What Does Not Kill You Makes You Search: The Effects of Failure Threat and Self-Evaluation on Entrepreneurs’ Ego Networks

Social network theory suggests that social networks, particularly diverse ones, are crucial for entrepreneurial resource acquisition and success. However, previous research has found that entrepreneurs do not necessarily develop diverse networks but tend to associate with similar others and develop closed networks. Building on problemistic search theory and perceptual control theory, we propose that as developing diverse networks consumes cognitive and time resources, entrepreneurs are more likely to do so when they face failure threats and do not evaluate themselves as able to address the threats. An experiment with 155 entrepreneurs in China found that failure threat increases entrepreneurs’ network diversity and that this effect is attenuated by self-affirmation. A longitudinal survey of 153 entrepreneurs in China showed that entrepreneurs whose self-worth is contingent upon business success develop social networks rich in structural holes in the short term and dense networks in the long term, and these effects are attenuated by entrepreneurial self-efficacy. These findings highlight the motivational and cognitive factors driving entrepreneurs’ social networks and contribute to social network theory, problemistic search theory, and perceptual control theory.