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Networks, and their resulting social capital, can be key determinants of successful business start-up for immigrant entrepreneurs. Historically, immigrants have settled in communities characterized by networks that consist of strong ties. Network theory suggests that in addition to strong ties, success also requires the development of weak ties. In this paper, we develop a model of the relationships between strong and weak ties, and the likelihood of a business start-up and its subsequent growth. We also specifically consider the moderating effect of the entrepreneur's human capital in these relationships. Based on this model, we derive a number of theoretical propositions.
Keywords: Immigrant entrepreneurs; social capital; human capital; social network ties.
1. Introduction
The immigrant population in the U.S. is 34.2 million according to a recent census bureau report (USDC, 2005). The U.S. Department of Commerce reports that the foreign-born are more likely to reside in central cities within a metropolitan area (USDC, 1999). Even within an urban area, immigrants often tend to settle in distinct spatial locations that develop into highly close-knit communities often referred to as ethnic enclaves. An ethnic enclave is made up of an interdependent network of social and business relationships that are geographically concentrated (Portes and Bach, 1985). The enclave is a source of social cohesion and economic support because it provides the immigrants with opportunities to socialize and associate with their co-ethnic peers, buy ethnic products and services, find employment in co-ethnic businesses as well as start businesses of their own. In the event of an immigrant deciding to start a business, his/her social network becomes a key determinant of his/her ability to launch a start-up as well as of its subsequent success.
The role of networks in advancing organizational and individual goals is becoming more widely accepted (Hite and Hesterly, 2001; Adler and Kwon, 2002). A network is defined as "the set of social relations or social ties among a set of actors (and the actors themselves thus linked)" (Emirbayer and Goodwin, 1994, p. 1448). Networks are made up of strong and weak ties. Strong ties refer to relationships that are close, stable and binding (Ibarra, 1993). On the other hand, weak ties tend to be more superficial and lacking in emotional investment. They are more likely...