Bringing Political Skill into Social Networks: Findings from a Field Study of Entrepreneurs

Sociological Perspective on Entrepreneurship

Entrepreneurial environments are highly uncertain and ambiguous (Lichtenstein et al., 2006). In starting and developing new ventures, entrepreneurs are heavily involved in tasks such as seeking market and growth opportunities, formulating business strategies and business models, negotiating new business deals, acquiring essential resources, and constructing effective relationships (Baron, 2008). However, new ventures are often information- and wealth-constrained (Shane and Cable, 2002). Entrepreneurs thus face substantial difficulty in responding to technology and demand uncertainties. Often they must rely on social relations to identify opportunities for launching new ventures and to garner crucial information and resources.

Resources obtained through social relations are the foundation of social capital, which has two key components (Lin, 1999). First, social resources are embedded in social relations rather than in individuals – that is, social capital is distinct from other capital such as human and financial capital (Lin, 1999). Second, individuals can access and mobilize social capital only when they are cognitively aware of social ties in their networks and of resources those ties possess (e.g., Burt, 1992; Coleman, 1988; Lin, 1999). Social capital, in its various forms, facilitates information and knowledge flows, exerts influence, builds social credentials, and reinforces social identity and recognition (Lin, 1999). Those elements of social capital – information, influence, credentials, and reinforcement – help individuals and groups achieve desirable outcomes (Payne et al., 2011).

Taking the sociological perspective, entrepreneurship researchers have identified that social networks containing social capital are important at various stages of venture development. For example, during venture creation, entrepreneurs consistently use their social networks to gather information and ideas and to identify market opportunities (Ozgen and Baron, 2007; Singh, 2000; Smeltzer et al., 1991). Beyond the venture creation stage, entrepreneurs continue to rely on social networks for acquiring resources such as information, referral, advice, and technology (e.g., Batjargal and Liu, 2004; Jack, 2005; Lee et al., 2001; Shane and Cable, 2002). Social networks offer opportunities to obtain low-cost financial capital (Uzzi, 1999) and enable young ventures to move forward initial public offering (IPO) quickly and earn high IPO valuations (Stuart et al., 1999). Those studies are insightful in showing how social capital enhances venture performance. As described previously, however, they remain limited in addressing the two fundamentally important questions pertaining to entrepreneurial networks, that is, what roles do individual characteristics play in the access and mobilization of social capital to achieve desirable venture performance?

Behavioural Perspective on Entrepreneurship

Separately, researchers who take the behavioural perspective have found that entrepreneurs' individual characteristics such as personality, motivation, cognition, affect, social skill, and political skill have important effects on venture performance (e.g., Baron, 2007, 2008; Baron and Tang, 2008; Baum and Locke, 2004; Ciavarella et al., 2004; Tocher et al., 2012). For example, social skill, which reflects social competence and effectiveness in social interactions, has been found to be significantly related to venture success: more socially skilled entrepreneurs achieved greater financial success in their new ventures (Baron and Markman, 2003; Baron and Tang, 2008). More recently, political skill, a closely related concept, has also been found to be positively associated with entrepreneurial performance (Tocher et al., 2012).

Individual characteristics such as political skill are suggested to help entrepreneurs shape and build resource-rich social networks, which, in turn, provide social capital critical for desirable venture performance (Baron, 2007; Baron and Markman, 2003; Tocher et al., 2012). This suggestion aligns with recent findings that entrepreneurs' networking strategies influence the creation and development of resource-rich networks; that is, strategies such as networking orientation in building potentially valuable ties (Ebbers, in press), participation in heterogeneous industry events or bridging between events with few common participants (Stam, 2010), network-broadening and network-deepening networking styles (Vissa, 2012), and catalysing strategies for efficient tie formation (Hallen and Eisenhardt, 2012). As such, an in-depth understanding of how entrepreneurs' individual characteristics influence their network construction and use will provide additional insights into entrepreneurs' strategic networking actions. To our knowledge, however, no empirical investigations have considered the roles that individual characteristics play in the entrepreneurial process within the social network context.

Integrating the Sociological and Behavioural Perspectives

Combined sociological and behavioural perspectives reveal that social networks and individual characteristics are important yet independent antecedents of entrepreneurial performance. Although outside the entrepreneurship context, emerging literature indicates that individual characteristics influence how people construct and use social networks in organizational settings (e.g., Burt et al., 1998; Kalish and Robins, 2006; Klein et al., 2004; Mehra et al., 2001; Totterdell et al., 2008). For example, self-monitoring is related to network positions: employees high in self-monitoring are more likely than those low in self-monitoring to occupy central positions in their social networks (Mehra et al., 2001): they can ‘take advantage of their personality orientation to forge different types of network structures’ favourable for them (Mehra et al., 2001, p. 141). Individuals spanning many structural holes (i.e., sparse regions in the network with absence of ties between individuals) tend to be independent outsiders searching for change and authority; in contrast, individuals spanning few structural holes tend to be conformist, obedient, and oriented towards security and stability (Burt et al., 1998). Furthermore, individual differences can affect how people use their social networks (Emirbayer and Goodwin, 1994; Stevenson and Greenberg, 2000). For example, managers with higher level of need for cognition better utilize their social networks to search for relevant information (Anderson, 2008). New employees who have more positive core self-evaluations are better at capitalizing social capital for adjusting and assimilating (Fang et al., 2011).

Simultaneously, a recent study of the association of political skill and venture performance focuses on political skill as an individual characteristic that may influence how entrepreneurs construct and use their social networks (Tocher et al., 2012). Although highly correlated with social skill, political skill is more widely studied in organizational settings and refers to ‘the ability to effectively understand others at work and use such knowledge to influence others to act in ways that enhance one's personal and/or organizational objectives’ (Ferris et al., 2005, p. 127). It allows individuals to form constructive and effective relationships with others and adapt to widely ranging social circumstances (Ferris et al., 2007, 2012). Studies on political skill and individual performance (e.g., Ferris et al., 2005) have suggested that political skill affects the ability to develop, maintain, and/or change social relationships, which perhaps explains why individuals with higher political skill tend to perform better in organizations. For instance, they tend to achieve better work performance as assessed by supervisors or peers (Ferris et al., 2005) and achieve better outcomes in managerial positions (Smith et al., 2009). Although some political skill aspects are dispositional, others can be trained and developed through formal and informal developmental experiences (Ferris et al., 2005). We believe that studying the role of political skill in the entrepreneurial process within the social network context adds value to the entrepreneurship literature and provides practical guidelines for entrepreneurs who seek to improve their venture performance.

