Innovation embedded in entrepreneurs’ networks and national educational systems
Thomas Schott
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Mahdokht Sedaghat
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JEL Classifications M
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O
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Z
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T. Schott (&) M. Sedaghat Department of Entrepreneurship and Relationship Management, University of Southern Denmark
, Kolding,
Denmark
The proposition that entrepreneurs' innovation is embedded in networking is refined. We distinguish between networking in the public sphere and networking in the private sphere, and hypothesize that innovation benefits from public sphere networking but suffers from private sphere networking. These hypotheses are tested with a representative sample of 56,611 entrepreneurs in 61 countries surveyed in the Global Entrepreneurship Monitor. Hierarchical linear modeling shows that, while overall networking benefits innovation, innovation is decreased by private sphere networking and increased by networking in the public sphere, especially in the professions and internationally. A further refinement is to consider entrepreneurs' endeavors as embedded in society with its system of education for entrepreneurship. We hypothesize that the quality of a national system moderates the impacts of networks on innovation by adding value to networks. Analyses show that quality of national educational system adds innovation benefits to both public sphere networking and private sphere networking.
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Entrepreneurial activity denotes perception and
pursuit of opportunities. This activity is usually
considered the work of individuals, entrepreneurs. An
entrepreneur may see an opportunity, mobilize and
acquire resources, create a competitive advantage
compared to other entrepreneurs, and exploit the
opportunity, especially by being innovative (Shane
2003). This entrepreneurial process may be purposive
rational action, following a business plan with
evaluation of ideas and markets and with a calculation of
costs and utility, or the process may be more of an
effectuation of circumstances with an assembly of
available resources (Sarasvathy 2008). This echoes a
recent review with a conceptualization,
Entrepreneurshipis carried out by individuals, entrepreneurs,
[who] perceive and create new opportunitiesThe
entrepreneurial activity and the entrepreneurial
ventures are influenced by the socioeconomic
environment (Carlsson et al. 2013, p. 914; italics in
original). The influence by the socioeconomic
environment will here be conceptualized as embeddedness
in networks at the micro-level and in social institutions
at the macro-level.
In the entrepreneurial process, the entrepreneur is
not acting alone but together with others, and thereby
the entrepreneurial activity is embedded in the
network around the entrepreneur (Granovetter 1985).
The entrepreneur networks with others who may
provide advice and other resources for the business.
The network may include an entrepreneurial group, a
team of founders, or the family as in a family business.
The entrepreneurs networking is a social capital, an
investment in relations that may benefit performance,
e.g., innovation.
Individual behavior in the entrepreneurial
processsuch as networking and innovatingis further
embedded in society. Society comprises a
configuration of social institutions, e.g., the educational system,
which provides a framework that is more or less
favorable for entrepreneurship. Thereby society
affects entry and other inputs into entrepreneurship,
affects the entrepreneurial process, and also affects
outcomes by impacting outcomes and moderating the
process by which individual behavior leads to
outcomes (Fig. 1).
This conceptualization of entrepreneurial activity
has the theoretical advantage of combining the
microlevel focus on individual behavior with the
macrolevel focus on societal framework conditions.
Moreover, our modeling shall estimate effects on
entrepreneurial outcomes from both the individual and societal
level, both direct and less direct effects. Our study
focuses on an entrepreneurial outcome, innovation, as
it is shaped by an individual behavior, networking, and
also by a social institution, the national system of
education for entrepreneurship.
The recent review specifies, Future research
questions of interest include, for example, what are
the types of interaction between entrepreneurs and
other actors and between entrepreneurial activity and
institutions/norms/laws that yield fruitful outcomes?
(Carlsson et al. 2013, p. 926). The interaction between
entrepreneurs and other actors is here understood as
networking, the interaction between entrepreneurial
activity and institutions is here conceptualized as
embeddedness in institutions in society, and here the
fruitful outcome is innovation.
The review also points out that, The systematic
gathering of longitudinal internationally comparable
data on multiple levels, such as that by the Global
Entrepreneurship Monitor (GEM), should open up
new avenues of research (Carlsson et al. 2013,
p. 927). The GEM data from around the world on the
micro-level behavior of entrepreneurs and on the
macro-level institutions (...truncated)