Entrepreneurial Ecosystem: Network Embeddedness, Institutions, and New Venture Growth in China

Abstract

Social network theory has established that the diversity of entrepreneurs’ ego network is especially important for new venture growth. However, less attention is paid to how entrepreneurs’ personal network is embedded in the local and institutional context. In this paper, we propose that entrepreneurs’ personal network is embedded in the entrepreneurial ecosystem and their institutional context. We define ecosystem embeddedness as the degree to which an entrepreneurs’ ego network covers a variety of sectors in an entrepreneurial ecosystem. We examine how and when it influences new venture growth in an entrepreneurial ecosystem in China. Employing a longitudinal survey of 83 entrepreneurs in China, we found that the ecosystem embeddedness of entrepreneurs’ ego network is positively related with new venture revenue growth, and this effect is contingent on the institutional context (incubator ownership) of their new ventures. The study makes theoretical contributions to the embeddedness literature, social network theory, and entrepreneurial ecosystem research.