Qual Quant (2012) 46:1643–1657
DOI 10.1007/s11135-011-9472-7
Heterogeneous networks and resource acquisition
of SMEs in emerging economies
Karen Yuan Wang · Yue Wang · Kai-Ping Huang ·
Jingsong Deng
Received: 28 August 2010 / Accepted: 3 March 2011 / Published online: 26 March 2011
© Springer Science+Business Media B.V. 2011
Abstract It is acknowledged that social capital plays an important role in the growth of
entrepreneurial firms. However, few studies have examined the contribution and function of
social capital networks that contain structural holes (heterogeneous networks) in emerging
economies. It is not clear how trustworthiness and behavioural commitment impact on effectiveness of these networks in obtaining resources. This study explores how heterogeneous
networks characterize successful entrepreneurship of small-medium enterprises in such setting. We find that behavioural commitment moderates the relationship between heterogeneous
networks and resource acquisition, while trustworthiness does not significantly moderate this
relationship. The impact of the findings on the literature and practice in emerging economies
is discussed, as is the need for future research in this domain.
Keywords Heterogeneous networks · Trustworthiness · Behavioural commitment ·
Resource acquisition · Entrepreneurs · Emerging economies
1 Introduction
Resource acquisition is vital to entrepreneurial success (Brush et al. 2001; Martens et al.
2007). According to resource-based view (Barney 1991), firms can earn sustainable returns
if they have superior resources (Street and Cameron 2007). An imperative task of entrepreneurship thus is to acquire resources strategically (Baker and Nelson 2005; Martens et al.
K. Y. Wang (B) · K.-P. Huang
School of Management, University of Technology, Sydney,
PO Box 123, Broadway, Haymarket, Sydney, Australia
e-mail: [email protected]
Y. Wang
School of Organization and Management, 5th Floor, Australian School of Business,
University of New South Wales, Sydney 2052, Australia
J. Deng
School of Business, Sun Yat-Sen University, Guangzhou, China
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K. Y. Wang et al.
2007; Siu and Bao 2008; Yiu and Lau 2008). More recently, it is argued that formal and
informal institutions of economies significantly shape the strategies of firms (Peng et al.
2008; Wright et al. 2005). In emerging economies resources are constrained to entrepreneurs of small-medium enterprises (SMEs) due to the highly volatile nature of the political
and unfavourable economic environment (Guillen 2000; Peng et al. 2008). To survive in the
tough conditions, SME entrepreneurs in emerging economies are found to employ social
networks as critical strategies to gain resources while dealing with complex and challenging
institutional environment (Siu and Bao 2008; Yiu and Lau 2008).
Despite the numerous interests in entrepreneurship of SMEs in emerging economies in the
literature of social networks in the past decade (Yiu et al. 2007), there are two central issues
surrounding the mechanisms of resource acquisition of SMEs in the emerging economies
remaining under-addressed. One is the extent to which heterogeneous networks is taken as
a social instrument by entrepreneurs to facilitate firm resource acquisition (Burt 2005; Jack
2005; Stam and Elfring 2008). Whereas much work has focused on the role of the homogeneous network which is composed of strong, closed ties in firm performance (Uzzi 1997; Siu
and Bao 2008), surprisingly few studies have examined how an entrepreneur’s embeddedness in heterogeneous networks which links heterogeneous social clusters through weak ties,
is related to resource acquisition of entrepreneurial orientation in these economies (Moran
2005; Street and Cameron 2007).
The second issue concerns understanding of the extent how devoted those whom are
pursued by SME entrepreneurs for firm resources are to the weak, non-bounded relationships has an influence on outcomes of SMEs’ resource acquisition (Moran 2005; Street and
Cameron 2007). The positive correlations among trust, networks and resource acquisition
have received empirical support in the previous studies of intra-firm resource transfer within
homogeneous networks in developed economies (e.g. Tsai and Ghoshal 1998). However, little
is known whether trustworthiness and behavioural commitment play a same role in interorganizational resource transfer within heterogeneous networks in the emerging economies.
