Propagation of New Ideas in Effectual Social Networks – a Simulation Approach

Abstract

The use of social networks for information exchange and acquisition of partners and resources is essential to entrepreneurs. Despite the key importance, theory regarding social networks and entrepreneurship is still underdeveloped, especially for the control-based effectuation approach stemming from research on expert serial entrepreneurs. Effectual social network theory is still in a nascent state: literature on networking processes is fragmented and empirical research is focusing on high-level relationships leaving underlying processes opaque. In particular, the impact of individual and collective behavior in effectual social networking remains ambiguous. Due to the complexity and interdependency of multi-actor networking processes, we use computer simulation to identify key parameters and clarify their impact on effectual networking performance. Our simulations reveal the importance of high collective docility and persistence to initiate the effectual networking process for the successful implementation of a market for new ideas. For individuals, a high level of persistence has a significantly larger effect on market creation than their level of docility. Still, the effects of collective behavior significantly outweigh individual choices. With the creation of a formal model and results on its key parameters we deliver the building blocks for a theory of effectual social networking and promote further research on the processes and effects of effectual social networks.