Nested Embeddedness: How Alliances Impact the Innovation Benefits of Entrepreneurs’ Social Capital

Abstract

This study advances research on networks and innovation of entrepreneurial firms by examining how industry-level alliance networks influence the optimal configuration of entrepreneurs’ personal networks. Specifically, we hypothesize that new venture innovation increases when entrepreneurs form managerial ties to either firms with brokerage positions in the industry’s alliance network (i.e., “brokers”) or firms that have no alliances (i.e., “isolates”). We also argue that a focal venture’s alliance network centrality increases the innovation benefits of managerial ties to brokers, yet diminishes the value of managerial ties to isolates. Implications for research on networks and innovation in entrepreneurship are discussed.