The impact of social networks on technology entrepreneurs’ opportunity recognition process

Abstract

The purpose of this study is to examine the relationships of the weak ties network and entrepreneurial opportunity recognition of small technology firms in Malaysia. The study seeks to explore the gaps between the practice of networking among new start-up firms and industry. This paper employs quantitative research design involving self-reporting questionnaires. Founders and co-founders of technology companies (n=255) are surveyed as respondents and data collected are analysed using Partial Least Squares - Structural Equation Modeling (PLS-SEM) technique to examine the reliability, goodness-of-fit, predictive strength, and strength of relationship of independent and mediating variables with the dependent variable. Findings show that weak ties affect the entrepreneur's ability to recognise opportunity. Entrepreneurs who possesses wider social contacts benefits from a wide array of information which plays a key role to opportunity previously not recognised either due to lack of information or resources to exploit. To identify opportunities, a weak tie network is best suited to spark the imagination of entrepreneurs in novel ideas. In practice, the use of networking programs in entrepreneurial and incubation initiatives needs to focus on networking heterogenous groups. The clear delineation of the opportunity construct within the entrepreneurship studies enables progress to be made in building a clearer opportunity recognition framework. Empirical results also support the presence of entrepreneurial alertness as the mediator in the model.