Network Locations or Embedded Resources? The Effects of Entrepreneurs’ Social Networks on Informal Enterprise Performance in Ethiopia

Abstract

Unlike the industrialized economies where economic exchange is mainly based on impersonal transactions, African economies rely heavily on interpersonal relationships and social networks. Though the study of social networks in African economies is not new, quantitative perspectives on returns of social networks in the informal sector have rarely been the subject of empirical analysis. While studies in Ethiopia have documented how rural households use their networks to improve agricultural productivity and livelihoods, little is known about the contribution of networks in the informal economy. Yet, debates are prevalent on the contribution of social networks in enterprise performance as their effects vary depending on the context of study. This paper thus examines the effects of entrepreneurs’ social networks on informal enterprise performance. Multi-stage sampling procedures involving purposive and systematic random-walk techniques were employed to draw samples. Ego-network data were collected through name generator and interpreter surveys constructed on the basis of regular relations of people related to resources needed and obtained by entrepreneurs for the operation of businesses. The data were analyzed using social network analysis and statistical procedures. Multiple regression models were used to investigate the extent to which an entrepreneurs’ location in networks and embedded resources affect enterprise performance. The findings revealed that while the diversity of contact resources has a significant positive effect on enterprise performance, an entrepreneurs’ location in a network has a significant negative effect.

This is a preview of subscription content, log in to check access.

Notes

  1. 1.

    A working definition of micro-enterprises in the Ethiopian context is that they are the smallest, usually informally organized businesses engaged in diverse activities including trade, services, handicrafts, etc. They are typically operated by the owner and immediate family (usually unpaid labor) and the income from the micro-enterprise is in most cases the sole source of income for the family (Desta 2010).

  2. 2.

    Constraint is a measure of network structure. It measures the extent to which a network is directly or indirectly concentrated in a single alter. If all contacts of an ego are connected to each other (have dense network structure), then the ego is highly constrained (Burt, 2004). Constraint index shows the extent to which all of an entrepreneur’s network time and energy are concentrated on limited contacts. An entrepreneur with high network constraint depends on a small number of contacts within the network (Burt 1992).

  3. 3.

    The random-walk technique used in this study is different from the one used to sample nodes in networks. In the case of this paper, individual street vendors, not nodes, were selected following a random-walk procedure by walking on foot in street vending cluster sites. However, a key purpose of random walks in network applications is to perform node sampling.

  4. 4.

    E-NET is a social network analysis software focusing on the analysis of ego-network data. E-NET accepts data related to three aspects: ego’s characteristics, connection between ego and his/her alter, and relationships between alters (Borgatti 2006).

References

  1. Alesina, A. F., & Giuliano, P. (2009). Family ties and political participation. NBER working paper no. 15415. Cambridge: National Bureau of Economic Research.

    Google Scholar 

  2. Aral, S., & van Alstyne, M. (2007). Network structure & information advantage. In Proceedings of the Academy of Management Conference, Philadelphia, PA (Vol. 3). Citeseer. Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.457.5963&rep=rep1&type=pdf.

  3. Arregle, J., Batjargal, B., Hitt, M. A., Webb, J. W., Miller, T., & Tsui, A. S. (2015). Family ties in entrepreneurs’ social networks and new venture growth. Entrepreneurship Theory and Practice, 39, 313–344. https://doi.org/10.1111/etap.12044.

    Article  Google Scholar 

  4. Baker, J. (1992). The Gurage of Ethiopia: rural-urban interaction and entrepreneurship. The rural-urban interface in Africa. Nordiska Afrikainstitutet, Uppsala, Sweden, 125–47. Retrieved from http://www.diva-portal.org/smash/get/diva2:277421/FULLTEXT01.pdf#page=127. Accessed 15 April 2016.

  5. Barnes, M., Kalberg, K., Pan, M., & Leung, P. (2016). When brokerage is negatively associated with economic benefits? Ethnic diversity, competition, and common-pool resources. Social Networks, 45, 55–65.