Taken together, our study seeks to integrate sociological and behavioural perspectives by examining how entrepreneurs' political skill contributes to their network building and their subsequent use of social networks to enhance venture performance.

Data Sources

Two members of the research team interviewed 28 entrepreneurs in ten different industries during a six-month period. The entrepreneurs were all born and started their businesses in the United States. Their average age was 47.3 (SD = 10.6), ranging from 28 to 62 years of age. They had various educational levels: non-degree, bachelor's, master's, and PhD degrees. Their average industry experience was 16.2 years (SD = 9.3), ranging from 2.5 to 32 years. Their venture ages ranged from 3 to 5 years.

Gender, age, education, and prior industry experiences have shown mixed relationships with entrepreneurs' venture performance (e.g., Jo and Lee, 1996; Van de Ven et al., 1984). Moreover, to our knowledge, no literature has evidenced whether those demographic factors are associated with political skill and social relations. For example, Aldrich et al. (1986) tested but found no gender differences in network size and amount of networking activity. Therefore, we are unconcerned about whether those factors significantly confounded our results.

As the interviews progressed, we adjusted the data collection instruments by adding questions to the semi-structured interview protocol and questionnaire (Eisenhardt, 1989b). Our interviews provided much evidence that advances our understanding of how political skill influences the construction and use of social networks. Our study includes: (1) semi-structured interviews with entrepreneurs, (2) questionnaires completed by entrepreneurs, and (3) secondary sources and other data.

Secondary sources and other data

In addition to the interviews and questions, we collected secondary data about entrepreneurs' backgrounds and businesses through the internet (e.g., company websites, LinkedIn), news reports, and on-site observations to validate the self-reported data. For example, we confirmed whether their self-reported numbers of contacts were generally consistent with the numbers indicated in their LinkedIn profiles. We found that some entrepreneurs who reported high levels of political skill received high recommendations from many friends. We often arranged to interview entrepreneurs at their business sites to carefully observe their interactions.

Table II shows descriptive statistics of the self-reported political skills, including network ability, apparent sincerity, social astuteness, and interpersonal influence. We then compared the statistics in our sample with those obtained in prior studies (e.g., Ferris et al., 2005). The comparison shows that the self-ratings of political skill in our sample are only slightly higher than those obtained using large samples. Given our small sample, we consider the scores to be relatively consistent with prior studies. In addition, our respondents' political skills have a relatively wide range, suggesting considerable personal differences. Therefore, selection bias poses no serious concern. We are confident that our sample is relatively representative, mitigating the potential concern that the interviewees who agreed to participate in our research are politically skilled and sociable. Although we cannot completely rule out the social desirability possibility that our interviewees self-inflated their political skill, we believe that social desirability did not distort our results given that several entrepreneurs in our sample reported very low political skill scores. Indeed, across multiple studies and different samples, political skill researchers have found that self-ratings of political skill are significantly correlated with supervisor and peer ratings (Blickle et al., 2011).

Table 2. Statistics of political skill dimensions (N = 28)

	Mean	SD	Minimum	Maximum
Political skill	4.21	0.55	2.33	5
Dimensions of political skill
1. Networking ability	3.97	0.68	2.67	5
2. Apparent sincerity	4.83	0.38	3.33	5
3. Social astuteness	4.03	0.72	1.8	5
4. Interpersonal influence	4.33	0.74	1.5	5

Among the four dimensions of self-reported political skill, most interviewees perceived themselves as highly sincere, and thus apparent sincerity has the smallest variation (SD = 0.33). Social astuteness, networking ability, and interpersonal influence show relatively wide variations and mostly explain differences in overall political skill scores. Therefore, we use a novel approach to visualize the political skill scores along these three most varied dimensions (Figure 1). This visual map allows us to effectively compare cases and contrast patterns of network construction and usage of entrepreneurs with different levels of political skill.

Data Analysis

Consistent with the research design of theory building and many prior studies (e.g., Elfring and Hulsink, 2007; Human and Provan, 2000; Jack, 2005), our study was largely qualitative, being based on data from in-depth interviews. For additional insights, we supplemented the qualitative findings with quantitative data from the questionnaire responses. We analysed our data following Eisenhardt (Eisenhardt, 1989a; Eisenhardt and Graebner, 2007). Specifically, the quantitative data, including scores of political skill, number of social ties, and average tie strength, were calculated and analysed for patterns. The qualitative responses were summarized around the key constructs of political skill, social capital (or social networks), and entrepreneurial performance. Once preliminary analyses were developed from both quantitative and qualitative data, we derived propositions using methods of theory building from case studies.

In our analysis, we first divided the entrepreneurs into two groups based on their self-reported scores of political skill – entrepreneurs with relatively high political skill versus entrepreneurs with relatively low political skill. We based the splitting on the median score of political skill because it has a highly skewed distribution. We then coded the interview transcripts by extracting and summarizing verbal descriptions relevant to the process of network building and network use. Under each process, we further coded the verbal descriptions into social astuteness, networking ability, interpersonal influence, and apparent sincerity, based on words that reflected each dimension. The verbal accounts vividly described the entrepreneurs' psychological characteristics or behavioural tendencies (e.g., sensitivity to subtleties in interaction and ability to read nuances or to develop large networks) and also provided detailed contexts of processes by which the entrepreneurs leveraged their political skill consciously or unconsciously. For example, A1 said: ‘I would say 30–40 per cent of my time … sort of target for investment in building the networks, expanding or feeding the existing network, to make sure the relationships are healthy and growing.’ The quote vividly conveyed A1's networking ability and also explicitly suggested the context where he used his networking ability to strategically develop his personal network. In this case, we coded the descriptions into the ‘networking ability’ dimension of political skill under the process of ‘network building’.

