Contagious Entrepreneurship?: The Impact of High-Quality Entrepreneurial Social Networks on Risk Attitudes

There is a substantial literature documenting the importance of social networks on the desire of individuals to pursue entrepreneurship and their capacity to obtain key resources. In the case of entry, entrepreneurship seems to be highly predicted by immediate connections to other entrepreneurs (whether through family, geography, or other social networks), yet we do not have a clear mechanism for the diffusion of entrepreneurship in certain social networks. As entrepreneurship is one of the key mechanisms for wealth and job creation in the US (and more broadly in other developed economies), we might then ask whether limited access to “entrepreneurial networks” could be one source of inequality that has driven observed income disparities in the US. We seek to understand how the inclusion of more successful entrepreneurs in the social networks of socially disadvantaged prospective entrepreneurs changes their risk attitudes and through this their likelihood of entering into entrepreneurship. To do so, we will measure the baseline risk attitudes of a set of prospective entrepreneurs and then randomly give half of those entrepreneurs free trips to a weekly high quality networking event in Cambridge for three months, where they will be given access to a group of successful entrepreneurs. After the three months, we will measure changes in the risk attitudes of the treatment and control groups. In addition, we will measure differences in the tendency of the treatment and control group to have entered into entrepreneurship within that three-month period. Using these data, we can assess the link between social networks, higher-order risk preferences, and entrepreneurial entry.
 

Key facts

Stage: Ongoing research
Location: US