Institutional deficiency theory (Martinsons 1998, 2008) argues that personal connections
(guanxi in China, blat in Russia, etc.) and blurred business–government relations in emerging economies result in country’s lack of institutional trustworthy in marketspaces. Given
heterogeneous networks which do not involve mutual obligation and are influenced by selfinterest (Medcof 2001; Uzzi 1997; Walker et al. 1997), trust and commitment at the individual
level may become a condition if the expected outcomes are to be obtained (Blau 1968; Healy
2001; Molm et al. 2000). SEM entrepreneurs lacking in essential resources have to seek establish relationship (i.e. be dependent upon) with the resource holders. According to resource
dependency theory (Pfeffer 1981), the resource holders in the weak, non-bounded ties of
heterogeneous networks can exercise substantial power over SEM entrepreneurs and choose
to leave the relationship in any time if no trust and commitment (Michener 2004; Beugelsdijk
and Schaik 2005; Siegrist et al. 2003).
This research therefore will examine these issues by investigating entrepreneurs in the
world’s largest emerging economy—China. Specifically, this paper aims to address (1) the
extent to which heterogeneous networks play a role in firm resource acquisition in an emerging economy; and (2) whether there is the moderating effect of trustworthiness and behavioral
commitment of resource holders of entrepreneurs’ link on the relationships between heterogeneous networks and the entrepreneurial goal of resource acquisition. Trustworthiness
refers to the confidence of one party in that the other party, across the structural-hole link,
will act with reciprocal reliability and risk-free conduct in social exchanges (Molm et al.
2000), and behavioural commitment refers to a pattern of social exchange in which the
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parties of the structural-hole link choose to exchange repeatedly with one another, rather
than with alternative partners (Kollock 1994; Molm et al. 2000).
Our study makes two contributions to the literature. First, we empirically contribute to
the understanding of how SME entrepreneurs strategically obtain resources through heterogeneous networks by examining the moderating effect of trustworthiness and behavioral
commitment of resource holders. Second, theoretically we contribute to the entrepreneurial literature by integrating social networking theory with resource dependency theory and
institutional deficiency theory to explain the complex process of entrepreneurs’ resource
acquisition in emerging economies which are largely ignored by previous research (Burt
2005). As such, this study provides initial evidence of the mechanism of heterogeneous
networks and resource acquisition in the context of an emerging economy.
2 Theoretical background and hypotheses
2.1 Heterogeneous networks and resource acquisition
The strategic management literature indicates that the relational resources embedded in networks play a significant role at a firm operational level (Ahuja 2000; Kale et al. 2000; Moran
2005; Xiao and Tsui 2006; Zaheer and Bell 2005). Social capital is a relational resource
that is embedded in networks and facilitates collective action for the exchange of tangible
and intangible resources (Baker 1990; Bourdieu 1986; Burt 1992; Coleman 1988; Nahapiet
and Ghoshal 1998; Tsai and Ghoshal 1998; Uzzi 1997). Social capital can be differentiated
in two types: bonding and bridging social capital. Bonding social capital is embedded in
the strong ties of networks amongst homogeneous individuals or groups, whereas bridging
social capital which is a focus of our study is embedded in the weak ties of heterogeneous
networks amongst heterogeneous individuals or groups that might otherwise remain unconnected (Burt 2005; Putnam 2000). Heterogeneous networks are defined as those connections
across structural holes that link heterogeneous social clusters (within which relationships
are denser than they are outside the cluster) to generate bridging social capital facilitating
collective action for access to diverse sources of resources for involved parties (Burt 2005). A
structural hole is the absence of ties between two actors from different dense social clusters
in a network (Burt 2005) (Fig. 1).
Resources in this study refer to tangible goods, such as financial resources, land or production-related resources (Uzzi 1999), and intangible goods, such as business information,
knowledge and opportunities (Ahuja 2000).