In another example, J1 said: ‘I pick the contact in my network who I think most appropriate for the job given the situation.’ The quote clearly described the context of effectively using her network to get the work done. In addition, she conveyed her social astuteness in sensitivity to the subtle context of when, where, and whom to summon for the task. In this case, we coded the descriptions into the ‘social astuteness’ dimension of political skill under the process of ‘network use’. Overall, such coding allowed us to identify associations between political skill and social capital and to observe distinct, contrasting patterns in network construction and use between entrepreneurs with relatively high political skill and those with relatively low political skill. The patterns somewhat suggest that political skill contributes to access and mobilization of social capital.

Per Eisenhardt (1989a, 1989b), we conducted detailed within-case and cross-case analyses between pairs of entrepreneurs to recognize distinct patterns from the data. As described above, we treated the cases as experiments, with each case serving to confirm or disconfirm the inferences drawn from the others (Yin, 1994). For cross-case analyses, we selected pairs of entrepreneurs and listed similarities and dissimilarities between each. We then categorized entrepreneurs according to the variables of interest, such as industry characteristics (e.g., high uncertainty versus low uncertainty) and venture performance (e.g., high versus low). The analyses allowed us to control for certain confounding factors in identifying the patterns and to derive tentative propositions. Then we revisited each case to see whether the data confirmed the propositions. If they did, we used the cases to improve our understanding of the underlying dynamics. After several rounds of iteration between the data and the propositions, we used the literature to sharpen insights yielded by the iterative process. Propositions linking political skill, social capital, and venture performance emerged in an integrative process model.

Access to Social Capital

The three characteristics of social ties that an entrepreneur develops and maintains with various contacts – number, strength, and extent – determine the amount of social capital the entrepreneur can access. Specifically, the number of social ties pertains to the number of contacts the entrepreneur knows and thinks of contacting when needed. The strength of social ties captures whether entrepreneurs and their contacts have strong or weak relationships. Strong ties, typically more reliable than weak ties, involve higher trust, support, and emotional closeness (Granovetter, 1973; Marsden and Campbell, 1984). Thus, while weak ties are useful for transferring information that is highly scattered or unevenly distributed in the network but typically publicly available (e.g., market prices), strong ties are useful for transferring private information, generating new ideas, solving complex problems, or making critical decisions. Strong ties are also particularly useful for individuals in insecure positions (Granovetter, 1973) or changing environments (Krackhardt and Stern, 1988) where they need strong ties for protection and uncertainty reduction. The extent of social ties reflects the diversity of contacts' backgrounds, including occupation, job rank, education, expertise, and professional experience. More extensive network ties increase access to broader information about potential markets, business locations, innovations, sources of financial capital, and potential investors (Aldrich and Ruef, 2006; Dubini and Aldrich, 1991; Renzulli and Aldrich, 2005).

Our data suggest that entrepreneurs' personal networks of social ties vary considerably in number, strength, and extent. More important, entrepreneurs simultaneously maintain two types of social networks: core and extended networks. Core networks typically include friends, colleagues, business partners, and sometimes family members with similar backgrounds and interests. In core networks, entrepreneurs tend to have strong ties, long-term, and stable relationships with social contacts they trust and rely on for obtaining information, referral, social influence, financial capital, and social support. In contrast, extended networks typically include weak ties with contacts who have more diverse backgrounds and interests and more distant and fluid relationships. Contacts in the extended network are good sources for information and referral of investors, clients, or business opportunities.

As Table III shows, core networks have significantly fewer contacts and stronger bonding. Figure 2 shows that core and extended networks together reflect ‘resource-rich networks’ (Uzzi, 1999). Uzzi (1999) examined arm's-length versus embedded social ties to understand how social embeddedness affects organizations' acquisition and financial capital costs in the middle-market banking industry, and found that arm's-length ties are characterized by lean and sporadic transactions and ‘function without prolonged human or social contact between parties … [who] need not enter into recurrent or continuing relations as a result of which they would get to know each other well’ (Hirschman, 1982, p. 1473). In contrast to arm's-length ties, embedded ties promoted mutual benefits ‘through the transfer of private resources and self-enforcing governance’ and ‘by enacting expectations of trust and reciprocal obligation that actors espouse as the right and proper protocols for governing exchange with persons they come to know well’ (Uzzi, 1999, pp. 483–84). Uzzi (1999) captured the two types of ties based on the relationship between the firm and the lending bank: (a) duration of the relationship (in years); and (b) multiplexity of the relationship (number of business and personal bank services the entrepreneur used). He found that arm's-length and embedded ties can complement each other's advantages. Thus a mix of embedded ties and arm's-length ties provides ‘resource-rich networks’ with optimal benefits, both increasing access to financial capital and reducing costs relative to networks composed predominantly of arm's-length or embedded ties. Uzzi's definitions of arm's-length and embedded ties are similar to the weak and strong ties defined in our study. As such, our finding of a beneficial mix of strong and weak ties with social contacts of diverse backgrounds in core and extended networks echoes well with Uzzi's (1999) finding of ‘resource-rich networks’ comprising both embedded and arm's-length ties. Taken together, differences between core and extended networks lead us to ask: As entrepreneurs strategically construct resource-rich networks, what factors provide differential access to social capital?

Politically skilled individuals can better understand social interactions, read nuances and hidden agendas in behaviour, and develop diverse contacts and networks (Ferris et al., 2012; Witt and Ferris, 2003). They combine social astuteness with the capacity to adjust their behaviour according to changing situational demands by appearing to be sincere, inspiring support and trust, and influencing and controlling responses (Ferris et al., 2005, 2007). Thus, political skill involves individual ability to interact with and influence others (Ferris et al., 2005, 2007). Accordingly, we expect that entrepreneurs with different levels of political skill will develop different patterns of social networks and thus have access to different amounts of social capital. We find that political skill is instrumental in enabling the development of resource-rich networks for gaining access to information, money, equipment, influence, and referral. Interestingly, our observationalso reveals that political skill is critical to core network stability and extended network mobility and changing dynamics.

