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Entrepreneurial networks, geographical proximity, and their relationship to firm growth: a study of 241 small high-tech firms

Author

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  • Hans Löfsten

    (Chalmers University of Technology)

  • Anders Isaksson

    (Chalmers University of Technology)

  • Heikki Rannikko

    (Chalmers University of Technology Metropolia University of Applied Science)

Abstract

Start-up firms in high-tech sectors normally engage in networking to overcome their lack of resources, knowledge, and competence constraints. A newly established firm’s network can provide a source of social capital, which may enhance its growth prospects. In this study, 241 new technology-based firms (NTBFs) in Sweden are studied during their early formative years to investigate how entrepreneurial networks and the geographical proximity to actors in these networks affect the early performance of these firms in terms of growth. Three underlying factors are identified in the analysis: geographical proximity and professional and consultative networks. This study finds that professional networks have a positive and significant effect on NTBFs’ growth, which indicate that utilizing these networks benefit the growth of both young and growing firms. NTBFs in initial stages can acquire business opportunities by constructing professional networks. In addition, several formal links positively affect growth, such as regional business partners, incubator networks, and links to universities.

Suggested Citation

  • Hans Löfsten & Anders Isaksson & Heikki Rannikko, 2023. "Entrepreneurial networks, geographical proximity, and their relationship to firm growth: a study of 241 small high-tech firms," The Journal of Technology Transfer, Springer, vol. 48(6), pages 2280-2306, December.
    • Handle: RePEc:kap:jtecht:v:48:y:2023:i:6:d:10.1007_s10961-022-09988-0
    DOI: 10.1007/s10961-022-09988-0
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    More about this item

    Keywords

    Entrepreneurial networks; Geographical proximity; Firm growth; New technology-based firms;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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