1. Introduction
Biotechnology is a knowledge-intensive industry that relies on a fluid and dynamic collaboration network, including firms, universities, research laboratories, suppliers, and customers (
Colovic 2019;
Hughes and Kitson 2012;
Powell et al. 1996). The fundamental role of synergies in creating successful entrepreneurial ecosystems has been discussed extensively (
Acs et al. 2017;
Focacci and Kirov 2021;
Perez 2002). Among the various forms of collaboration, the exchange of ‘tacit knowledge’ is of particular relevance for firms’ performance (
Pina Stranger and Lazega 2011). Mainstream research has been usually interested in the factors favouring the spillover of informal knowledge, including through proximity and clustering (
Audretsch and Stephan 1996). In this article, we take an alternative approach: based on the idea that the exchange of tacit knowledge is conditioned to the entrepreneur’s epistemic and social status, we propose to explore the sources of these statuses can be explore by looking at the induvial and organizational trajectories.
While maturing as innovators and training in technology development and business, entrepreneurs claim scientific and financial expertise in crucial domains of the biotechnology industry and innovation process. During the initial founding decisions (
Tornikoski and Renko 2014) and later on, such expertise is subject to the scrutiny of the community of peers, who judge entrepreneurs’ quality of knowledge as well as trustworthiness for potential collaboration. Thus, the status as an expert or as a reliable stakeholder is a personal intangible asset obtained in a relational way (
Kotlar and Sieger 2019). The members of the biotechnology ecosystem evaluate and validate the ‘credentials’ that allow an entrepreneur to be ‘credible’. For this reason, we believe it is necessary to explore what elements in the innovators individual and organizational trajectory allow them to gain epistemic and social status.
The recognition and legitimization of entrepreneurs’ epistemic and social credentials is marked by the socio-historical norms, values, beliefs, and definitions that underly a given milieu in a particular time (
Bargues and Valiorgue 2019;
Suchman 1995). What is positively appreciated in a specific industry may trigger a negative assessment in another. In the case of engineering-based fields,
Roberts (
1991) observed that founders with a PhD were not positively regarded by their peers because they were considered to have a temperament, attitude, and orientation usually ‘out of line with those necessary for successful technical entrepreneurship’ (p. 253). Similarly, in the technical industry of the internet,
Hsu (
2007) found that having a PhD has a significantly negative impact compared to obtaining funding from VCs. In knowledge-intensive fields, biotech entrepreneurs holding an MBA may be considered more highly by their peers, affecting their position in the knowledge and social networks due to larger entrepreneurial intentions (
Amofah et al. 2020).
In this article, we aim to identify and explain the attributes or ‘credentials’ that lead biotech entrepreneurs to gain a central status, or ‘prominence position’ in a network (
Freeman 1979), either as social or epistemic authorities. Our strategy consists of mapping friendship and advice ties among entrepreneurs belonging to the French biotechnology industry. Both personal ties have been previously studied to explore their influence on performance indicators (
Gibbons 2004), including enhanced collaboration and better information exchange among competitors (e.g.,
Ingram and Roberts 2000;
Lazar et al. 2022) or exchange of knowledge (
Pina Stranger and Lazega 2010). However, little research has been conducted on the credentials (referred also as social capital o signals) or trajectory events that allow entrepreneurs to be granted with such a central power position in the biotechnology field.
We are interested in understanding the role of social mechanisms in shaping entrepreneurs’ centrality and, therefore, ability to enhance the sector’s coordination capability and economic performance. While previous research has specifically focused on formal networks, we consider informal ties, such as advice exchange and friendship, that are developed through interpersonal channels. Particularly, we are interested in answering the following questions that link the induvial and organizational trajectories of a venture whit the epistemic and social position of entrepreneurs in the peers’ network. Namely, whether industry experience in the health sector affects entrepreneurs’ centrality, whether educational experience plays a role in making the entrepreneur a greater friend or expert, whether political engagement may influence actors’ centrality network positions, to what extent having worked in a public company (IPO) grants entrepreneurs higher levels of expertise and friendship, and finally, whether experience built by working in a capital city affects centrality. While the extant studies have provided evidence for entrepreneurs being innovators, we contribute to the literature by shedding light on the ability of entrepreneurs to also think and behave as social actors in a broad exchange system with their peers.
