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Structural Holes and Entrepreneurial Decision Making

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  • Aarstad Jarle

    (Faculty of Engineering, Bergen University College, Bergen NO-5020, Norway)

Abstract

Actors in a position to broker and connect otherwise disconnected parts of a social network are spanning structural holes. The spanning of structural holes can leverage performance, but in this paper I study if it can also influence entrepreneurial decision making. Studying a network of entrepreneurs – mostly farmers – who have built their own hydroelectric micro-power plants in rural Nozrway, I find that actors spanning structural holes tend to build relatively large plants. The use of instrumental variables indicates that the spanning of structural holes is a cause, and not an effect, of entrepreneurs’ decisions about plant size. The paper discusses how the finding can have implications for our understanding of decision making and entrepreneurial risk taking beyond the studied context. I also find that the entrepreneurs’ formal level of education is positively associated with the size of the plants being built.

Suggested Citation

  • Aarstad Jarle, 2014. "Structural Holes and Entrepreneurial Decision Making," Entrepreneurship Research Journal, De Gruyter, vol. 4(3), pages 261-276, July.
    • Handle: RePEc:bpj:erjour:v:4:y:2014:i:3:p:16:n:3
    DOI: 10.1515/erj-2013-0077
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    References listed on IDEAS

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    3. Yael V. Hochberg, 2015. "Accelerating Entrepreneurs and Ecosystems: The Seed Accelerator Model," NBER Chapters, in: Innovation Policy and the Economy, Volume 16, pages 25-51, National Bureau of Economic Research, Inc.
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    6. Nickerson, Jordan & Griffin, John M., 2017. "Debt correlations in the wake of the financial crisis: What are appropriate default correlations for structured products?," Journal of Financial Economics, Elsevier, vol. 125(3), pages 454-474.

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