    Google Scholar 

  6. Barr, A. M. (2002). The functional diversity and spillover effects of social capital. Journal of African Economies, 11(1), 90–113.

    Google Scholar 

  7. Bascle, G. (2008). Controlling for endogeneity with instrumental variables in strategic management research. Strategic Organization, 6(3), 285–327. https://doi.org/10.1177/1476127008094339.

    Article  Google Scholar 

  8. Batjargal, B. (2010). The effects of network’s structural holes: polycentric institutions, product portfolio, and new venture growth in China and Russia. Strategic Entrepreneurship Journal, 4(2), 146–163.

    Google Scholar 

  9. Beall, J. (2001). From social networks to public action in urban governance: where does benefit accrue? Journal of International Development, 13(7), 1015–1021.

    Google Scholar 

  10. Berrou, J.-P., & Combarnous, F. (2011). Testing Lin’s social capital theory in an informal African urban economy. Journal of Development Studies, 47(8), 1216–1240.

    Google Scholar 

  11. Berrou, J. P., & Combarnous, F. (2012). The personal networks of entrepreneurs in an informal African urban economy: does the “strength of ties” matter? Review of Social Economy, 70(1), 1–30.

    Google Scholar 

  12. Bigsten, A., & Mulu, G. (2007). The small, the young, and the productive: determinants of manufacturing firm growth in Ethiopia. Economic Development and Cultural Chang, 55(4), 813–840.

    Google Scholar 

  13. Bisrat, A., Kostas, K., & Feng, L. (2012). Are there financial benefits to join RoSCAs? Empirical evidence from Equb in Ethiopia. Procedia Economics and Finance, 1, 229–238.

    Google Scholar 

  14. Bizzi, L. (2013). The dark side of structural holes: a multilevel investigation. Journal of Management, 39(6), 1554–1578.

    Google Scholar 

  15. Borgatti, S. P. (2006). Software for the analysis of ego-network data. Needham: Analytic Technologies.

    Google Scholar 

  16. Bourdieu, P. (1986). The forms of capital. In Richardson (Ed.), Handbook of theory and research for the sociology of education (pp. 241–258). New York: Greenwood.

    Google Scholar 

  17. Bula, H. O. (2012). Performance of women in small scale enterprises (SSEs): marital status and family characteristics. European Journal of Business and Management, 4(7), 85–99.

    Google Scholar 

  18. Burt, R. S. (1984). Network items and the general social survey. Social Networks, 6(4), 293–339.

    Google Scholar 

  19. Burt, R. S. (1992). Structural holes: the social structure of competition. Cambridge: Harvard University Press.

    Google Scholar 

  20. Burt, R. S. (2000). The network structure of social capital. Research in Organizational Behavior, 22, 345–423.

  21. Burt, R. S. (2001). Structural holes versus network closure as social capital. Retrieved from https://www.researchgate.net/publication/51992854_Structural_Holes_versus_Network_Closure_as_Social_Capital_In_Social_Capital_Theory_and_Research. Accessed 20 Dec 2016.

  22. Burt, R. S. (2002). The social capital of structural holes. The new economic sociology: developments in an emerging field, 148–190. Retrieved from https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&q=The+social+capital+of+structural+holes.+The+new+economic+sociology%3A+developments+in+an+939+emerging+field%2C+148%E2%80%93190.&btn. Accessed 26 Jan 2016.

  23. Burt, R. S. (2004). Structural Holes and Good Ideas. American Journal of Sociology, 110(2), 349–399.

  24. Burt, R. S. (2005). Brokerage and closure: an introduction to social capital. Oxford: Oxford University Press.

    Google Scholar 

  25. Burt, R. S., & Burzynska, K. (2017). Chinese entrepreneurs, social networks, and guanxi. Management and Organization Review, 13(2), 221–260.

    Google Scholar 

  26. Burt, R. S., & Ronchi, D. (1994). Measuring a large network quickly. Social Networks, 16(2), 91–135.

    Google Scholar 

  27. Burton, P., Wu, Y. A., & Prybutok, V. R. (2010). Social network position and its relationship to performance of IT professionals. Informing Science: The International Journal of an Emerging Transdiscipline, 13, 121.

