Abstract:
Research shows that structural holes and network connectivity are
associated with entrepreneurial performance. Yet the explanatory variables
will tend to be correlated, and multicollinearity may skew the
results. The use of instrumental variables can nevertheless generate
reliable estimates. The methodology can also identify possible reverse
causal orders. Here a network of rural entrepreneurs building their
own hydroelectric micro-power plants is studied. The use of instrumental
variables shows that structural holes and network connectivity have
strong and additive effects on performance, and with a particular focus
on rural entrepreneurs in developing countries, the findings’ implications
are discussed.
