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Entrepreneurs and social capital in China

June 13th, 2017 | Posted by admin in 2017 - (0 Comments)

Olav Sorenson

Does social capital operate differently in China? A long and vibrant literature on the concept of guanxi suggests not only that social capital might have a different character in China but also that it might prove more valuable there to employees and entrepreneurs alike. Drawing on unusually high quality data on Chinese executives, Burt and Burzynska (2017) explore the question of whether the same structural configurations of relationships appear associated with success in China as have been found in the West. Their short answer is yes. In this response, I comment on their article.

Management and Organization Review, 13 (2017): in press

Olav Sorenson and Michelle Rogan

Interorganizational relationships connect people affiliated with organizations rather than corporate actors themselves. The managers and owners of organizations therefore do not always control these connections and consequently often cannot profit from them. We discuss the circumstances under which individuals (versus organizations) “own” these relationships (and therefore also the social capital generated by them). Three factors increase the odds of individual ownership: (i) the extent to which the resources valued by alters belong to the individual (rather than the organization), (ii) the degree to which alters feel greater indebtedness to the individual than the organization, and (iii) the extent to which relationships involve emotional attachment. We discuss the implications of the locus of ownership, argue that these distinctions can help to explain many results that appear inconsistent on the surface, and call for future research to pay closer attention to these issues.

Annual Review of Sociology, 40 (2014): 261-280

The social attachment to place

January 4th, 2011 | Posted by admin in 2010 - (0 Comments)

Michael S. Dahl and Olav Sorenson

Many theories either implicitly or explicitly assume that individuals readily move to locations that improve their financial well being. Other forces, however, offset these tendencies; for example, people often wish to remain close to family and friends. We introduce a methodology for determining how individuals weight these countervailing forces, and estimate how both financial incentives and social factors influence the probability of geographic mobility in the Danish population from 2002 to 2003. Our results suggest that individuals respond to opportunities for higher pay elsewhere, but that their sensitivity to this factor pales in comparison to their preferences for living near family and friends.

Social Forces, 89 (2010): 633-658

The migration of technical workers

December 4th, 2009 | Posted by admin in 2010 - (0 Comments)

Michael S. Dahl and Olav Sorenson

Using panel data on the Danish population, we estimated the revealed preferences of scientists and engineers for the places in which they choose to work. Our results indicate that these technical workers exhibit substantial sensitivity to differences in wages but that they have even stronger preferences for living close to family and friends. The magnitude of these preferences, moreover, suggests that the greater geographic mobility of scientists and engineers, relative to the population as a whole, stems from more pronounced variation across regions in the wages that they can expect. These results remain robust to estimation on a sample of individuals who must select new places of work for reasons unrelated to their preferences—those who had been employed at establishments that discontinued operations.

Journal of Urban Economics, 67 (2010): 33-45

The embedded entrepreneur

December 1st, 2009 | Posted by admin in 2009 - (0 Comments)

Michael S. Dahl and Olav Sorenson

Using comprehensive data on the Danish population, this paper examines the determinants of entrepreneurs’ choices of where to locate their newventures. Our findings suggest that entrepreneurs place much more emphasis on being close to family and friends than on regional characteristics that might influence the performance of their ventures when deciding where to locate those businesses. Two factors could explain our findings: On the one hand, entrepreneurs may simply value proximity to family and friends. On the other hand, these relationships may help them to assemble the assets and to recruit the personnel that they need to succeed in their ventures. Our results suggest that the former plays the greater role in entrepreneurs’ location choices.

European Management Review, 6 (2009): 172-181

The mobilization of scarce resources

August 7th, 2009 | Posted by admin in 2008 - (0 Comments)

Bjørn Løvås and Olav Sorenson

We examine how the ability of one actor to gain access to resources controlled by another depends on two factors: (i) the number of mutual acquaintances connecting the prospective lender and borrower and (ii) the scarcity of the resources in question. We argue that the incentives to renege on an agreement grow as the resources being traded become increasingly scarce. Mutual acquaintances, however, dampen these incentives, and therefore become more important to facilitating exchange as demand for the good of interest rises. Our analysis of qualitative and quantitative evidence from a study of senior partners at an international consultancy supports these propositions.

Advances in Strategic Management, 25: 361-389

Toby E. Stuart and Olav Sorenson

Much research suggests that social networks shape the emergence and development of nascent ventures. Scholars have argued that founders’ and firms’ networks influence innovation and the identification of entrepreneurial opportunities, as well as facilitate the mobilization of resources for growth and the harvesting of value from fledgling firms. It is not an exaggeration to claim that existing empirical findings point to the centrality of networks in every aspect of the entrepreneurial process. However, with exceptions so few they may be counted on one hand, this research untenably treats network structures as exogenous—in other words, as if entrepreneurs and enterprises do not pursue valuable connections. In this article, we review the literature on networks in entrepreneurial contexts, argue that it disproportionately focuses on the consequences of networks at the expense of research on their origins, and consider the implications for the literature of the fact that most entrepreneurs and young ventures are strategic in their formation of relations. We then articulate a research agenda composed of five areas of inquiry we consider critical to a better understanding of networks and entrepreneurship.

Strategic Entrepreneurship Journal, 1 (2007): 211-227

Olav Sorenson and David M. Waguespack

This study uses data on the U.S. film industry from 1982 to 2001 to analyze the effects on box office performance of prior relationships between film producers and distributors. In contrast to prior studies, which have appeared to find performance benefits to both buyers and sellers when exchange occurs embedded within existing social relations, we propose that the apparent mutual advantages of embedded exchange can also emerge from endogenous behavior that benefits one party at the expense of the other: actors offer better terms of trade and allocate more resources to transactions embedded within existing social relations, thereby contributing to the ostensible advantages of such exchange patterns. Findings show that not only do distributors exhibit a preference for carrying films involving key personnel with whom they had prior exchange relations, but also they tend to favor these films when allocating scarce resources (opening dates and promotion effort). After controlling for the effects of these decisions, films with deeper prior relations to the distributor perform worse at the box office. The results suggest that, rather than benefiting from repeated exchange, distributors overallocate scarce resources to these prior exchange partners, enacting a self-confirming dynamic.

Administrative Science Quarterly, 51 (2006), 560-589