    Google Scholar 

  28. Caliendo, M. (2013). Endogeneity in entrepreneurship research. In the context of the research seminar. Applied econometrics in the summer term 2013. University of Potsdam Faculty of Economics and Social Sciences.

  29. Chai, S. K., & Rhee, M. (2010). Confucian capitalism and the paradox of closure and structure holes in East Asian firms. Management and Organization Review, 6(1), 5–30.

    Google Scholar 

  30. Chung, K. K., Hossain, L., & Davis, J. (2005). Exploring sociocentric and egocentric approaches for social network analysis. In Proceedings of the 2nd international conference on knowledge management in Asia Pacific (pp. 1–8).

  31. Coleman, J. S. (1988). Social capital in the creation of human capital. American Journal of Sociology, 94, S95–S120.

    Google Scholar 

  32. Cruz, C., Justo, R., & De Castro, J. (2008). Family involvement and firm performance: a family embeddedness perspective. IE business school working paper, GE8-107-1.

  33. CSA (2013). Population projections for Ethiopia 2007–2037, Addis Ababa.

  34. De Graaf, N., & Flap, H. D. (1988). “With a little help from my friends”: social resources as an explanation of occupational status and income in West Germany, The Netherlands, and the United States. Social Forces, 67(2), 452–472.

    Google Scholar 

  35. Desta, S. (2010). Desk review of studies conducted on women entrepreneurs in Ethiopia. Retrieved from https://catalogue.lse.ac.uk/Record/1347563.

  36. Dodds, P. S., Watts, D. J., & Sabel, C. F. (2003). Information exchange and the robustness of organizational networks. Proceedings of the National Academy of Sciences, 100(21), 12516–12521.

    Google Scholar 

  37. Durlauf, S. N. (2002). On the empirics of social capital. The Economic Journal, 112(483), F459–F479.

    Google Scholar 

  38. Durlauf, S. N., & Fafchamps, M. (2004). Social capital (working paper no. 10485). National Bureau of Economic Research. Retrieved from http://www.nber.org/papers/w10485. Accessed 24 Feb 2017.

  39. Elfring, T., & Hulsink, W. (2003). Networks in entrepreneurship: the case of high-technology firms. Small Business Economics, 21(4), 409–422.

    Google Scholar 

  40. Fafchamps, M. (2011). Development, social norms, and assignment to task. Proceedings of the National Academy of Sciences, 108(Supplement 4), 21308–21315.

    Google Scholar 

  41. Fafchamps, M., & Minten, B. (2001). Social capital and agricultural trade. American Journal of Agricultural Economics, 83(3), 680–685.

    Google Scholar 

  42. Fafchamps, M., & Minten, B. (2002). Returns to social network capital among traders. Oxford Economic Papers, 54(2), 173–206.

    Google Scholar 

  43. Ferriani, S., Cattani, G., & Baden-Fuller, C. (2009). The relational antecedents of project-entrepreneurship: network centrality, team composition and project performance. Research Policy, 38(10), 1545–1558.

    Google Scholar 

  44. Fransen, J., & van Dijk, M. P. (2008). Informality in Addis Ababa, Ethiopia1. Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?

  45. Ganzeboom, H. B. G., & Treiman, D. J. (2003). Three internationally standardized measures for comparative research on occupational status. In J. H. P. Hoffmeyer-Zlotnik & C. Wolf (Eds.), Advances in cross-national comparison (pp. 159–193). New York: Springer.

    Google Scholar 

  46. Gargiulo, M., & Benassi, M. (2000). Trapped in your own net? Network cohesion, structural holes, and the adaptation of social capital. Organization Science, 11(2), 183–196.

    Google Scholar 

  47. Garoma, B. F. (2012). Determinants of microenterprise success in the urban informal sector of Addis Ababa: a multidimensional analysis. International Institute of Social Studies of Erasmus University (ISS). Retrieved from http://repub.eur.nl/pub/37927/.

