Chapter 8 - Networks

Question 1

Describe the four main ways networks influence individual’s behaviour

Answer 1

• Provide people with information
• Influence other people in the network
• Create social legitimacy
• Develop and enhance personal identities

Question 2

Name the two netoworking arguments

Answer 2

• Heterogeneity

- Homogeneity

Question 3

Describe the heterogeneity argument

Answer 3

• Suggest that differences among individuals in the entrepreneurs network and weak relationships between these are the most efficient network.
• Entrepreneurs obtain optimal access to valuable market information that they can apply through the entrepreneurial process by having networks that consists of diverse individuals with regard to their attitudes, values, jobs, experiences, skills etc.
• Through these differences, the entrepreneur becomes the centre and bridge for information which increases the possibility for opportunities

Question 4

Describe the two levels of the heterogeneity argument

Answer 4

The rational level:

• The strength of weak relationships
• The less emotional attachment, the weaker the relationship
• The strengths of relationships affects the nature of information the entrepreneur receives

The network level:

• Typical drawback is that people are strongly related to each other and possess the same information
• Strong relationships are unimportant
• You want to build bridges within the network

Question 5

Describe the characteristics of the homogeneity argument

Answer 5

• Networks consisting of uniform and strongly associated persons are the most efficient
• The best networks are the one whereas many people as possible have a strong relationship
• Focuses on resources such as emotional support, sensitive market information and access to financial resources

Question 6

What is the main difference between the two arguments

Answer 6

The disagreement between homogen and heterogen is what resources that are considered important

Question 7

Name and describe the two levels of the homogeneity argument

Answer 7

The relational level:

• The entrepreneur needs contacts that he/she have strong contacts with
• These relationships is based on trust and are established
• The entrepreneur will receive emotional support
• Very sensitive information is only shared with strong contacts
• Investors are usually family

The network level:

• In large networks where many know each other it is an increase in the likelihood that they will act as a whole with a common goal
• Exchange of sensitive information

Question 8

Describe the factors that can affect the decision on when to use which network

Answer 8

Can depend on:

• The situation
• The challenges determine the necessary resources
• The entrepreneur is interested in a network consisting of diverse people
• In the beginning we want weak relationships to define opportunities
• Later we will need emotional support, advice and capital,
• When the organisation has started, we will need access to market information again

Question 9

Why is network important for venture creation?

Answer 9

• Resources
• Information
• Influences
• Legitimacy
• Identity

Question 10

Name the two logics in network creation

Answer 10

• Rational

- Embedded

Question 11

Can the rational logic and the embedded logic co-exist in the venture process or shall they mutually exclude? Discuss

Question 12

What are the roles of network in acquiring resources for the venture? Discuss

Question 13

Name 5 factors to why network is important for venture creation

Answer 13

• Resources
• Information
• Influences
• Legitimacy
• Identity

Question 14

Describe the business life cycle of networks

Question 15

How does (1) network influence (2) the exploitation and (3) the exploration of resources? Any example? How would you 
put (1), (2) and (3) into practice of your business plan project? Discuss

Question 16

How does (1) technology influence (2) firm’s financing 
strategies ? Any example? How would you put (1) and (2) 
into practice of your business plan project?

Question 17

Discuss how context as an asset and a liability to resource utilization and acquisition when adopting the logies of resource exploitation and resource exploration. Support your answers with examples