Institutional-based view suggests that strategic choices are not only driven by industry
conditions and firm capabilities, but are also a reflection of constraints of a particular institutional framework that entrepreneurs confront (Peng et al. 2008). In developed economies,
heterogeneous networks are mainly adopted as a value-added strategy by high-technology
firms to create competitive advantages and to gain value-added resources, novel ideas and new
technologies in the start-up or expansion stage (Moran 2005; Stam and Elfring 2008). Developing heterogeneous networks, however, is a vital strategy chosen by SME entrepreneurs
to survive and grow in emerging economies. SME entrepreneurs face an unfair competition
imposed by formal institutions (Tang et al. 2008; Venkatraman and Lee 2004), even though
they are making an increasingly significant contribution to the economies (Batjargal 2006;
Fung et al. 2007; Siu and Bao 2008). There is difficult for them to gain the needed resources
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SME Entrepreneurs:
Structural-hole link:
K. Y. Wang et al.
Friends:
Friends’ Friends:
Closed link:
Industry cluster and social cluster:
Fig. 1 SME entrepreneur and structural-hole links
within their homogenous networks where other SME entrepreneurs are also constrained by
the same unfavourable institutions.
In the emerging economies such as in Russia, India and China, heterogeneous network is
strategically utilised to channel resources to firms (Batjargal 2006; Kumar and Sethi 2005;
Luo 2003; Peng and Luo 2000). In the past two decades SMEs have emerged at an unprecedented rate in China and Russia and rapidly occupied various niche markets (Batjargal 2006).
However, the rapid growth in the number of SMEs in the emerging economies has also created significant shortages of resources for the normal operation of these firms. These firms
are operating in an environment that lacks sufficient market institutions and implementation
of the rule of law (Wu and Huang 2008; Yiu and Lau 2008). Different to the developed economies, the government in emerging economies at both the central and local levels controls
a wide range of important resources, such as land (e.g., land for properties and plant operation), finance (e.g., bank loans), key technologies, licensing (e.g., special industries) and
policy information about industrial protection and production materials (Ahlstrom et al. 2000;
Wu and Huang 2008). The government’s prioritizing support to state-owned enterprises and
large private firms by providing these resources leaves SMEs in a tough condition to survive
(Hu 2005). To survive, entrepreneurs of these firms have to seek out the source of resources
or influence the distribution of resources outside their own industry (Batjargal 2006; Peng
and Luo 2000; Wu and Huang 2008). Rent-seeking activities and entrepreneurship agents,
for instance, have played a critical role in resource acquisition in China since the 1980s.
Ties with government officials have been constantly reported to represent a unique type of
relational resource to facilitate business resource acquisition in Russian, Poland and China
(Batjargal 2006; Child 1994; Li and Zhang 2007; Luo 2000; Spicer et al. 2000; Wang 2007;
Yiu and Lau 2008). It is also found that entrepreneurs tend to hire and encourage managers
who have prior ties outside the immoderate business group (Ahlstrom et al. 2000; Keister
2001; Luo 2003; Peng and Luo 2000). The critical competence of entrepreneurial talent is
described as the ability to develop heterogeneous networks (Wu and Huang 2008).
Heterogeneous network ties enable SME entrepreneurs to gain access to diverse sources
of resources or exclusive resources to overcome the above mentioned limitations (Brass et al.
2004; Burt 2005; Peng and Luo 2000; Venkatraman and Lee 2004; Walker et al. 1997).
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The heterogeneous networks provide SME entrepreneurs with access to new sources of tangible resources, which are unavailable or competed for within a close network (Burt 2005;
Peng and Luo 2000; Ahuja 2000).
Most importantly, unlike the case of homogeneous networks where people access to the
same tangible and intangible resources, in heterogeneous networks, SME entrepreneurs identify and gain exclusive, intangible resources from various sources, such as new technologies,
applications, skills and business opportunities in a niche market, which cannot be obtained
from homogenous networks (Burt 2005). Moran (2005) finds that the relational resources
embedded in structural-hole links contribute to explaining innovated-oriented tasks.
Using a heterogeneous network as a strategy to acquire resources is reinforced by cultural
and historical factors in these emerging economies like India, Hungary, Russia and China,
where doing business has been relational oriented—which stresses the development of social
networks wherever possible and with whomever possible (Batjargal 2006; Kumar and Sethi
2005; Luo 2003, 2008; Spicer et al. 2000; Wang et al. 2003; Wellman et al. 2001). On the
basis of the above discussion, the following hypothesis is proposed:
Hypothesis 1 Heterogeneous networks are positively related to SME firm resource
acquisition in emerging economies.