  48. Getahun, F. K. (2015). Social capital and the urban informal economy: the case of street vendors in Addis Ababa, Ethiopia. University of Trento. Retrieved from http://eprints-phd.biblio.unitn.it/1503/.

  49. Getahun, F. K., & Odella, F. (2014). The economic returns of network resources to the urban informal economy: evidence from street vendors in Addis Ababa, Ethiopia. European Journal of Sustainable Development, 3(3), 357–372.

    Google Scholar 

  50. Giannella, E., & Fischer, C. S. (2016). An inductive typology of egocentric networks. Social Networks, 47, 15–23.

    Google Scholar 

  51. Goerzen, A., & Beamish, P. W. (2005). The effect of alliance network diversity on multinational enterprise performance. Strategic Management Journal, 26(4), 333–354.

    Google Scholar 

  52. Granovetter, M. S. (1973). The strength of weak ties. American Journal of Sociology, 78(6), 1360–1380.

    Google Scholar 

  53. Granovetter, M. (1983). The strength of weak ties: a network theory revisited. Sociological Theory, 1(1), 201–233.

    Google Scholar 

  54. Granovetter, M. S. (1985). Economic action and social structure: the problem of embeddedness. American Journal of Sociology, 91(3), 481–510.

    Google Scholar 

  55. Granovetter, M. S. (1995). Getting a job: a study of contacts and careers. Chicago: University of Chicago Press.

    Google Scholar 

  56. Green Jr, H. D., Hoover, M. A., Wagner, G. J., Ryan, G. W., & Ssegujja, E. (2014). Measuring agreement between egos and alters: Understanding informant accuracy in personal network studies. Field Methods, 26(2), 126–140.

  57. Greve, A., & Salaff, J. W. (2003). Social networks and entrepreneurship. Entrepreneurship Theory and Practice, 28(1), 1–22.

    Google Scholar 

  58. Greve, A., Benassi, M., & Sti, A. D. (2010). Exploring the contributions of human and social capital to productivity. International Review of Sociology, 20(1), 35–58.

    Google Scholar 

  59. Grimm, M., Gubert, F., Koriko, O., Lay, J., & Nordman, C. J. (2013). Kinship ties and entrepreneurship in Western Africa. Journal of Small Business & Entrepreneurship, 26(2), 125–150.

    Google Scholar 

  60. Haftu, B., Tseahye, T., Teklu, K., & Tassew, W. (2009). Financial needs of micro and small enterprise (MSE) operators in Ethiopia, Occasional Paper No. 24. Addis Ababa: Association of Ethiopian Microfinance Institutions.

    Google Scholar 

  61. Hallam, C. R., Zanella, G., & Lijerón, J. D. (2017). Informal entrepreneurship and past experience in an emerging economy. The Journal of Entrepreneurship, 26(2), 163–175.

    Google Scholar 

  62. Herz, A., & Petermann, S. (2017). Beyond interviewer effects in the standardized measurement of ego-centric networks. Social Networks, 50, 70–82.

    Google Scholar 

  63. Hoang, H., & Antoncic, B. (2003). Network-based research in entrepreneurship: a critical review. Journal of Business Venturing, 18(2), 165–187.

    Google Scholar 

  64. Hoffman, J., Hoelscher, M., & Sorenson, R. (2006). Achieving sustained competitive advantage: a family capital theory. Family Business Review, 19, 135–145.

    Google Scholar 

  65. Hofstede, G. (1984). Culture’s consequences: international differences in work-related values (Vol. 5). Newcastle upon Tyne: Sage.

    Google Scholar 

  66. Hopkins, N. (2011). Religion and social capital: Identity matters. Journal of Community & Applied Social Psychology, 21(6), 528–540.

  67. Hulbert, J. S., Haines, V. A., & Beggs, J. J. (2000). Core networks and tie activation: what kinds of routine networks allocate resources in non-routine situations? American Sociological Review, 65, 598–618.

