Do founders' own resources matter? The influence of business networks on start-up innovation and performance

• Published in: Technovation 2012-05, Vol.32 (5), p.316-327
• Main Authors: Huang, Hao-Chen, Lai, Mei-Chi, Lo, Kuo-Wei
• Format: Article
• Language: English
• Subjects: Business; Business community; Business networking; Business networks; Competition; Economic performance; Entrepreneurs; Founder's human capital; Founder's ties; Human capital; Influence; Innovation; Links; Mathematical analysis; Mathematical models; Modelling; Networks; Organization development; Organizational innovation; Scanning electron microscopy; Small & medium sized enterprises-SME; Startups; Studies; Suppliers; Technological change
• ISSN: 0166-4972; 1879-2383
• DOI: 10.1016/j.technovation.2011.12.004

The primary objective of this study is to investigate the potential influence of founders' ties and human capital on organizational innovation and organizational performance. In addition, this study determines whether or not business network mediates the relationship among contextual variables. Accordingly, this work devises a hypothesized model for exploring the links among contextual variables. Accordingly, in the conceptual model, business network is conceptualized as a second-order construct comprised of three complementary first-order dimensions: supplier interaction, customer interaction, and competitor interaction. To clarify the relationship among these variables, structural equation modeling (SEM) is used to examine the hypothesized model's fit and the hypotheses. Using data from a study of 222 start-ups' founders sampled from China-based Taiwanese small and medium enterprises, the result of SEM clearly demonstrates the mediating role of business network in the relationship between founders' ties and both organizational innovation and firm performance, as well as in the relationship between founders' human capital and both organizational innovation and firm performance. Moreover, this paper illustrates the role of business network in the organizational innovation and organizational performance enhancement through empirical evidence from China-based Taiwanese small and medium enterprises, which makes a contribution to the current literature. ► Partners get to connect with founders' own resources to construct business networks. ► Business network comprises three interactions. ► The findings suggest the interaction with counterparts has the most impact.