Comparing and contrasting cases allows us to recognize the patterns more easily. Table IV summarizes the number of contacts and average tie strength across core and extended networks for entrepreneurs with high versus low political skill. Figures 3 and 4 present examples of five highly politically skilled entrepreneurs (A2, J1, R2, C1, and D3) and four less-politically skilled entrepreneurs (E2, S1, C2, and M2). We quoted their vivid descriptions of how they constructed their core and extended networks. The visual maps effectively contrast patterns of how entrepreneurs with different levels of political skill construct their networks.

Table IV and Figure 3 show that politically skilled entrepreneurs tend to maintain stable core networks of stronger ties than do less politically skilled entrepreneurs, although the social ties are similar in number. For instance, five within-case analyses of politically skilled entrepreneurs in our study (A2, J1, R2, C1, and D3) distinctly showed that they developed a cohesive core network allowing them to rely on their contacts to make key business decisions or important referrals, to provide financial support, and to get tasks accomplished quickly. As C1 said, ‘Whenever I'm in need, I can rely on them. They are willing to move around their schedules and even go out of their ways in order to get the things done for me.’

Table IV and Figure 4 further reveal that highly politically skilled entrepreneurs tend to dynamically update the contacts in their extended network on a need basis, as compared with less politically skilled entrepreneurs, although they do not differ in either the number or strength of social ties in their extended network. Dynamically updating the extended network enables the entrepreneurs to continually bring new information and novelty into their social networks by building social ties with contacts who have more extensive backgrounds, for example in occupation, job rank, prior education, expertise, and professional experience. The verbal accounts we gathered revealed consistent patterns among the politically skilled entrepreneurs: they actively ‘go to … events’ or ‘talk to different people’ to consciously ‘expand’, ‘grow’, or ‘feed’ their extended network. The verbal accounts also vividly conveyed that political skill affects networking behaviour in instrumental development of personal networks. Specifically, the narratives suggest that networking ability allows them to proactively expand and update their networks, while social astuteness and apparent sincerity enable them to understand various social interactions and to build effective rapport and trust with diverse contacts. In dynamically updating their networks, politically skilled entrepreneurs tend to bring in more new and diverse contacts ‘who are more productive in terms of generating real business leads and more relevant to help grow business’ or ‘on a need basis’. Thus, political skill allows them to strengthen and solidify their relationships with valuable, trustworthy contacts and avoid or reduce less-valuable contacts. This finding is consistent with the suggestion that networking ability, a key dimension of political skill, enables people to mindfully and proactively construct favourable social networks (Thompson, 2005). Below we illustrate two between-case comparisons of how entrepreneurs with high versus low political skill construct their networks.

As Table V shows (also see Figures 3 and 4), S1 and D3 work in similar industries – catering and restaurant – but have contrasting levels of political skill. They construct their networks using widely different processes. This cross-case comparison demonstrates how political skill is conducive to social capital access through networks. Specifically, S1, who reported relatively low political skill (in particular, very low networking ability), owns a small catering and personalized consulting business. She reported difficulty developing a resource-rich network, although she knew the importance of social networks and tried to develop her network for business growth. She developed both her core and extended networks solely on a dense, closed family network that barely grew over the years and remained relatively stagnant without breaking the closed-loop circle. Members with similar family backgrounds could hardly bring her much new information, business opportunities, or resources. Furthermore, she failed to bond strongly with her family members: ‘there is barely anyone in the family circle whom I'm very close to or would trust except my husband.’ In contrast, D3, who reported high political skill (in particular, very high networking ability), owns a successful restaurant business. On one hand, she has maintained a stable, strongly bonded core network of 15–20: most are ‘family members who are also entrepreneurs and share the same entrepreneurial spirit.’ She emphasized that ‘these people are critical for my business development, especially when I seek important advice, or try to secure important business deals and financial support.’ She also manages a large, dynamic extended network of about 200 contacts with diverse backgrounds, including a fast-growing number of media people (e.g., food editors and columnists), customers (many acquaintances in the neighbourhood or friends of friends referred through word-of-mouth), and suppliers (e.g., paper, goods, food suppliers). She contributes freelance articles to food journals and circulates information about innovative menus or food items to her media friends. Her extended network has been growing over the years and continues to expand. Comparing S1 and D3 shows that: (1) although their core networks include similar family member contacts, D3 has stronger bonding with her core network members; and (2) although their extended networks are similar in size, D3's extended network comprises non-family-member contacts with diverse backgrounds and dynamically changing contacts, while S1's extended network is mostly restricted to family members and unchanging over time.

Comparing M2 and A2 (Table VI) confirms that high political skill facilitates access to social capital. Specifically, M2 works in the online gaming industry, and A2 works in the executive recruiting industry. Their industries share a common characteristic: information is highly scattered, implicit, and highly uncertain. However, M2 and A2 possess different levels of political skill and have developed different patterns of social networks providing access to different amounts of social capital. Specifically, M2 reported an overall low score of 3.61 for political skill and particularly low scores in social astuteness and networking ability. Most of his customers are video game publishers and developers obtained mainly through referrals. Although he realizes the importance of social networks, he develops and maintains a relatively small network. He said: ‘I think I've developed a network, but … I don't considerate it that large … Larger is better; the more people you know … and that's really not me, I know a lot of people; they spend a lot of time; they have a huge network of people.’ In sharp contrast, A2 reported an overall high political skill score of 5.00. He said: ‘I communicate reasonably well, and I'm very comfortable talking with people about very important and sometimes potentially controversial or personal issues and without being nervous about it, or without being uncomfortable. Therefore, I'm able to make them feel very comfortable, and the most common thing I hear from people after they meet me for the very first time and spend an hour or two with me, the most common comment … is “I've just told you things that I've never told anybody else and you make me feel so comfortable”.’ Furthermore, A2 skilfully reads nuances and senses others' motivations: ‘It is through conversation and through asking diagnostic questions that draw stories out of them. I'm a strong believer in the power of narrative, and so I create an environment in which I give them permission to tell me stories, face-to-face, over the phone, or in written form, and out of the stories comes the fabric of those intangibles, their value systems, how they feel about work, family life, balance, how they feel about accumulation of wealth and work ethic, and making ethical decisions; all of those things come out of the context of the stories.’ A2's political skill has enabled him to develop a large network of 600–700 people with diverse backgrounds and interests and to dynamically update his extended network. He said: ‘… basically, I would say 30–40 per cent of my time … sort of target for investment in building the networks … expanding or feeding the existing network, to make sure the relationships are healthy and growing.’

