Entrepreneurs' Networks: Size, Diversity and Composition Shaped by Cultures of Rationality and Trust

The network around an entrepreneur is conceptualized as having structural properties of size, diversity and composition as network components of varying prominence in the entrepreneur's network. These properties are important by impacting entrepreneurs' performance in terms of innovation, exporting and expectations for growth. In our research-consortium Global Entrepreneurship Monitor, a sample of 35430 entrepreneurs in 42 countries reported on relations with up to 20 advisors. Cluster analysis of their relations discerned five components: a private network of advice relations with spouse, parents, other family and friends, a work-place network of boss, coworkers, starters and mentors, a professional network of accountants, lawyers, banks, investors, counselors and researchers, a market network of competitors, collaborators, suppliers and customers, and an international network of advice relations with persons abroad and persons who have come from abroad. Entrepreneurs' networking is embedded in their cultures with the dimension of trust and the dimension of traditionality versus rationality. Rationality and trust are hypothesized to enhance size and diversity of networks and prominence of the work-place network, of the professional network, of the market network and of the international network, but to reduce prominence of the private network, that is, the private network is hypothesized to be more prominent in a culture of traditionality and in a culture of distrust in others beyond family and friends. Cultural effects on networking are tested as macro-to-micro effects in two-level mixed linear models with fixed effects of national levels of rationality and trust and individual-level variables as controls and random effects of country, where the dependent variables are the properties of the networks. We find that rationality promotes diversity of networks and prominence of work-place network, professional network, market network and apparently also international network, but reduces prominence of the private network. Trust increases size of the networks, diversity of networks, prominence of market network and apparently also work-place network and professional network, but reduces prominence of the private network. These cultural effects are larger than most effects of entrepreneurs' individual characteristics.