2.2 Moderating effect of trustworthiness of the dominant side
Although SME entrepreneurs can be substantially awarded by connecting in heterogeneous
networks, these external relationships can also be viewed as a control mechanism to SMEs
(Street and Cameron 2007). Resource dependency theory proposes that the greater a firm’s
reliance on another party for an important resource, the greater the likelihood that the firm
will adapt their behaviours to comply with that party’s expectations (Pfeffer and Salancik
1978; Street and Cameron 2007). The structural-hole link is characterized by uncertainty
and asymmetry in terms of the contributive value and influential power of the two sides. A
resource or source holder from another social cluster whom is connected for a purpose of
resource acquisition by the entrepreneurs becomes a dominant side to control the process and
further success of exchanges. Bridging a structural hole within the heterogeneous network
renders access to a territory in which people usually do not know each other well and most
critically are not necessarily accountable to each other. Engagement of these relationships is
rather based on self-interest (Brass et al. 2004). In this regard, heterogeneous networks do
not necessarily lead to firm resource acquisition (Brass et al. 1998; Uzzi and Spiro 2005).
SME entrepreneurs in emerging economies inevitably risk being manipulated, by the
dominant side and incurring high costs when dealing with heterogeneous networks (Welter
and Smallbone 2006). Trustworthiness and commitment of the dominant side of the structural-hole link can be critical to break this vicious circle (Sherer 2003; Uzzi 1997). Albeit
noting that trust may be less likely to be a salient feature of the structural-hole links of heterogeneous networks, Burt (1992, 2005) acknowledges that such networks are as dependent
on trustworthiness as the value created by the parties involved in exchanges. Portes and
Sensenbrenner (1993) believe that entrepreneurs expect social networks to diminish behaviour based on greed, fulfil reciprocal relationships and subordinate immoderate desires to
longer-term achievement.
Trustworthiness reduces the risk of opportunism in heterogeneous networks (Beugelsdijk
and Schaik 2005; Siegrist et al. 2003) to increase chances of successful resource exchanges.
Institutional trust refers to trust in the institutional environment, which includes formal
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organizations, sanctioning mechanisms through the implementation of the legal process
(Welter and Smallbone 2006). It provides a broadly secure condition for business transfers between trade partners, firms and firm-individual relations at the society level. However,
in emerging economies, the level of institutional trust is low (Child and Mollering 2003;
Fukuyama 1995; Welter and Smallbone 2006), compared with that in developed economies.
Consequently, entrepreneurs employing heterogonous networks in emerging economies
have to seek heavily trusting relationships for business at the individual level (Child and
Mollering 2003; Fu et al. 2006). Most entrepreneurs believe that a signed contract does not
preclude business (Uzzi 1997; Wang et al. 2003), but that a relationship based on interpersonal trust fulfils business purposes (Kumar and Sethi 2005). In the context of no-bounded
relationships, any analysis of issues related to exchanges must take into account the fact
that reciprocity is conditioned and an instrumental concept that is based on the belief that
both sides should be in the reciprocal exchange (Fan 2002; Huang et al. 2003). Trustworthiness facilitates cooperation across clusters of a society in successful social exchanges. The
following hypothesis is thus proposed that in an emerging economy:
Hypothesis 2 Trustworthiness positively moderates the relationship between heterogeneous networks and SME firm resource acquisition. Specifically, the correlation
between heterogeneous networks and resource acquisition will be higher when the
trustworthiness of the dominant side is stronger.
2.3 Moderating effect of behavioural commitment
The literature reveals that, in general, behavioural commitment in exchange relations plays
a role in social capital outcomes (Adler and Kwon 2002; Kollock 1994; Lawler and Yoon
1996; Molm et al. 2000; Pildes 1996). Behavioural commitment in the present context refers
to dedication to a relationship that is long-term cooperative and guided by expectations of
repeated exchanges for mutual value (Molm et al. 2000; Provan and Gassenheimer 1994). It
involves the willingness of both sides to deliver desirable value to each other.
