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Bringing the individual back in: entrepreneurs' networking actions and referral based search for new exchange partners

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Existing theories of inter-organizational relationship formation imply that decision makers use referrals from current partners to form new ones, leading to dense ties that aggregate into homogenous clusters. Actual interorganizational networks include ties to strangers and extant explanations for their formation focus on organizational or environmental attributes. This study proposes a new explanation for the formation of interorganizational ties to strangers by outlining how individual entrepreneursÂ’ networking actions lead to differential use of referral based search for exchange partners for their venture. I posit that entrepreneurs use a greater proportion of referral based search when their interpersonal networking behavior focuses less on adding new contacts and more on maintaining existing contacts. The empirical analysis employs a longitudinal design using data coded from the business cards of new contacts formed over a two-month period by a panel of 73 Indian entrepreneurs operating business-to-business ventures in a single industry sector. The key contribution of this study is to show that, contrary to extant literature that stresses the importance of referrals in exchange partner selection, particular types of networking behavior enable entrepreneurs to mimic the benefits of referrals and thereby shape how they balance referral versus direct modes of search for new exchange partners.

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp2008/2008-55.pdf

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Copyright INSEAD. All rights reserved