Our semi-structured interviews with J1 show the important role of political skill in influencing access to social capital (Figures 3 and 4). J1 reported the second highest overall political skill score in our sample. Her philosophy of developing personal contact networks highlights the four key dimensions of political skill – social astuteness, apparent sincerity, networking ability, and interpersonal influence. Specifically, she owns a consulting firm that helps clients obtain financial loans. When asked how she developed her personal network, she described: (1) ‘approaching people on a conversational basis, but not for the purposes of making a sale or conducting a business transaction’ (i.e., social astuteness); (2) ‘presenting as an interesting and genuine person’ (i.e., apparent sincerity); (3) ‘being able to bring benefits and value to others’ (i.e., networking ability); and (4) ‘on the basis of cultivating relationships of mutual interests and trust, influence can be achieved through maintaining strong ties’ (i.e., interpersonal influence). She said that her political skill facilitated her process of developing and managing her networks dynamically on an ‘as needed’ basis. For instance, she uses her clients' networks to help her get new clients: ‘I initially started my network from a group of 2 to 3 people, relying on purely professional relationships, and then cultivated these professional relationships into close friendships by getting to know my contacts’ families and by attending social events with them. On the basis of reciprocity and mutual benefits, I then grew my network through referrals from the initial 2 to 3 people. Sometimes, one referral source may bring three contacts into my network.' J1 currently maintains an extended network of more than 200 people, with some moving in and out from time to time, based on her personal needs. Her core network consists of roughly 10 to 15 people, some of whom she considers very close. Her extended network consists of people with a wide range of professional backgrounds, including federal government officers, bank loan officers, other business consultants, and small business owners. Overall, J1 shares more social and intellectual interests with contacts in her core network than with those in her extended network.

Mobilization of Social Capital

Access to social capital creates the necessary condition for mobilizing social capital. The amount of accessible social capital mobilized then influences the instrumental outcomes (Lin, 1999). Entrepreneurship researchers have found that the structural characteristics of social networks greatly affect entrepreneurial performance. In terms of the number and strength of social ties, for instance, entrepreneurs who possess social capital characterized by many social contacts, strong personal ties, and direct ties with referrals to investors are more likely to receive funds from venture capitalists (Shane and Cable, 2002). Strong ties reinforced by mutual feelings of attachment, reciprocity, and trust (Uzzi, 1999) are critical to counter uncertainty concerns of potential partners who are often reluctant to risk their reputation, capital, or other resources on uncertain ventures (Lee et al., 2001). Strong social ties could significantly affect venture investment decisions, and thus affect the likelihood and cost of acquiring financial capital (Batjargal and Liu, 2004). In terms of the extent of social ties, for instance, before launching new ventures, entrepreneurs can often identify or obtain valuable information from diverse and extensive contacts in their informal social networks within their industry, such as current or past customers, suppliers, and financial institution employees (Ozgen and Baron, 2007). New ventures associated with high-status contacts were shown to undertake IPOs faster and earn greater valuations at IPO than ventures lacking such connections (Stuart et al., 1999). However, those authors implicitly assumed that all entrepreneurs have the same ability to utilize all available network resources. Instead, our field observations indicate that political skill is a widely varying individual difference that may determine the ability to mobilize accessible social capital for achieving desirable venture performance.

Specifically, we observed that politically skilled entrepreneurs mobilize their social capital better than politically unskilled entrepreneurs. Politically skilled entrepreneurs are more likely to use their networking ability to connect with diverse contacts for utilizing information and other resources. They are particularly more attentive to others' needs and are more aware of opportunities when they arise. They are also better at presenting themselves as honest, sincere, open-minded, caring, and helpful. Thus they can foster a norm of reciprocity and openness in their networks, which, in turn, guides the behaviour of other network members. Furthermore, they are often highly skilful at negotiating, deal-making, and conflict management (Ferris et al., 2007), and thus are more likely to influence others, especially key contacts who are instrumental to their venture performance.

Our interviewees developed and maintained many contacts in their core and extended networks. Table III shows that they maintained an average of 37 close contacts in their core networks and 199 more distant contacts in their extended networks. With so many contacts but with constrained time and energy to invest in social relationships, entrepreneurs are unlikely to contact them all frequently. Furthermore, even if they are aware of all their contacts, individual entrepreneurs may still differ in their ability to influence them all. When entrepreneurs have many contacts in their social networks, how can they identify the key contacts for gathering the right expertise and resources?

Figures 5 and 6 present quotations from the entrepreneurs we interviewed. Interviewees had varied political skills and they used their social networks differently, particularly in mobilizing key social ties. Politically unskilled entrepreneurs tend to consider their social networks to be less efficient for supplying needed resources (e.g., C2 in Figure 5) or less crucial for their business needs (e.g., E2 in Figure 6). They are less aware of key social ties that they could trust (e.g., E2 in Figure 5 and S1 in Figure 6). In contrast, politically skilled entrepreneurs are more aware of the expertise, backgrounds, and interests of various contacts. They are better at identifying key, maximally beneficial contacts, and more skilful at influencing key contacts to obtain crucial resources such as business information and financial capital. They utilize different dimensions of political skill in building and using their networks, identifying more relevant key contacts through their social astuteness, and building strong bonding and trust through their apparent sincerity. Their interpersonal influence allows them to influence close contacts who are well-placed as bridges connecting entrepreneurs with potential key clients or investors the entrepreneurs could not have reached alone. Each case confirms the patterns identified from the previous case, but each case adds some uniqueness to the pattern.

