FEATURE PAPER

Complementary Effects of Tie Strength And Network Range Enhancing Transnational Venture Performance

This paper was written by Pankaj C. Patel from the Ball State University It was presented at the 2010 USASBE Conference in Nashville, TN.

ACADEMIC ABSTRACT

We examine complementary effects of network range and tie strength on transnational venture performance. Network range facilitates access to a broad set of knowledge and resources, such transactions are possible in presence of strong ties. Alternatively, a network heavy in strong ties provides reliable connections, but lack of diversity can lead to network closure. Thus, broad network range and strong ties should have mutually reinforcing effects. Using a sample of 452 transnational ventures, and drawing on supermodularity and linear restriction tests, we find that tie strength is a critical input and network range plays a supporting role in venture performance.

EXECUTIVE SUMMARY

We examine the dynamics of transnational entrepreneurial activity in the context of social networks. We extended the prior work of Drori et al. (2006) by empirically testing the social network structure that helps entrepreneurs mobilize activities in two different institutional settings. We also extended the findings of Portes et al. (2002) examining the choice to engage in transnational entrepreneurship, by exploring influences on TEs' performance. The central theme for our study is extending Reagans & Zuckerman's (2001) work resolving the diversity/performance debate by examining the complementary effects of dyadic tie strength and network structure on transnational entrepreneurial activities. We draw on a sample of 452 transnational entrepreneurs. Clearly, having both network range and tie strength in a network is advisable. However, developing and maintaining ties is costly. Under such circumstances, transnational entrepreneurs may be better off realizing most of their investments in certain types of ties. Drawing on the notion of supermodularity and linearity tests we assess the true nature of complementarity. Traditional tests focusing on complementarity using twointeractions, provides a limited overview of specific effects of each factor contributing to the joint effects.

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TIP OF THE WEEK

Credit In A Deep Recession

Executive Summary

• Many policymakers misidentify the fundamental bases of small business problems, leading to promotion of faulty policy. The principal immediate economic problem for 51 percent of small employers remains slow or declining sales, six percentage points more citing the problem than one year ago. Uncertainty was identified by over one-fifth (22%) as theirs, followed by access to credit (8%) and falling real estate values (8%), virtually te same as last year. Even among owners who report they cannot get credit, twice as many cite poor sales as cite credit access.
• The percentage of small business owners holding a business loan or credit line each fell almost 20 percent in the last year, though the number of loans and lines cut standing per owner with at least one loan or line remained almost constant. The percentage holding business credit card(s) fell by about 10 percent. Sixty-two (62) percent pay off their card balances monthly, leaving 38 percent using business card as a source of credit.
• The financial institution extending a line of credit changed the terms/conditions of the line(s) during 2009 for 20 percent of small employers having at least one. About 10 percent with a business loan had the same experience as did 22 percent with a business credit card. The most frequent change was increased interest rates.
• Fifty-five(55) percent of small employers attempted to borrow in 2009; 45 percent did not, although five percent of owners, so-called discouraged borrowers, did not try because they did not think they could obtain credit.
• Forty(40) percent of small business owners attempting to borrow in 2009 had all of their credit needs met; 10 percent had most of their needs met; 21 percent had some of their needs met; and, 23 percent had none of their credit needs met. The current level of borrowing success is significantly lower tan in the mid-2000s when up to 90 percent had heir most recent credit request approved.
• In 2009, about 20 percent of small employers attempted to obtain each of the following types of credit: vendor loans, credit lines, renewal of credit lines, business loans, and business or credit cards. The least difficult to obtain was a credit car (73% successful); the most difficult was a new line of credit (38% successful).
• The best predictors of success in meeting credit needs were: higher credit scores, customers of banks with less than $100 billion in assets, more properties collateralized for business purposes, and fewer second mortgages held. Owners of larger small firms, older businesses, and businesses located in states with relatively few home fore closures are also frequently good predictors of success in obtaining certain types of credit.
• Overwhelmingly, the most common planned purpose of credit rejected as to fill cash flown needs. Though many prospective borrowers had a multiple planned purposes for rejected credit, about one in three sought at least some money to replace plant, equipment and vehides with a non-mutually exclusive third intending to invest in additional plant, etc.
• Falling real estate values (residential and commercial) severely limit small business owner capacity to borrow and strains currently outstanding credit relationships. Ninety-five(95) percent of small employers own real estate, including a primary residence, the business premises (commercial), or investment real estate that is neither of the two. Twenty (20) percent hold one or more mortgages on real estate that finance other business assets and 11 percent use real estates as collateral for business purposes. A non-mutually exclusive 20 percent hold a second mortgage on a property. Thirteen (13) percent report at least one property upside down.
• Broad and deep real estate ownership is a major reason why small businesses have not yet begun to recover, why larger businesses have been able to recover more quickly than small business, and why this recession is different, at least for small business owners, from recent ones.

