The Functional Diversity and Spillover Effects of Social Capital

Entrepreneurial networks are functionally diverse. They can be used to access information about technologies and markets or to reduce uncertainties. A network's function affects its structure and the nature of the relationship that exists between networking effort and enterprise performance. Networks that reduce uncertainty are small and cohesive. Here, the positive relationship between co?networkers' efforts and own enterprise performance is cancelled out by a negative relationship between own networking effort and enterprise performance. In contrast, the strong positive relationship between own networking effort and enterprise performance within networks designed to provide access to information about technologies and markets dominates the negative relationship between co?networkers' efforts and own enterprise performance. This last relationship is consistent with the existence of negative spillover effects in the second type of network.