Empirical analysis of the effect of Japanese university spinoffs' social networks on their performance

Entrepreneurial firms have “liability of smallness” and “liability of newness”. A university spinoff, a type of entrepreneurial firm, also lacks internal capital such as financial capital and human capital. Therefore, it is crucial for university spinoffs to utilize external capital, especially social capital, which can provide them important resources.In this study, by using data from Japanese university spinoffs, we empirically examine the effect of university spinoffs' external advice networks on their performance. We focus on nonredundancy in their networks and on the influence of the strength of ties to nonredundant contacts in both business and private aspects. Our results show that nonredundancy in university spinoffs' networks affects their performance positively, and the impact is enhanced by the tie closeness of business relationships and the tie weakness of private relationships. Thus, this study provides not only an insight about university spinoffs' performance but also an additional perspective on the social network theory by adopting the interaction between structural embeddedness and relational embeddedness.

► We examine the effect of university spinoff's external advice network on performance.
► Nonredundancy is associated with superior venture performance.
► The effect of nonredundancy is enhanced by business closeness and private weakness.
► We amalgamate structural embeddedness with relational embeddedness.