Next we conducted two within-case analyses (J1 and P1, Figure 5). Recall that J1 owns a consulting firm for clients that have annual sales ranging from $500,000 to $15 million. J1 described herself as ‘highly capable of picking the right (key) contact’ in both core and extended networks that are ‘most appropriate for the job given the situation’. She said: ‘I like to go to different events and talk to people of different trades and small business owners like dry clean owners. I pay attention to what they do, what they need, and what their interests are … I'm highly capable of picking the right contact who is most appropriate for the job given the situation.’ Her quote demonstrates a high level of social astuteness that helps her achieve her goals through identifying and using important social relations.

Importantly, we find that politically skilled entrepreneurs are better at mobilizing strong ties in their core network to reach key clients or investors outside their personal social networks. In other words, politically skilled entrepreneurs are better at using strong ties in their core network as network bridges to reach key people who are otherwise not easily reachable. Strong bridging ties create network bridges linking entrepreneurs to otherwise unconnected individuals outside the entrepreneur's immediate personal networks. The network bridge is a network link providing the only path between two persons (Harary et al., 1965). ‘A network bridge between two persons A and B provides the only route along which information or influence can flow from any contact of A to any contact of B, and consequently, from anyone indirectly connected to A to anyone indirectly connected to B’ (Granovetter, 1973, p. 1364). A bridge is significant: (a) as a direct tie between A and B, who are presumably members of different groups; and more broadly (b) as a network link that joins otherwise unconnected individuals by bridging between A and B (Granovetter, 1973). Both information and influence resources can flow through network bridges. Furthermore, bridging ties can be strong or weak, differing in the time spent in interaction, emotional intensity, intimacy, or reciprocity (Granovetter, 1973; Marsden and Campbell, 1984).

Network scholars argue that strong ties can serve as network bridges linking otherwise unconnected individuals. For example, Kalish and Robins (2006) examined the ego network structures of 125 university students and found very few ‘weak’ structural holes in ego networks; almost 28 per cent of the triads (on average) were ‘forbidden triads’ or ‘strong’ structural holes. The substantial amount of ‘strong’ structural holes suggests that strong ties may serve as network bridges. Kalish (2008) found two psychological network orientations – entrepreneurial orientation and relationship-building orientation – associated with individuals who span structural holes and form strong ties linking densely connected cliques. The findings possibly explain why strong ties can serve as bridges. Tie strength, weak or strong, is not a precondition for a tie to function as a bridge: a disconnection between individuals having non-redundant resources or holding different network positions is, however, critical (Burt, 1992). Bian (1997) further detailed ‘strong ties as network bridges’. In the corporate world, disconnections may be deliberate because they give strategic players information and control in competing for economic rewards. In the social world, disconnections are largely non-deliberate, social-cultural processes, constrained by ego's and alter's social class and residential location (Bott, 1957).

Several studies have shown that strong ties are better bridges than weak ties when influence and other social resources (e.g., trust and loyalty) must be transferred through network bridges. Indirectly connected third parties positively affect trust within strong ties but negatively affect trust within weak ties (Burt and Knez, 1995). In the Chinese labour market, where recruitment is informal and job information is not readily available, interpersonal connections are essential; thus strong rather than weak ties with intermediaries provide the network bridges job-seekers need (Bian, 1997). Entrepreneurs striving to acquire financial capital benefit if they have embedded, strong ties with bank managers who are then motivated to persuade relevant decision-makers that the entrepreneur is creditworthy (Uzzi, 1999). Overall, the empirical evidence on strong ties as bridges indicates that trust and reciprocity between individuals can be ‘rolled over’ to a new third party, ‘thereby establishing trust and reciprocal obligations between two parties that lacked a prior history of exchange’ (Uzzi, 1999, p. 490).

Consistent with those prior arguments and findings of strong ties as network bridges, evidence from our field interviews reveals that for politically skilled entrepreneurs, crucial business deals with major clients or major investments are channelled more through strong ties than through weak ties. In other words, weak ties are used mostly for transferring publicly available information that otherwise is scattered in the market and sometimes they are used for obtaining referrals. Instead, entrepreneurs must rely on strong ties to obtain influence and referrals, which are often more costly and difficult to obtain. For example, the case of P1 illustrates how politically skilled entrepreneurs use strong ties as network bridges to obtain financial capital needed for venture development. At the initial fundraising stage of P1's restaurant business, one of his close uncles introduced him to ten friends, former executives from the company where his uncle once worked as an executive. The ten friends became angel investors, each investing $5000 to $10,000 in P1's new restaurant. P1 separately raised more money through close friends. One woman, a close friend, introduced P1 to her close friend who then invested $50,000. Another close friend since college introduced P1 to his boss, the CEO of a biotech company, who also invested $50,000. P1 said, ‘so it was, usually somebody close introducing me to somebody who wasn't close and that was the person who made the investment.’ In P1's example, financial capital from key investors was channelled more through contacts with strong ties who served as bridges connecting the entrepreneur and the key investors who were otherwise unconnected.

P1 was not the only entrepreneur who described using strong ties to reach key investors with whom he was not directly connected. Our coding showed that other entrepreneurs with relatively high levels of political skill gave similar reports (e.g., D3, C1, R2 in Figure 6). In contrast, the entrepreneurs with relatively low political skill (e.g., E2, S1, M2, C2 in Figure 6) failed to use strong ties to reach unconnected key investors or clients. The observations suggest that politically skilled entrepreneurs show a consistent pattern of network mobilization in which they use strong ties as network bridges. We reason that political skill influences the mobilization of social capital through strong ties possibly through several mechanisms. First, as mentioned, politically skilled entrepreneurs tend to develop and maintain a stable core network by developing strong bonding with key contacts for long durations. Second, politically skilled entrepreneurs tend to be more competent in the four dimensions of political skill, particularly in social astuteness and networking ability. They are better at using social ties for achieving desirable outcomes. For important business tasks and decisions, strong ties are better than weak ties for exerting influence. Thus, politically skilled entrepreneurs are more likely to use strong ties to reach and influence key people who may be outside their personal networks but are important for achieving business objectives. Thus we propose that politically skilled entrepreneurs are better at using strong ties as network bridges to obtain influence and referrals for reaching clients or investors. Figure 7 depicts the process.