ANNOUNCEMENTS

Canadian Council for Small Business & Entrepreneurship

CCSBE is seeking to explore the multifaceted impact entrepreneurs and small businesses have on their communities through their new ventures, business and community outreach.
There is growing recognition by policy makers, members of society, business leaders and youth, that creative approaches are needed to address environmental, economic, and societal issues. The conference program highlights the research, educational methods, and community practices pertaining to venture sustainability and social entrepreneurship. In support of the theme we have attracted an array of plenary and guest speakers, and developed workshops which will contribute to the dialogue.

The conference offers several opportunities for you to contribute. We encourage you to submit to our Program Committee:

1. A full paper for blind review
2. An Abstract for blind review
3. Or a workshop proposal idea

For instructions on how to submit a proposal, and for more informationClick Here.

Allied Academies

We would like to invite you to submit your papers to the upcoming Allied Academies Spring International Conference in New Orleans, to be held April 14-16, 2010. The deadline for submissions is March 5, so don't delay. We will be holding the conference at the Hilton New Orleans Riverside in the heart of New Orleans and walking distance to the French Quarter. We have secured an excellent rate of $129 for our participants. Base registration, on or before March 5, is $300, late registration after that date will be $350.

Please note that participants may choose their presentation times when they submit their papers. Further, participants who cannot attend physically may choose to participate via the Internet Division. This will enable you to participate via a message board system at your leisure during the two week period surrounding the conference. More details can be found on the Conference Call for Papers.
For more informationClick Here.

ICSB 2010: "Entrepreneurship: Bridging Global Boundaries"

The ICSB World Conference 2010 will be taking place June 24-27, 2010. It will be held in Cincinnati, Ohio, USA. The deadline for submissions is February 15, 2010 and the Early Registration Deadline is April 30th, 2010. ICSB invites you to invite you to submit papers, case studies, workshop and/or symposia proposals that deal directly or indirectly with: * Entrepreneurship Education * Individual Entrepreneurship * Women and Minority Entrepreneurship * Small Business and SME's in Developing Economies * Public Policy * Entrepreneurship and Technology * Family Business * Corporate Entrepreneurship * International Entrepreneurship * Entrepreneurship in the Arts * Entrepreneurship Across the Curriculum * Social Entrepreneurship * Additional topics of interest and value to ICSB's membership.
For more informationClick Here.

SBI Journal - Request for Papers And Reviewers

The Small Business Institute is now requesting papers and reviewers for the fifth volume of the Small Business Institute Journal. If you are interested in submitting a paper please visithttp://www.sbaer.uca.edu/sbij/about.phpto see the guidelines and submission procedure. If you are interested in becoming a reviewer or would like more information please email us atsbij@uca.edu.The fifth issue is to be published April 2010.

CONFERENCES

CALLS FOR PAPERS

SBANC STAFF

Main Office Phone: (501) 450-5300

Don B. Bradley III, Executive Director of SBANC & Professor of Marketing - Direct Phone: (501) 450-5345

Nicole Kluck, Development Intern

Derius Campbell, Development Intern

Raven Ambers, Development Intern