Social Networks, Cognition and Risk Recognition in New Ventures: Evidence From China

Abstract

Although risk has always been at the center of entrepreneurship, research on risk recognition in new ventures is limited. Applying cognitive information-processing theory, we develop a theoretical framework that explores the interactive influences of entrepreneurs' social networks and their cognitive characteristics on the outcomes of risk recognition. We test the framework on a sample of 226 Chinese entrepreneurs. The results show that network size, tie strength and structural holes enhance risk recognition outcomes and that cognition (i.e. risk propensity and illusion of control) generally reduces such effects, except in the case of illusion of control, which has no effect on structural holes.

Chinese Entrepreneurs, Social Networks, andGuanxi

“…Evidence is mixed on the issue. In support of the idea that Chinese culture inhibits brokerage, Yang and Zhang (2015) had difficulty finding structural holes in entrepreneur networks and quote one of their entrepreneurs on fear of failure: ‘I try to avoid any potential risks in my way. A vice-president in our company is even more conservative.…”

“…There are many, many examples. On a rating scale of low to high, respondents are asked how much they agree with statements such as: ‘My network is as effective as any at my level within the company’ (Burt, 1998: 34); ‘Please circle the number best describing the extent to which top managers at your firm have utilized personal ties, networks, and connections during the past three years with top managers at supplier firms’ (Peng & Luo, 2000: 501); ‘I am good at the art of networking’ (Batjargal, 2010a: 145); ‘I play a bridging role in the exchange of information and resources among my network ties’ (Yang & Zhang, 2015), or the four-point General Social Survey ersatz density item: ‘Some people have friends who know one another. Other people have friends who don't know one another.…”

Research on Structural Holes: An Assessment on Measurement Issues

“…Works focus on social capital and field studies to analyse companies, and their management and economic environment. Verbatim transcripts of the works in cluster 1 show that business networks analyse production of innovation, performance, interfirm relationships, partnership agreements, and industrial organization in terms of management and control and organizational structure of social networks, for different countries (Burt et al ., 2000; Corsino, 2013; Yang and Zhang, 2015). The growth of technological innovation is linked to direct ties, indirect ties, and structural holes (Ahuja, 2000).…”

Cognição empreendedora: elementos cognitivos que influenciam a exploração de oportunidades

“…Desde os primeiros escritos sobre empreendedorismo, o risco sempre esteve associado à figura do empreendedor e é inerente à atividade empresarial. Diversos trabalhos recentes, selecionados nesta revisão, citam a atitude em relação ao risco como fator determinante da identificação e exploração de oportunidades, demonstrando ainda haver espaço para a discussão do tema (Fillis & Rentschler, 2010;Yang & Zhang, 2015;Shepherd et al, 2015;Hsieh & Kelley, 2016). segundo Hsieh e Kelley (2016), desempenha um papel relevante na maneira como os empreendedores avaliam as oportunidades de negócios disponíveis.…”

“…Durante este processo, interagem com o ambiente, percebem e codificam as informações para atribuirlhe significado. As informações sensoriais são armazenadas para que processos inconscientes as analisem e determinem se a entrada deve ser armazenada na memória de trabalho, caso seja relevante, ou descartada, caso seja irrelevante (Yang & Zhang, 2015).…”