An Integrative Model

Figure 8 shows our integrative model summarizing our findings. We suggest two propositions describing the role of political skill in influencing entrepreneurial processes within social networks. On one hand, political skill affects whether entrepreneurs construct resource-rich networks that provide access to social capital. On the other hand, political skill influences how well entrepreneurs can leverage the network resources available.

Theoretical Implications

First, our study has important implications for entrepreneurship research, which has often taken either sociological or behavioural perspectives. Although we are increasingly recognizing that individual characteristics affect access and mobilization of social capital in organizational settings, we know little about how individual differences influence processes of building and using social networks to achieve desirable venture performance. In this study, we integrate sociological and behavioural perspectives by examining how political skill, an important individual-level factor, influences entrepreneurs' access to and mobilization of social capital for achieving desirable performance. We find that political skill does indeed play a crucial role in the social network context. Politically skilled entrepreneurs, compared with politically unskilled entrepreneurs, are more likely to develop stable core networks with stronger ties and dynamically update their extended network to extend their social ties. Furthermore, given the same level of accessible social capital, politically skilled entrepreneurs are better at using key contacts and strong ties as network bridges to enhance venture performance. Overall, by focusing on the entrepreneurial process in the social network context, we answer the calls for more process-oriented studies to advance current understandings of entrepreneurs' social network development (Hoang and Antoncic, 2003; Jack, 2010; Stuart and Sorenson, 2007). We also provide in-depth insight into how entrepreneurs leverage their individual political skill to strategically develop and effectively mobilize their social networks for enhancing venture performance. Thus, we add to emerging research that highlights the importance of understanding how entrepreneurs create and develop their personal social networks (e.g., Hallen and Eisenhardt, 2012; Vissa, 2012).

Furthermore, responding to calls in the entrepreneurship literature for more qualitative work to construct informative theories (Hoang and Antoncic, 2003; Jack, 2010), we expand previous research by building theory from cases (Eisenhardt, 1989a; Eisenhardt and Graebner, 2007). The qualitative data drawn from our field interviews goes beyond quantitative data in providing a richer and more in-depth understanding of the composition and structure of the social networks that entrepreneurs develop and manage. For example, previous research, although valuable, did not attempt to disentangle the different types of social networks that entrepreneurs develop. In contrast, our study reveals that entrepreneurs simultaneously develop and manage different structural characteristics of the core and extended networks, which, in turn, give them access to various rich resources critical for attaining their performance goals.

Our qualitative data show that politically skilled entrepreneurs tend to develop a more stable core network of strongly tied contacts with similar backgrounds and interests, and a more dynamic extended network of weakly tied contacts with more extensive backgrounds. This finding has a particular implication for understanding homophily theory within the entrepreneurship context. Homophily, a basic tenet of sociology, is the tendency of people to interact with and form connections with similar others in terms of demography (e.g., gender, ethnicity) or other attributes (e.g., personality, values) (McPherson et al., 2001). On the one hand, homophily contributes to individual and group performance outcomes by avoiding potential conflicts, simplifying coordination, and facilitating transmission of resources such as information and tacit knowledge. On the other hand, homophily may prevent individuals and groups from reaping diversity benefits by limiting communication with dissimilar others (Borgatti and Foster, 2003). We find that politically skilled entrepreneurs are better at managing and balancing homophily in their different social networks – they reap homophily benefits by developing strong ties with similar contacts in their core network and simultaneously overcome the constraints of homophily by dynamically updating dissimilar contacts in their extended network. As such, we answer calls for unveiling characteristics of entrepreneurs' network partners to better understand whether homophily applies to entrepreneurs who strategically construct their social networks (Stuart and Sorenson, 2007).

Although our quantitative data reveal that the number and strength of social ties in the extended network do not significantly differ across entrepreneurs with contrasting levels of political skill, our semi-structured interviews reveal that politically skilled entrepreneurs dynamically update social contacts and develop more extensive social ties in their extended network. Although diverse and extensive social networks expand access to various resources (Dubini and Aldrich, 1991; Renzulli and Aldrich, 2005), widespread involvement in diverse and multiple networks may simultaneously cause network overload given the costs (e.g., time, effort, and money) of various networking activities (Steier and Greenwood, 2000; Watson, 2007). We suggest that entrepreneurs must balance the imperatives of network diversity with the challenge of network overload. We find that political skill enables entrepreneurs to develop and manage resource-rich networks while avoiding network overload.

Second, this study has important implications for political skill research. Although many previous studies have examined political skill in conventional organizational settings to understand behaviour and job performance, little is known about how political skill may function in influencing entrepreneurs' venture performance. To our best knowledge, no previous research has examined the role of political skill in entrepreneurial processes from a social network perspective. Our field interviews reveal that political skill is an important individual factor that influences how entrepreneurs build and use their social networks for achieving desirable venture performance. Given that entrepreneurs are generally leaders of their business ventures, this finding provides some insights into the literature on the potential underlying relationship between political skill and leadership effectiveness. Political skill is known to positively influence leadership effectiveness through its impact on leader–member exchange (Brouer et al., 2013) and leader reputation (e.g., Ammeter et al., 2002; Blass and Ferris, 2007). Our finding suggests that the patterns of network relationships which leaders develop and construct may be another mechanism that explains why politically skilled leaders are more effective in terms of employee reactions and work unit performances. Future studies might consider that direction.

Our findings also add to the literature noting that political skill plays dual roles – as antecedent (e.g., Ferris et al., 2005) and as moderator (e.g., Perrewe et al., 2004; Treadway et al., 2007) of individual behaviour and job performance in organizations. For example, politically skilled managers are better at achieving desirable managerial outcomes (Smith et al., 2009). Additionally, political skill moderates the negative relationship between perceived role conflict and strain: greater political skill neutralizes the negative impacts of role conflict on all types of strain (Perrewe et al., 2004).