This article has been organized as follows. First, we describe the theoretical framework (
Section 2), which includes research on actors’ attributes (
Section 2.1), and centrality through both personal and impersonal ties (
Section 2.2) in both advice (
Section 2.3) and friendship (
Section 2.4) networks. We then describe our methodology (
Section 3), and we conclude with a description (
Section 4) and discussion (
Section 5) of our main results.
4. Results
Correlations between the variables of interest and the Poisson multiple regressions results are presented for each year, 2008 in 2013, in
Table 1,
Table 2,
Table 3,
Table 4,
Table 5 and
Table 6. The model can be represented as follows where
NetworkT.20XX.IN_DEGREE corresponds to the indegree measure for either friendship or advice in 2008 or 2013:
We used 0.05 as the level of significance with robust standard errors to tackle the problem of overdispersion often observed when using Poisson regression. All the models were checked and are globally significant. For each network, we observed outliers that were not caused by an error in our data and, therefore, kept in the models.
All the dimensions were observed separately with six models. In the results section, model in the column (8) is used as the main reference for interpretation as it is the more complete and represents the best data (e.g., the AIC value is lower).
Hypothesis 1a. Industry experience (years in the biotech industry) may influence actors’ centrality network positions.
With respect to our Hypothesis 1a, we observed that experience in the biotech industry had a positive and significant effect on indegree measured through friendship in 2008. For entrepreneurs interviewed in 2008, an additional year in the biotech industry corresponds to an increase in advice centrality of 3 percentage points, significant at the 1% level. The fact that insignificant results were observed for 2008 friendship centrality and 2013 advice and friendship centrality leads us to reject this hypothesis. While, in 2008 the biotech industry was starting to develop in the French economy and the central entrepreneurs were those with more healthcare experience, in 2013, when the sector is established, entrepreneurial centrality is transferred to CEO and CFOs with little or non-existent experience in healthcare but with venture capitalists’ support with the scope of making the company reach higher levels. This result may also be explained by the economic world crisis still present in 2008. Networks have been proven to be guarantors of stability in times of economic crisis (
Chung et al. 2008), while the quest for social solidarity increases (
Sotiropoulos and Bourikos 2014). Thus, expert entrepreneurs may be considered crucial business ‘friends’ in economic contexts where collaborations can determine the survival and success of a company.
Hypothesis 1b. Entrepreneurial experience in founding companies may influence actors’ centrality network positions.
We observed that being a serial entrepreneur, or someone who has founded several companies, guaranteed epistemic authority only in 2013. For each additional founded company, this feature granted the entrepreneur an increase in advice centrality equal to 25 percentage points, significant at the 5% level. This may be explained by the better positioning of venture capitalist firms in the industry over time, when trust is finally reciprocal (
Panda et al. 2020), asymmetrical information diminished (
Zhang 2019), and their skills and social connections have been tested (
Zhang 2011). While expertise in the biotech industry may help a company to find alternative routes and avoid failure (Hypothesis 1a), in 2008, having multiple companies, especially if some of them was losing momentum, may signal negative or non-existent epistemic authority.
