of high trust relatively independent of the surrounding network structure, and are critical to distinguishing more successful entrepreneurs from the less successful. (2) The substance of a significant event matters less than the fact that the entrepreneur deems it significant. (3) When family is turned to for support it is most likely at founding, but family is not the usual source of support at founding. Rather, entrepreneurs turn to people they have known for many years, typically people beyond the entrepreneur's family. (4) The transition from founding to first significant event stands out as distinctly consequential for later success. Entrepreneurs who turn for help on their first significant event to a person separate from, but especially close to, the founding contact are more successful in their business development. That early move is not visible in the later network around the entrepreneur.

Angry Entrepreneurs: A Note on Networks Prone to Character Assassination

“…First, the kinds of relations so often mentioned as sources of business contacts in China are largely irrelevant here. This is a point highlighted in analyses of who the entrepreneurs trust (Burt and Burzynska, 2017;Burt and Opper, 2017;Burt, Bian, and Opper, 2018), so it is not surprising to see it repeated here for character assassination. Respondents were asked to indicate which of a variety of roles applied to their cited contacts.…”

“…To stretch the network data back in time, we also asked about contacts associated with up to five significant events since the firm's founding. Cited events include replacing a lost supplier, getting a big contract, raising money for equipment purchase, introducing new production technology, getting preferential land or tax treatment, managing a quality-control disaster (Burt and Opper, 2017: Table 3). Contacts cited in association with significant events we reference as "event contacts.…”

“…The research focus to date has been on positive correlates of networks. Achievement in East and West increases with access to structural holes (Batjargal et al, 2013;Burt and Burzynska, 2017;Burt and Opper, 2017), and associations between trust and network closure are similar, allowing for Chinese guanxi relations, which turn out to have an analogue in the networks around Western business managers (Burt and Burzynska, 2017;Burt, Bian, and Opper, 2018).…”

A Note on Business Survival and Social Network

“…There are two ways to have a poor start: turn to the same person for help in founding the business and during the first significant event, or turn to two people who have little or no connection with each other. 4 4 The cocoon imagery in Burt and Opper (2017) has been observed elsewhere. In her unpublished doctoral dissertation describing a convenience sample of 151 Silicon Valley entrepreneurs, Yoo (2003: 126, 191-192) shows that a closed (high density) network is advantageous in securing funds to launch a business, after which an open (low density) network is advantageous in securing funds to expand the business.…”

Exploring small-world network with an elite-clique: Bringing embeddedness theory into the dynamic evolution of a venture capital network

“…In this kind of high-uncertainty environment, players seek alliances to hedge against various types of risks. Building guanxi, defined as "a high-trust relationship which is relatively independent of the social structure around it" (Burt & Burzynska, 2017;Burt & Opper, 2017), is a common strategy for players in this industry. Major players often mobilize their reputation and resources to attract loyal followers to form guanxi circles, i.e.…”