A foot in the door: Field-experiments on entrepreneurs’ network activation strategies for investor referrals

• Main Authors: NAI, Jared, LIN, Yimin, KOTHA, Reddi, BALAGOPAL, Vissa
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2022
• Subjects: Entrepreneurship; Social networks; Network activation; Venture financing; Field experiments; Entrepreneurial and Small Business Operations; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/6879; https://ink.library.smu.edu.sg/context/lkcsb_research/article/7878/viewcontent/Activation_Accept_Manuscript.pdf
• Institution: Singapore Management University

We investigate entrepreneurial network activation—the processes by which entrepreneurs select specific contacts from their existing personal network and persuade the selected contacts to provide referrals to access targeted early-stage investors (venture capitalists or angel-investors). We differentiate between selection of entrepreneur-centric contacts versus investor-centric contacts. We also distinguish between persuasion tactics that induce contacts' cooperation through promises of reciprocity versus offers of monetary incentives. We conducted two field-experiments in India and one in Singapore. Our primary field-experiment involved 42 Singapore-based entrepreneurs seeking referrals from 684 network contacts to reach a panel of four investors. Our evidence suggests that selecting investor-centric contacts leads to greater referral success; in addition, persuasion by promising reciprocity also leads to greater referral success.