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Social networks of entrepreneurs are theorized as evolving from an idea generating stage, to a business development stage, and finally to a strategic stage. A model of network evolution that relates changing network activity to the increasing complexity facing the entrepreneur is presented in this paper. A field study of premium wineries, operated by their founding entrepreneurs, is used to (1) assess the impact of social networks in the identification of entrepreneurial opportunity, (2) examine the development and use of networks in establishing the business, and (3) explore the role of interorganizational networks in startup firms. The results suggests that both broad social and interorganizational strategic networks are important to successful startup and ongoing competitive advantage. The results suggest that public policy might be better directed toward the enhancement of this type of network activity, rather than the traditional support provided to encourage business formation.
Butler et al. (Tue,) studied this question.