    Google Scholar 

  68. ILO (2013).Women and men in the informal economy: a statistical picture. Geneva, Switzerland.

  69. Jack, S. L. (2005). The role, use and activation of strong and weak network ties: a qualitative analysis. Journal of Management Studies, 42(6), 1233–1259.

    Google Scholar 

  70. Jackson, M. O. (2014). Networks in the understanding of economic behavior. The Journal of Economic Perspectives, 28(4), 3–22.

    Google Scholar 

  71. Jackson, S. E., & Joshi, A. (2004). Diversity in social context: a multi-attribute, multilevel analysis of team diversity and sales performance. Journal of Organizational Behavior, 25(6), 675–702.

    Google Scholar 

  72. Jackson, M. O., & Yariv, L. (2007). Diffusion of behavior and equilibrium properties in network games. The American Economic Review, 97(2), 92–98.

    Google Scholar 

  73. Janhonen, M., & Johanson, J. E. (2011). Role of knowledge conversion and social networks in team performance. International Journal of Information Management, 31(3), 217–225.

    Google Scholar 

  74. Kantor, P. (2005). Determinants of women’s microenterprise success in Ahmedabad, India: empowerment and economics. Feminist Economics, 11(3), 63–83.

    Google Scholar 

  75. Kedir, A. M., & Ibrahim, G. (2011). ROSCAs in urban Ethiopia: are the characteristics of the institutions more important than those of members? Journal of Development Studies, 47(7), 998–1016.

    Google Scholar 

  76. Khalife, D., & Chalouhi, A. (2013). Gender and business performance. International Strategic Management Review, 1(1), 1–10.

    Google Scholar 

  77. Klyver, K., & Terjesen, S. (2007). Entrepreneurial network composition: an analysis across venture development stage and gender. Women in Management Review, 22(8), 682–688.

    Google Scholar 

  78. Kornienko, O., Agadjanian, V., Menjívar, C., & Zotova, N. (2018). Financial and emotional support in close personal ties among Central Asian migrant women in Russia. Social networks, 53, 125–135.

  79. Krackhardt, D. (1999). The ties that torture: Simmelian tie analysis in organizations. Research in the Sociology of Organizations, 16(1), 183–210.

    Google Scholar 

  80. Kristiansen, S. (2004). Social networks and business success: the role of subcultures in an African context. American Journal of Economics and Sociology, 63(5), 1149–1171.

    Google Scholar 

  81. Kuepie, M., Tenikue, M., & Walther, O. J. (2015). Social networks and small business performance in West African border regions. Oxford Development Studies. https://doi.org/10.1080/13600812.2015.1082540.

  82. Lai, G., Lin, N., & Leung, S.-Y. (1998). Network resources, contact resources, and status attainment. Social Networks, 20(2), 159–178.

    Google Scholar 

  83. Lim, C., & Putnam, R. D. (2010). Religion, social networks, and life satisfaction. American Sociological Review, 75(6), 914–933.

    Google Scholar 

  84. Lin, N. (1981). Social resources and instrumental action. New York: State University of New York, Department of Sociology.

    Google Scholar 

  85. Lin, N. (1982). Social Resources and Instrumental Action. State University of New York, Department of Sociology.

  86. Lin, N. (1999). Building a network theory of social capital. Connections, 22(1), 28–51.

    Google Scholar 

  87. Lin, N. (2000). Inequality in Social Capital. Contemporary Sociology, 29(6), 785–795.

  88. Lin, N. (2002). Social capital: a theory of social structure and action. Cambridge: Cambridge University Press.

    Google Scholar 

  89. Lin, N., & Dumin, M. (1986). Access to occupations through social ties. Social Networks, 8(4), 365–385.

    Google Scholar 

  90. Lin, N., Ensel, W. M., & Vaughn, J. C. (1981). Social resources and strength of ties: structural factors in occupational status attainment. American Sociological Review, 46(4), 393–405.

