Opening closure: Intercohesion and entrepreneurial dynamics in business groups

David Stark and Balázs Vedres

No 09/3, MPIfG Discussion Paper from Max Planck Institute for the Study of Societies

Abstract: Entrepreneurial groups face a twinned challenge: recognizing new ideas and implementing them. Recent research suggests that connectivity reaching outside the group channels new ideas, while closure makes it possible to act on them. By contrast, we argue that entrepreneurship is not about importing ideas but about generating new knowledge by recombining resources. In contrast to the brokerage-plus-closure perspective, we identify a distinctive network position, intercohesion, which is found at the overlap of cohesive group structures. The multiple insiders at this intercohesive position participate in dense cohesive ties that provide close familiarity with the operations of the members in their groups. Because they are members of multiple cohesive groups, they have familiar access to diverse resources. First, we test whether intercohesion contributes to higher group performance. Second, because entrepreneurship is a process of creative disruption, we test intercohesion's contribution to group instability. Third, we move from dynamic methods to historical network analysis and demonstrate that coherence is a property of interwoven lineages of cohesion that are built up through an ongoing pattern of separation and reunification. Business groups use this pattern of interweaving to manage instability while benefitting from intercohesion. To study the evolution of business groups, we construct a dataset that records personnel ties among the largest 1,696 Hungarian enterprises from 19872001.

Date: 2009
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:mpifgd:093

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