Determinants of business and financial network formation by Japanese start-up firms: Does founder’s human capital matter?

Hiroyuki Okamuro and Kenta Ikeuchi

No 21, Working Paper Series from Center for Interfirm Network, Institute of Economic Research, Hitotsubashi University

Abstract: Business start-ups are expected to make major contributions to economic growth. However, most of them lack internal business resources that are necessary for survival and growth. Therefore, business and financial networks that provide business opportunity and external resources are essential for the post-entry performance of start-ups. However, previous studies have regarded such networks as exogenous and not explicitly investigated the determinants of network formation. We argue that the formation of business and financial networks by start-up firms depends on founder’s human capital measured by university education and work experience, and empirically test it with our original survey data of recent Japanese start-ups. Moreover, we focus not only on the size of such networks, but also their quality measured as the status of major partners. Empirical results show that founder’s industry experience for 10 or more years has positive and significant effect on the size of both business and financial networks, while founder’s university education positively affects not only the size, but also the quality of both business and financial networks. Moreover, we also find that founder’s specific strength and personality also significantly affect network formation. We find no distinct differences between the determinants of business and financial network.

Keywords: business network; financial network; start-up; founder; human capital (search for similar items in EconPapers)
JEL-codes: L25 L26 M13 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2012-12
New Economics Papers: this item is included in nep-bec, nep-cse, nep-ent, nep-net and nep-sbm
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https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/25345/ifn_wp021.pdf

Related works:
Chapter: Determinants of Business and Financial Network Formation by Japanese Start-up Firms: Does Founders’ Human Capital Matter? (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:hit:cinwps:21

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