    Google Scholar 

  91. Liverpool, L. S. O., & Winter-Nelson, A. (2010). Poverty status and the impact of social networks on smallholder technology adoption in rural Ethiopia. International Food Policy Research Institute (IFPRI). Retrieved from http://www.ifpri.org/sites/default/files/publications/ifpridp00970.pdf.

  92. Lourenço-Lindell, I. (2002). Walking the tight rope: informal livelihoods and social networks in a West African city. Retrieved from http://www.diva-portal.org/smash/record.jsf?pid=diva2:189997.

  93. Lyon, F. (2000). Trust, networks and norms: the creation of social capital in agricultural economies in Ghana. World Development, 28(4), 663–681.

    Google Scholar 

  94. Ma, R., Huang, Y., & Shenkar, O. (2011). Social network and opportunity recognition: a cultural comparison between Taiwan and the United States. Strategic Management Journal, 32(11), 1183–1205.

    Google Scholar 

  95. Marsden, P. V. (1990). Network data and measurement. Annual Review of Sociology, 16, 435–463.

    Google Scholar 

  96. Marsden, P. V. (2005). Recent developments in network measurement. Models and Methods in Social Network Analysis, 8, 30.

    Google Scholar 

  97. Marsden, P. V., & Campbell, K. E. (1984). Measuring tie strength. Social Forces, 63(2), 482–501.

    Google Scholar 

  98. Marsden, P. V., & Campbell, K. E. (2012). Reflections on conceptualizing and measuring tie strength. Social Forces, 91(1), 17–23.

    Google Scholar 

  99. Marsden, P. V., & Hurlbert, J. S. (1988). Social resources and mobility outcomes: a replication and extension. Social Forces, 66(4), 1038–1059.

    Google Scholar 

  100. Martí, J., Bolíbarb, M., & Lozares, C. (2018). Network cohesion and social support. Social Networks, 48, 192–201.

    Google Scholar 

  101. McFadyen, M. A., & Cannella, A. A. (2004). Social capital and knowledge creation: diminishing returns of the number and strength of exchange relationships. Academy of Management Journal, 47(5), 735–746.

    Google Scholar 

  102. McPherson, M. A. (1995). The hazards of small firms in Southern Africa. Journal of Development Studies, 32(1), 31–54.

    Google Scholar 

  103. McPherson, M. A. (1996). Growth of micro and small enterprises in southern Africa. Journal of Development Economics, 48(2), 253–277.

    Google Scholar 

  104. McPherson, J. M., & Smith-Lovin, L. (1982). Women and weak ties: differences by sex in the size of voluntary organizations. American Journal of Sociology, 87(4), 883–904.

    Google Scholar 

  105. Meagher, K. (2005). Social capital or analytical liability? Social networks and African informal economies. Global Networks, 5(3), 217–238.

    Google Scholar 

  106. Merluzzi, J., & Burt, R. S. (2013). How many names are enough? Identifying network effects with the least set of listed contacts. Social Networks, 35(3), 331–337.

    Google Scholar 

  107. Miguel, E. (2004). Tribe or nation? Nation building and public goods in Kenya versus Tanzania. World Politics, 56(3), 328–362.

    Google Scholar 

  108. Molina-Morales, F. X., & Martínez-Fernández, M. T. (2009). Too much love in the neighborhood can hurt: how an excess of intensity and trust in relationships may produce negative effects on firms. Strategic Management Journal, 30(9), 1013–1023.

    Google Scholar 

  109. MoLSA (2015). Ethiopian national labor force survey 2013 (2005 E.C). Addis Ababa, Ethiopia.

  110. Muhib, F. B., Lin, L. S., Stueve, A., Miller, R. L., Ford, W. L., & Johnson, W. D. (2001). A venue-based method for sampling hard-to-reach populations. Public Health Reports, 116(Suppl 1), 216–222.

    Google Scholar 

  111. Munshi, K. (2011). Strength in numbers: networks as a solution to occupational traps. The Review of Economic Studies, 78(3), 1069–1101.

    Google Scholar 

  112. Mutz, D. C. (2002). Cross-cutting social networks: testing democratic theory in practice. American Political Science Review, 96(1), 111–126.

