The Added Value of Neighborhood-Based Support Networks to Local Firm Growth

The rise of the service economy and developments in modern information and communication technologies have promoted workplace flexibility and increased the number of people working from home. As a result, an increasing number of firms and entrepreneurs can be found within residential neighborhoods. These developments have drawn attention to the local neighborhood as the relevant context for both the private and professional lives of neighborhood entrepreneurs and as a potential networking arena. Recent empirical studies show that firm support networks influence firms’ and entrepreneurial success, in accordance with the resource-based perspective and the social capital approach. However, the role of geographically proximate network members in a firm’s success remains largely unexplored. Through an extensive survey of 385 Dutch entrepreneurs, this paper empirically examines the extent to which firms’ neighborhood-based support networks influence their success with respect to sales growth, profit growth, and employment growth. Our results, which were controlled for firm- and entrepreneur-level factors, show that the strength and proximity, not the size, of these support networks are related to firms’ success. These findings indicate that the relationship between neighborhood-based entrepreneurs and their support networks certainly has a neighborhood-based dimension.