Behavioural commitment varies inversely with power (Lawler and Yoon 1996). Dependence creates unbalanced power relationships, which generates incentives for commitment
of the dependent side as well as opportunistic chances for the less dependent side which
brings more desirable value to exchange.
Resource dependency theory (Pfeffer and Salancik 2003) suggests that the more dependent
side is expected to make the first move by providing lateral, valuable commitments before
tangible results and benefits are to flow from the targeted exchange. In resource exchanges,
SME entrepreneurs normally initiate conveying credibility to attract the resource (or source)
provider’s commitment through heterogeneous networks (Zott and Huy 2007). However, the
dominant side tends to be less committed than the less powerful one, as behavioural commitment reduces their transaction costs but increases opportunity costs (Molm et al. 2000).
Clearly, for the more powerfully dominant side, behavioural commitment to a particular
structural-hole link means predictability at the cost of forgoing the opportunity to explore
others, possibly better alternatives (Molm et al. 2000). If the two parties are not well aligned,
then the dominant side of the structural-hole link is able to neglect reciprocal norms by doing
nothing in return, or turning to other relationships for greater benefits.
Compared with developed economies, the dominant side of heterogeneous network in
emerging economies can exercise more manipulative power upon the resource seekers due
to exposure to more alternatives and the absence of the formal marketing institutions. In
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the fast-growing emerging market, quite often a resource provider or a source or resource
holder is ‘pursued’ by entrepreneurs as resource seekers from a number of firms, who usually
initiate the structural-hole links (Wang et al. 2003; Wu and Huang 2008). While entrepreneurs try to attract the dominant party to commit to the structural-hole link, they will lose
out in social exchanges without the behavioural commitment of the dominant side. There
are, for instance, many cases of unsatisfactory outcomes in exchanges across structural holes
in Chinese business, including examples of nepotism, overt favouritism and even hoaxes
(Luo 2000, 2008; Tang et al. 2008). The dilemma is that the bridging of structural holes
to link members of heterogeneous networks is vulnerable to opportunism in general, but
that individual entrepreneurs still proactively and strategically cultivate mutual behavioural
commitment with expectation for reciprocity of the other side of the link (Batjargal 2006).
Behavioural commitment of the resource or source holder side is vital to success of SME
entrepreneurs’ resource acquisition with the context of no obligation (Achrol and Gundlach
1999; Das et al. 1998; Park and Luo 2001). Indeed, Molm et al. (2000) find that behavioural
commitment is more important than the equality of the exchange in the subjective evaluations
of the character of the other party in an exchange. The following hypothesis is thus proposed:
Hypothesis 3 Behavioural commitment positively moderates the relationship between
heterogeneous networks and SME firm resource acquisition. Specifically, the correlation between heterogeneous networks and resource acquisition will be stronger, when
behavioural commitment of the dominant side is higher.
3 Method
3.1 Sampling and procedure
China, one of the largest and most rapidly growing emerging economies, was chosen as the
location of this study.
The participants were entrepreneurs who operated business ventures and who had responsibility for the strategic and administrative activities of their respective firms. The sample
was randomly drawn from a list of firms compiled from the databases of city administration
of industry and commence in Sichuan province, China. Research assistants were hired to
distribute 170 questionnaires. They visited the selected entrepreneurs in person to have the
questionnaire completed, and the respondent’s business card was attached to each questionnaire to verify the participation of the entrepreneurs in the survey. The investigation yielded
a useful sample of 154 respondents (112 men and 42 women) who represented two industries, including service and retail industries. The response rate was 83%, which is fairly high,
because of the way that the data were collected. The means of the firm existence years since
the firm’s establishment is around 9 years (means = 9.02); and the means of the firm size
is around 30 employees (means = 2.75). The means of entrepreneurs’ working years in the
same firm is around 8–10 years (means = 4.58) in Table 1.
