Structural Holes and Entrepreneurial Decision Making

What is it about?

Actors in a position to broker and connect otherwise disconnectedparts of a social network are spanning structural holes. The spanning of structural holes can leverage performance, but in this paper I study if it can also influence entrepreneurial decision making. Studying a network of entrepreneurs–mostly farmers– who have built their own hydroelectric micro-power plants in rural Norway, I find that actors spanning structural holes tend to build relatively large plants. The use of instrumental variables indicates that the spanning of structural holes is a cause, and not an effect, of entrepreneurs’ decisions about plant size. I also find that the entrepreneurs’ formal level of education ispositively associated with the size of the plants being built.

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Why is it important?

I discuss how the findings can have implications for our understanding of decision making and entrepreneurial risk taking beyond thestudied context.

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