Third, our findings have important implications for social capital research. Although entrepreneurship researchers have acknowledged that social capital has beneficial effects on venture performance (e.g., Aldrich and Ruef, 2006; Batjargal and Liu, 2004; Hoang and Antoncic, 2003; Jack, 2005; Shane and Cable, 2002; Uzzi, 1999), they have paid less attention to the determinants of social capital development. In other words, they have not fully investigated how entrepreneurs build the social networks that create the social capital critical for venture performance. We show that political skill is an individual-level factor that enables entrepreneurs to develop resource-rich networks for access to social capital critical for achieving desired venture performance. This finding adds to the literature suggesting that individual-level characteristics such as self-monitoring (e.g., Mehra et al., 2001) and proactive actions (e.g., Fang et al., 2011) contribute to individual social capital development.

Practical Implications

From a practical perspective, our field study results provide useful guidelines for multiple practitioners. For entrepreneurs seeking growth opportunities, it is beneficial to understand that political skill is important for building, maintaining, and using social networks. Political skill influences how extensively entrepreneurs capitalize on or mobilize available social capital embedded in their social networks. Consider three important components of social networks: number, extent, and strength of social ties. Establishing many ties with contacts of diverse backgrounds is useful for accessing critical information that is otherwise difficult and costly to obtain in a timely manner. In addition, establishing a core network that includes social contacts with strong relationships is particularly valuable in obtaining influence and referrals to secure major business deals and key clients or investors.

Given the importance of the four dimensions of political skill – networking ability, social astuteness, apparent sincerity, and interpersonal influence – in building and mobilizing networks, entrepreneurs who seek to develop resource-rich networks may well benefit from consciously monitoring their behaviour and carefully observing nuances and hidden agendas when they interact with others. We suggest they: (a) approach people with diverse backgrounds on a conversational basis, and avoid trying to sell or conduct transactions; (b) show genuine interest in others; (c) try to bring benefits and value to others; and (d) cultivate close relationships of mutual interests and trust to achieve influence through strong ties. Entrepreneurs may also benefit from dynamically updating their extended network; for example, by developing new relationships, refreshing inactive relationships, or terminating less-meaningful relationships. Dynamic updates will bring new information and resources into the network. Note that political skill can be trained, developed, and improved through practice (Ferris et al., 2007, 2012); entrepreneurs who seek to construct favourable social networks and effectively utilize network resources may develop their political skill through mentoring, practicing, and other training methods (Ferris et al., 2007, 2012). For example, mentoring can enhance each of the four political skill dimensions. In particular, individuals who are mentored to understand the environmental landscape (e.g., workplace and organizations) can become better networkers (Blass et al., 2007). Training for social astuteness, apparent sincerity, and interpersonal influence could involve aspects of active empathetic listening (Ferris et al., 2012).

Directions for Future Research

In addition to empirically testing our integrative model (Figure 8) through a large-scale survey investigation, future research may pursue several potentially fruitful avenues. First, future studies may investigate various dynamics underlying the entrepreneurial process in social network contexts. Our interviews with entrepreneurs provided many rich verbal descriptions of the dynamics of the entrepreneurial process. Yet, our data offer a one-time snapshot, which limits full exploration of process operations over time. Future studies incorporating longitudinal research designs may clarify how political skill influences network formation and characteristics in timing and evolution. For example, such work can address how entrepreneurs develop political skill over time and the related question of how political skill affects the evolution and development of social networks. Future studies may also extend our focus on political skill and explore how other individual characteristics such as cognition and personality influence strategic construction of social networks. As described previously, network scholars are increasingly considering individual characteristics when they explain network formation and development in organizational settings (e.g., Klein et al., 2004; Mehra et al., 2001).

Second, we started our inquiry from the dyadic structure of social networks and examined its interplay with entrepreneurs' individual characteristics in affecting venture performance. Although our study did not focus on the triadic structure of social networks, it did touch on some triadic aspects. That is, we observed that politically skilled entrepreneurs tended to use strong ties as bridges to reach key investors or clients who were outside their immediate personal networks. This observation goes beyond the dyadic structure of social networks and concerns the roles of entrepreneurs' close contacts in connecting entrepreneurs and key investors or clients who were otherwise unconnected parties. This observation of triadic aspects in social networks enriches our understanding of how entrepreneurs with different levels of political skill differentially use their network resources of embedded social ties to achieve desirable outcomes. Future research may further examine the triadic structure, the basic unit of network analysis for many complex social processes (Granovetter, 1973; Kalish, 2008). Thus, future studies of the interplay between triadic network structure of social networks and political skill will provide in-depth insights into how entrepreneurs leverage their individual characteristics to develop and use their social networks to affect venture performance.

Third, future studies may examine how individuals, including entrepreneurs and leaders, leverage the four dimensions of political skill to build and use their social networks. Politically skilled individuals can increase others' trust, support, and commitment in social interactions, which are important for building high-quality relationships in organizations and other social situations (Ferris et al., 2012). Politically skilled individuals tend to occupy central positions in workplace influence networks (Treadway et al., 2011). However, empirical evidence is still limited as to how political skill influences the construction and development of social networks. Moreover, less is known regarding whether and how networking ability, social astuteness, apparent sincerity, and interpersonal influence differentially affect network building and use. Social astuteness and apparent sincerity should generate richer and more expansive social networks (Ferris et al., 2012). Our interviews with entrepreneurs suggest that politically skilled entrepreneurs use different dimensions of political skill in building and using their social networks. They emphasize their social astuteness for identifying relevant and key contacts, their apparent sincerity and networking ability for building strong ties and trust with contacts, and their interpersonal influence for exerting influence for achieving objectives. Therefore, future research can further explore how individuals leverage the four dimensions in their personal network building and use as well as their occupation of central or peripheral positions in large social networks.