    Google Scholar 

  113. Nee, V., Liu, L., & Della Posta, D. (2017). The entrepreneur's network and firm performance. Sociological Science, 4, 552–579.

    Google Scholar 

  114. Nordman, C. J. (2016). Do family and kinship networks support entrepreneurs? IZA world of labor. Retrieved from http://wol.iza.org/articles/do-family-and-kinship-networks-support-entrepreneurs/long.

  115. Nordqvist, M. (2005). Understanding the role of ownership in strategizing: a study of family firms. Ph.D. dissertation, Jönköping international business school.

  116. Odella, F. (2006). Using ego-networks in surveys: methodological and research issues. In Proceedings of international conference on network science. Retrieved from http://vw.indiana.edu/netsci06/conf-slides/conf-mon/netsci-talk-francesca-odella.pdf.

  117. Pena-López, J. A., & Sánchez-Santos, J. M. (2017). Individual social capital: accessibility and mobilization of resources embedded in social networks. Social Networks, 49, 1–11.

    Google Scholar 

  118. Podolny, J. M., & Baron, J. N. (1997). Resources and relationships: social networks and mobility in the workplace. American Sociological Review, 62, 673–693.

    Google Scholar 

  119. Poluha, E. (2004). The power of continuity: Ethiopia through the eyes of its children. Uppsala: Nordic Africa Institute.

    Google Scholar 

  120. Renzulli, L. A., Aldrich, H., & Moody, J. (2000). Family matters: gender, networks, and entrepreneurial outcomes. Social Forces, 79(2), 523–546.

    Google Scholar 

  121. Robb, A. M., & Fairlie, R. W. (2007). Determinants of business success: an examination of Asian-owned businesses in the United States (No. 2566). IZA Discussion Papers.

  122. Rooks, G., Szirmai, A., & Sserwanga, A. (2009). The interplay of human and social capital in entrepreneurship in developing countries: the case of Uganda (No. 2009.09). Research paper/UNU-WIDER. Retrieved from http://www.econstor.eu/handle/10419/45159.

  123. Schneider, S. C. (1987). Information overload: causes and consequences. Human Systems Management, 7(2), 143–153.

    Google Scholar 

  124. Sherifat, Y. O. (2011). A theoretical analysis of the concept of informal economy and informality in developing countries. European Journal of Social Sciences., 20(4), 624–636.

    Google Scholar 

  125. Singh, K. (2007). Quantitative social research methods. Newcastle upon Tyne: Sage.

    Google Scholar 

  126. Small, M. L., & Sukuh, C. (2016). Because they were there: access, deliberation, and the mobilization of networks for support. Social Networks, 47, 73–84.

    Google Scholar 

  127. Son, J., & Lin, N. (2012). Network diversity, contact diversity, and status attainment. Social Networks, 34(4), 601–613.

    Google Scholar 

  128. Spielman, D. J., Davis, K., Negash, M., & Ayele, G. (2011). Rural innovation systems and networks: findings from a study of Ethiopian smallholders. Agriculture and Human Values, 28(2), 195–212.

    Google Scholar 

  129. Stovel, K., & Shaw, L. (2012). Brokerage. Annual Review of Sociology, 38, 139–158.

    Google Scholar 

  130. Stuart, T. E., & Sorenson, O. (2007). Strategic networks and entrepreneurial ventures. Strategic Entrepreneurship Journal, 1(3–4), 211–227.

    Google Scholar 

  131. Taye, M. (2001). Indigenous ethnicity and entrepreneurial success in Africa: some evidence from Ethiopia (Vol. 2534). Washington, D.C.: World Bank, Development Research Group, Macroeconomics and Growth.

    Google Scholar 

  132. Todo, Y., Yadate, D. M., Matous, P., & Takahashi, R. (2011). Effects of geography and social networks on diffusion and adoption of agricultural technology: evidence from rural Ethiopia. In CSAE 25th anniversary conference. Retrieved from http://dosen.narotama.ac.id/wp-content/uploads/2012/03/Effects-of-Geography-and-Social-Networks-on-Diffusion-and-Adoption-of-Agricultural-Technology-Evidence-from-Rural-Ethiopia.pdf.

