When Do Entrepreneurs Network? The Effects of Failure Threat and Self-Efficacy on Social Networks

Abstract

The extant research illustrated that social networks are crucial for entrepreneurial resource acquisition and success. However, few studies have investigated what situations lead entrepreneurs to engage in networking behavior and develop social networks. Building on resource allocation theory, we propose that networking behavior consumes cognitive attention and time resource, and entrepreneurs are more likely to engage in networking behavior when they face salient failure threat and hold low confidence in addressing such threat. With an experiment with 155 entrepreneurs in China, we found that failure threat increases entrepreneurs’ networking behavior, and this effect is attenuated by self-affirmation. A longitudinal survey of 153 entrepreneurs in China showed that contingency of entrepreneurs’ self-worth on business success, which amplifies the impact of failure threat, is associated with social networks rich in structural holes and low in density in the short term, whereas these effects are attenuated by entrepreneurial self-efficacy. In the long term, low self-efficacy and contingency of self-worth leads entrepreneurs to develop dense network. Overall, entrepreneurs’ networking behavior is aligned with their dynamic needs, and the need to acquire information and resources is prioritized over the need to seek social support. The findings contribute to social capital theory, strategic view of entrepreneurial behavior, and psychological research on network activation.