Roberts_Sterling - Pre-Founding Social Ties and the Success...

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Pre-Founding Social Ties and the Success of New Entrants in Emerging Regions Peter W. Roberts and Adina D. Sterling Goizueta Business School Emory University New entrants into geographic regions that are themselves just emerging face a ‘double liability of newness’. The prospects for newly-founded organizations tend to be limited or highly uncertain (Freeman, Carroll & Hannan, 1983). When founded by individuals without the direct support of established firms, they start off without many of the capabilities that lead to success (Carroll et al. , 1996). Sometimes, nascent organizations can benefit from the collective accomplishments of the regions in which they are founded (Landon & Smith, 1997). However, emerging regions initially lack these clusters and are thus poor in spillovers emanating from incumbent producers. Other times, the required organizational capabilities come from or through experienced founders (Freeman, 1986; Klepper, 2001). Again, however, the established incumbent organizations that tend to spawn these experienced founders are lacking in the early phases of regional development. In this paper, we advance a perspective on the emergence of competitive successes in which specific acts of entrepreneurship combine with developing social ties among early founders within a geographic region. When the relevant insights and capabilities are not imported into a region via the in- bound mobility of experienced founders, they must be developed locally through the actions and experiments of local entrepreneurs. The competitive implications of successful acts of entrepreneurship are amplified in the presence of ‘friendship ties’ (Ingram & Roberts, 1999) among individuals in the region. These social ties support the spread of ideas, supportive resources and capabilities and confidence (Sorenson & Audia, 2000) among the founders who establish organizations in a just-emerging region. Friendship ties are critical during this emergent phase given the lack of cumulative successes that give rise to collective reputations (Tirole, 1996) and specific regional identities (Romanelli & Khessina, 2005) that might be accessed by individuals not connected by close social ties. Thus, we predict that the success of early entrants into a region depends on having pre-founding friendship ties to entrepreneurs who have themselves experienced some success. How organizations interact and succeed within regions evolves
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This note was uploaded on 09/09/2010 for the course ECO 11230 taught by Professor Dr.nogara during the Fall '10 term at St.Francis College.

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Roberts_Sterling - Pre-Founding Social Ties and the Success...

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