3.2 Validity
To ensure face and content validity, two steps were taken. First, the survey instrument was
developed and modified based on published empirical studies that pertain to the effect of
bridging social capital on related variables. The questionnaire items were translated from
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Table 1 Means, standard deviations, and Pearson correlations for variables
M
SD
1
2
3
4
5
6
1. Firm year
9.02
1.9
–
2. Firm sizea
2.75
1.3
0.36**
3. Work years in co.b
3.38
1.6
0.58**
0.35*
–
4. Acquisition of resources
3.7
1.1
0.08
0.25
0.41
–
5. Heterogeneous network
4.5
0.66
0.12
−0.03
0.41**
0.49**
–
6. Trustworthiness
4.3
1.3
−0.08
−0.12
0.01
0.20
0.05
–
7. Behavioural commitment
3.72
0.86
−0.07
0.05
0.15
0.39*
0.51**
0.10
7
–
–
† p < 0.10, * p < 0.05, ** p < 0.01 (2-tailed)
a Firm size was coded as 1 = 1−10; 2 = 11−30; 3 = 31−100; 4 = 101−200; 5 = over 200; 6 = over 1000
b Work years in company was coded as: 1 = less than 2 years; 2 = 2–5 years; 3 = 6–10 years; 4 = 11–20 years
and 5 = over 20 years
English into Chinese. The Mandarin and English versions were checked for equivalency
in meaning. Second, a pilot test consisting of a questionnaire survey was conducted. The
questionnaire was then modified based on the feedback.
To ensure discriminant validity, all items were tested for common method variance using
Harman’s one-factor test (Podsakoff et al. 2003) and factor analysis with varimax rotation.
There was no evidence of common method variance (with a factor loading of 0.40 as the
criterion for inclusion). Some items were deleted because of low factor loading. The resulting
items yielded a reliable Cronbach’s alpha.
3.3 Measures
All measures (as described below) were assessed by asking the subjects to rate their level
of agreement with a given statement on a five-point Likert-type scale ranging from 1 for
‘strongly disagree’ to 5 for ‘strongly agree’.
3.4 Dependent variable
‘Resource acquisition’ measured the extent to which a firm obtained heterogeneous resources
through networking. This construct is developed from Mahoney (1995) analysis of resourcelearning theory and consisted of three items (Cronbach’s alpha coefficients = 0.86).
3.5 Independent variables
‘Heterogeneous network’ measured the extent to which an entrepreneur networked with outsiders of their own industry to do business (established brokerage relationships) and developed
from the literature of social networks Xin and Pearce (1996) and Burt (2005). This construct
was composed of three items starting with ‘In the past 3 years, I have had good interpersonal
relationships with acquaintances for business reasons who were’ (i) government officials;
(ii) from other industries; (iii) from other sectors.(Cronbach’s alpha coefficients = 0.78). An
‘acquaintance’ (shou ren in Mandarin) in Chinese society means someone whom the focal
person knows and may intentionally help, but who is not yet a close friend and whom is not
known well in terms of deep personal issues, e.g. ethical and social values (Luo 2008).
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‘Trustworthiness’ measured the extent to which an entrepreneur believed that network
members acted in accordance with the norms of reciprocity (Luo 2000). The scale to measure this variable was modified from those of Aulakh et al. (1996) and Putnam (2000), and
consisted of three items (Cronbach’s alpha coefficients = 0.85).
‘Behavioural commitment’ gauged the extent to which an entrepreneur received assistance from network acquaintances(Peng and Luo 2000). The scale for this variable was
developed and modified from that of Achrol and Gundlach (1999), and consisted of three
items (Cronbach’s alpha coefficients = 0.78).
3.6 Control variables
Three control variables were included in the analysis: (i) ‘firm size’ (measured by the number
of employees in the firm); (ii) ‘firm age’ (measured by the number of years since the firm’s
establishment); and (iii) ‘work years’ in the firm (the number of years of involvement by the
entrepreneurial respondent).
3.7 Analysis
Hierarchical regression analysis was conducted of the moderating effects of trustworthiness and behavioural commitment on the relationship between heterogeneous network and
resource acquisition using the control variables of firm size, firm age, entrepreneurs’ work
years in the firm.
