Entrepreneurial orientation and new venture performance: The mediating effect of network strategies

While entrepreneurship scholars have generally examined the direct effects of entrepreneurial orientation (EO) on the performance of new ventures, we build on recent calls for a contingency framework and propose that ventures' network strategies intervene in the EO-performance relationship. Drawing from an empirical study of the informal social networks among new ventures in the open source software industry, this paper examines how ventures' network strategies mediate the effects of entrepreneurial orientation (EO) on firm performance. Our findings indicate that ventures with a strong EO both occupied more central network positions in the industry and maintained more extensive bridging ties outside the industry. In addition we find that new ventures that were prominent in the industry and sustained extensive interindustry ties performed significantly better, while ventures that were centrally positioned in the communication network of the industry reported significantly lower levels of firm performance. After controlling for network effects, the direct effect of EO on firm performance failed to reach significance. Together these results show that ventures require effective network strategies in order to translate their EO into superior performance. More importantly, this paper shows that sustaining a strong EO may be harmful to firm performance since it may induce entrepreneurs to build social networks that have unintended consequences for their firms' competitive advantage. Implications for research on the relation between EO, networks, and firm performance are discussed