Ansprechpartner: Dipl.-Kfm. Sean Patrick Saßmannshausen (siehe Abstract der Babson-Konferenz 2005)

26th BCER Babson College Entrepreneurship Research Conference

June 8-10 2006 - Indiana University - Kelley School of Business, Bloomington, Indiana, USA

Abstract (full paper presented at conference)

Hayek’s Institutional Theory of Group Selectionand the Entrepreneurial Network Success Hypothesis:An Evolutionary View on Social Capital, Entrepreneurial Networks and Local Industrial Clusters© Sean Patrick Sassmannshausen 2005Institute for Research on Entrepreneurship and Innovation, University of Wuppertal, Germany

Principal Topic / Key Propositions

Networks are solid parts of the economic environment. The network success hypothesis predicts a positive relation between the networking activities of entrepreneurs and their economic success. Surprisingly, at first glance, empirical research on entrepreneurial networks and clusters still offers quiet varying answers to the question if and why networks or clusters influence the development of start-ups positively. The dissimilar (or even contrary) empirical results in more than 30 reviewed papers regarding the entrepreneurial network success hypothesis might can be explained by differences in the functionality in the theoretical models and the methods of measurement of a single transmitter in the networks: the entrepreneur. Therefore a new evolutionary model of the interplay between single entrepreneurs and their networks will be developed. The evolutionary model shall create a general understanding of the processes and interactions, which take place in a non-neoclassical market where social aspects play a certain role. Then, following and testing Hayek’s (1971, 1979, 1988) institutional theory of group selection, it is argued that entrepreneurial networks which are build on a shared cognitive basis will create efficient rules of conduct with less effort, resulting in a capable institutional framework and thus being comparatively fitter systems. In networks fulfilling these conditions, a common perception of new problems caused by external effects or by utilization of social capital can be expected. In the second part of this paper, the new evolutionary model will be confronted with results of empirical research done by the author.

Methodology

A longitudinal qualitative study has been carried out beginning in the year 2000 until spring 2005. More than 200 semi-structured interviews among almost 100 entrepreneurs have taken place using e.g. the critical-incident method. The data collection is completed as well as the analyses. The interviews had been done in entrepreneurial networks located in eight different industrial clusters, which hat no connexion between each other. All the single interviewed entrepreneurs were questioned in winter 2000/01 and again in winter 2004/05. In addition the entrepreneurs’ companies and their networks had been under surveillance over a five-year period of time in order to measure the economical development of the networks. Where ever feasible, the answers were coded to make it possible to do analyses using statistical methods like regressions, multivariate analysis etc. The longitudinal design was chosen to find out more about dependences among the variables.

Results

The Data was used to test Hayek’s theory of group selection in the case of entrepreneurial networks. The hypotheses about the role of communication and cognition were tested positively. The results show the influence of communication patterns and cognitive phenomenon on the development of single networks in detail. The higher the rate of division of labour, the level of product sub-diversity, the rate of interrelation and interaction, the more intense the communication, and the more spatial concentrated various actions take place, the more external effects were observed. Therefore the internalisation of positive external effects and the regulation of negative external effects within regional entrepreneurial networks became a major task of social interaction, creating great demands on the configuration of informal or formal institutions and property rights. Another offspring of the higher demand for a specific institutional framework within networks was the utilization of social capital: Only vague property rights can be associated with social capital, depending on the social ties representing the origin of supply. Networks showed them self not as a part of social capital but as an institutional instrument to stabilise fragile property rights on social capital. It is shown that informal rules on the utilization of social capital were created among those network partners how then in their group ended up relatively more successful. The variance of results shows the active role of the single entrepreneur as a transmitter within the network. Groups without any active transmitters could not create what Hayek would have cold a functional sensory order of the network, thus could not achieve to be a “fitter system” and by far ended up less successful. But new questions arose from the findings, e.g. a possibility to “over-network”.