4 Results
The means, standard deviations and Pearson correlations for all variables are reported in
Table 1. The There were positive correlations between: (i) heterogeneous network and
resource acquisition (r = 0.49; p < 0.01); (ii) resource acquisition and behavioural commitment (r = 0.39; p < 0.05); and (iii) heterogeneous network and behavioural commitment
(r = 0.51; p < 0.01). However, there was no significant correlation between heterogeneous
network and trustworthiness or between resource acquisition and trustworthiness.
The results of hierarchical regression analysis are shown in Table 2. Heterogeneous network had a significant, positive effects on resource acquisition (β = 0.58; p < 0.01)
in Model 1. Hypothesis 1, which states that heterogeneous networks are positively related
to firm resource acquisition in emerging economies, is thus supported. Model 3 in Table 2
shows that behavioural commitment is significantly related to resource acquisition (β = 0.25;
p < 0.05), with heterogeneous network controlled for in the model. The interactive effect of
heterogeneous networks and behavioural commitment is also significantly related to resource
acquisition (β = 0.65; p < 0.01).
Hypothesis 3, which states that behavioural commitment moderates the relationship
between heterogeneous networks and resource acquisition, is thus fully supported.
The results of hierarchical regression (Table 2) indicate that trustworthiness did not significantly moderate the relationship between resource acquisition and heterogeneous network.
Hypothesis 2, which stated that trustworthiness moderates the relationship between heterogeneous networks and firm resource acquisition, is thus rejected.
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Table 2 Hierarchical regression analysis of moderating effect on heterogeneous network and resource acquisition in an emerging economya
Variable
Resource acquisition
Model 1
Model 2
Model 3
Model 4
Controls
Firm year
−0.11
−0.05*
−0.04
−0.05
Firm size
−0.22
−0.28
−0.09
−0.14
Working years in co.
−0.25
0.39
−0.03
0.1
Main effects
Heterogeneous network (HN)
0.54*
0.52*
Trustworthiness
0.58*
0.15
0.13
Behavioral commitment
0.25*
0.32
Interactive effects
HN × Trustworthiness
0.11
HN × Behavioral commitment
0.65**
R2
0.51
0.67
0.59
Adjust R2
0.42
0.62
0.35
0.49
F
3.63***
4.4**
2.04*
2.0*
Observation number
154
154
154
154
0.65
* p < 0.05; ** p < 0.01; *** p < 0.001
a Standardized coefficients are reported
5 Discussion
SME firms in emerging economies have received attention worldwide, leading to the importance and increasing amount of social capital research in entrepreneurship studies. However,
more work is needed in which the process and procedural components in specific aspects
of entrepreneurship are specifically tested. Focusing on the dynamic situation in China, this
study contributes to the literature on social capital and entrepreneurship by exploring the
function of heterogeneous networks as an entrepreneurship strategy.
5.1 Theoretical implications
Although the importance of heterogeneous networks has been recognized for more than a
decade (Burt 1992, 2005), their role in business has not yet been adequately investigated
and rationalised. Based on social capital theory a, our study explores and provides empirical
evidence that heterogeneous networks containing structural holes play an important role in
resource acquisition by SMEs in an emerging economy.
We also base our analysis on resource dependence theory to understand the mechanism of
heterogeneous networks and resource acquisition. The findings indicate that contextual factors play a moderating role in such a relationship in the context of imbalance power in resource
exchange. Although much research into behavioural commitment in social exchanges within
homogeneous networks has been done (Molm et al. 2000), this study looked into the previously unexamined issue of the role of behavioural commitment in heterogeneous networks.
Our findings contribute to the literature by fully supporting the hypothesis that behavioural
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commitment moderates the relationship between heterogeneous networks and firm resource
acquisition in SEMs in the emerging economy. We explain the psychological reason of
entrepreneurs related to this factor to strategically overcome high uncertainty and risk in a
transitional economic environment.
The study also contributes to an understanding of the role of trustworthiness in entrepreneurship resource acquisition in emerging economies (Kale et al. 2000). Interestingly, our
findings indicated that trustworthiness has no significant moderating effect on the relationship
between heterogeneous networks and resource acquisition in the emerging economic context.