  133. UN-Habitat. (2008). Ethiopia: Addis Ababa urban profile. United Nations human settlements program. Nairobi: UNON, Publishing Services Section.

    Google Scholar 

  134. Urbana (2012). Friendships promote better farming in developing countries. Retrieved from http://aces.illinois.edu/news/friendships-promote-better-farming-developing-countries.

  135. Uzzi, B. (1996). The sources and consequences of embeddedness for the economic performance of organizations: the network effect. American Sociological Review, 61(4), 674–698.

    Google Scholar 

  136. Uzzi, B. (1997). Social structure and competition in interfirm networks: the paradox of embeddedness. Administrative Science Quarterly, 42(1), 35–67.

    Google Scholar 

  137. Van der Gaag, M. P. (2005). Measurement of individual social capital. F&N Boekservices. Retrieved from http://dissertations.ub.rug.nl/faculties/gmw/2005/m.p.j.van.der.gaag/.

  138. Van Dijk, M. P. (2005). What explains success in African countries? New theories of local economic development. Tegegne Gebre Egziabher and AHJ (Bert) Helmsing (Eds) Local economic development in Africa: enterprises, communities and local government, 186–96.

  139. Van dr Gaag, M., Snijders, T. A. B., & Flap, H. D. (2004). Position generator measures and their relationship to other social capital measures. Retrieved from http://gaag.home.xs4all.nl/work/PG_comparison.pdf.

  140. Van Staveren, I., & Knorringa, P. (2007). Unpacking social capital in economic development: how social relations matter. Review of Social Economy, 65(1), 107–135.

    Google Scholar 

  141. Vriens, E., & Corten, R. (2018). Are bridging ties really advantageous? An experimental test of their advantage in a competitive social learning context. Social Networks, 54, 91–100.

    Google Scholar 

  142. Webster, L., & Fidler, P. (1996). The informal sector and microfinance institutions in West Africa. World Bank. Retrieved from http://www.cabdirect.org/abstracts/19961810335.html.

  143. Welter, F., & Smallbone, D. (2006). Exploring the role of trust in entrepreneurial activity. Entrepreneurship Theory and Practice, 30(4), 465–475.

    Google Scholar 

  144. Werger, C. (2009). Kinship networks, wealth and economic behavior in rural Ethiopia: does family come at cost? Unpublished master's thesis. Wageningen University.

  145. Wooldridge, J. M. (2010). Econometric analysis of cross section and panel data. Cambridge: MIT Press.

    Google Scholar 

  146. Wooldridge, J. M. (2013). Introductory econometrics—a modern approach. Mason: South-Western Cengage Learning.

    Google Scholar 

  147. Xiao, Z., & Tsui, A. S. (2007). When brokers may not work: the cultural contingency of social capital in Chinese high-tech firms. Administrative Science Quarterly, 52(1), 1–31.

    Google Scholar 

  148. Yang, H.-H., Wu, C.-I., Lei, M. K., & Yang, H.-J. (2009). How many are good enough for the adolescent social network nomination. WSEAS Transactions on Mathematics, 8(7), 299–308.

    Google Scholar 

Download references

Author information

Affiliations

Authors

Corresponding author

Correspondence to Getahun Fenta Kebede.

Appendices

Appendix 1

Table 4 Distribution of samples with their sub-cities and cluster sites

Appendix 2

Table 5 Coefficient of correlation (r) between the instrumental variables, SN measures, and enterprise profit

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Kebede, G.F. Network Locations or Embedded Resources? The Effects of Entrepreneurs’ Social Networks on Informal Enterprise Performance in Ethiopia. J Knowl Econ 11, 630–659 (2020). https://doi.org/10.1007/s13132-018-0565-6

Download citation

Keywords

  • Social networks
  • Network locations
  • Embedded resources
  • Informal enterprise
  • Ethiopia