Specifically, SME resource acquisition through heterogeneous networks is not facilitated by
trustworthiness. The results may suggest that the integrative mix of traditional cultural values, the nature of heterogeneous networks and the unfavourable environment of an emerging
economy towards SMEs have a negative impact on the trust development of entrepreneurs in
this particular process of resource pursuit. SME entrepreneurs perceive that there are limited
opportunities to develop a significant trusting relationship in these heterogeneously social
clusters, which is characterised as expedient oriented.
According to agency theory (Eisenhardt 1985), it is possible that the involved sides in heterogeneous networks might develop calculation-based exchanges—based on the assumption
that the dominant side might not necessarily guarantee resource acquisition in the long term,
but will comply with reciprocity as a ‘rule of the game’ in early exchanges with a sign of
behavioural commitment.
The present findings contributes to the literature of commitment and trust by extending
the research of Molm et al. (2000), who found that reciprocal exchanges for a short period
of time are not necessarily conducive to building trust in a laboratory condition, in business setting with an empirical evidence. The present findings contribute to the social capital
literature by extending Burt (2005) contention that it is risky to trust in a heterogeneous network that contains structural holes, in the context of emerging economy. Finally, the findings
lend empirical support to the proposition of Brass et al. (2004) that the theory of structural
holes is more applicable to networks of market transactions than to networks of cooperative
relationships.
5.2 Practical implications
Our study manifests the important argument concerning whether and to what extent, heterogeneous network exerts a role in entrepreneurship outcomes that are associated with the
complex situation defined by a particular institutions. Through heterogeneously social networks entrepreneurial action in emerging economies can convert limited resources into ‘a
rich mining’ and compensate for constraints on access to resources within their own cluster.
The findings of previous studies indicate that, in contrast, heterogeneously social networks
have marginal impact on entrepreneurial firm performance in developed countries, such as
Sweden, the US and UK (Brown and Butler 1995; Golden and Dollinger 1993; Jack 2005;
Johannisson 1996), because of their mature economies with the high institutional trust.
Our findings highlight the complex nature of heterogeneous networking. The nature of
the networks is shaped by its actual structure, the structural-hole links and weak bonds. SME
entrepreneurs, especially for these nascent and embryonic ones, must be aware of involvement
in latent economic and social risks in the context of emerging economies and should reduce
the expectation of trustworthiness and the level of reciprocity when networking amongst
heterogeneous social clusters.
123
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K. Y. Wang et al.
6 Limitations and future research
Certain limitations are acknowledged in the present study, which have the virtue of pointing
the way to potentially fruitful avenues of future research. First, the study has examined only
two contextual factors (trustworthiness and behavioural commitment) that play a part in the
interaction between heterogeneous networks and resource acquisition. The mechanism of
resource acquisition and its further outcomes of SME firm in emerging economies can be
influenced by multi- contingent elements (Lawler and Yoon 1996; Molm et al. 2000). Future
research would benefit by examining the relationships between firm resource acquisition and
other factors to provide a comprehensive understanding.
Methodologically, the literature has proved that measuring trust and trustworthiness is
always challenging due to the nature of subjectiveness, fluidness and complexity of trust.
Although the measurement of trust in our study generates a relatively high reliability, adopting diverse approaches to test the trustworthiness of the link between social clusters would
be sufficiently warranted in future research.
The specific characteristics of the parties could affect outcomes of network interaction, as
has been suggested by strategic alliance theory (Saxton 1997). In this regard, it would be especially interesting for future research to investigate the influence of entrepreneurial personality
(Littunen 2000) on the development and utilisation of networks that contain structural holes.
7 Conclusion
In conclusion, the research presented in this paper provides evidence that the heterogeneous
network perspective helps to explain resource acquisition of SME and has shown that the
moderating effect of behavioural commitment in this mechanism in emerging economies.
The findings of the study cultivate a view which allows current trends in bridging social
capital of entrepreneurship and the development of the economy to be integrated with the
theoretical analysis reflecting RBV and RDT. It also demonstrates the need for future research
to address the complex process of entrepreneurs’ resource acquisition.
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