On the other hand, being a founder in a network of entrepreneurs was a good indicator of centrality in both waves. Such feature increased advice centrality by 37 and 39 percentage points, significant at the 5% level, respectively, in 2008 and 2013. In 2013, centrality was impacted at the friendship level. Founders were 35 percentage points more likely to be chosen as friends compared to non-founders. This can be explained in contexts where group cohesiveness is strong, with friendship norms prevailing over business norms in decision-making, due to reciprocity of exchanges (
Tognazzo and Mazzurana 2017). Contrarily to established corporations, start-ups have ‘promising ideas, organizational agility, the willingness to take risk, and aspirations of rapid growth’ (
Elia et al. 2016). Individuals may find it easy to attribute such characteristics to founding entrepreneurs, contributing to symmetrical liking and friendship. Additionally, being a founder may signal the ability to both create legitimacy to which individuals may want to partake as well as build an activity undertaken by a competitor (
Hegeman and Sørheim 2021). This could play a role in identifying a founder as a friend, especially in the biotech industry, where competition is fierce (
Yu et al. 2019).
Our analysis showed that founding experience helps entrepreneurs to showcase their self-efficacy, leading to higher levels of trust in expertise advice and friendship on behalf of their peers and, consequently, higher likelihood to perform well in the various tasks assigned. In other words, we enrich extant literature by showing that being a founder in a network of entrepreneurs makes the network stronger, together with the business depending on the network itself.
Hypothesis 1c. Educational experience may influence actors’ centrality network positions.
Individuals with scientific training were not recognized as epistemic authorities in 2008. In 2013, compared to individuals with no scientific training, they were 46 percentage points more likely, at the 1% significance level, to be chosen as friends by their peers. Knowing that some of the entrepreneurs were interviewed in both 2008 and 2013, this may show the gradual development of trust and mutual liking, which takes time (
Derrida 2005). In addition, smart people are often considered attractive (
Jackson and Nyström 2015). Thus, a large number of individuals may want to be friends with someone with a good education in the hope for knowledge spillovers (
Cunningham et al. 2019). Overall, however, our findings for holders of scientific training and double degrees are not robust enough predictors of epistemic authority as they are not consistently observed for the two waves of observations.
On the other hand, while the direct effect of education may not be significant, our hypothesis is partially confirmed by the indirect effect of it. We found this to be true for entrepreneurs who studied in different countries. We observed a positive and significant effect of 38 and 54 percentage points in, respectively, 2008 and 2013 for friendship centrality. International education was likely to promote social status, shaping the exchange of information and ideas, the distribution of resources, and the normative preferences in the partnership (
Menashy and Shields 2017). Studying abroad does not only enhance human capital but social capital as well (
Wang and O’Connell 2020). Exposure to cultural diversity and increased social network make individuals used to general and interaction (cross-cultural) adjustment (
Shu et al. 2020). As entrepreneurs who had these experiences may find it easy to build friendships, individuals may want to be friends with them for the comfortable social and business environment they are able to create. To that, one may add the marginal benefit that comes from being friends with an entrepreneur with several business connections abroad (
Cuypers et al. 2020).
While it is objectively recognized that education helps building relationships, especially abroad, our case study is relevant in that it shows how the direct effect of education becomes void if not supported by the right social norms. By considering two different time periods, we show that when collectives do not recognize science and scientific education as an added value, even in sectors that highly depend on it, then the immediate impact of such education is not absorbed sociologically.
Hypothesis 2. Political engagement may influence actors’ centrality network positions.
We observed that political engagement, defined in our case by the entrepreneur’s presence in a board of directors, or presence in associations had an influence on centrality. Specifically, in 2013, politically active entrepreneurs were 21 percentage points, significant at the 1% level, more likely than non-politically active entrepreneurs to be considered friends by their peers. They were also 24 percentage points more likely to be sought advice from. Similar effects were found in 2008 for entrepreneurs who were part of associations. The comparative epistemic advantage here is equal to 17 percentage points, significant at the 1% level, for friendship centrality and 9 percentage points for advice centrality. Overall, results suggest that our hypothesis is confirmed. Understandably, individuals interested in the economic success of a sector, in this case biotech, can benefit from forming strong networks with entrepreneurs with high decision-making power. Boards can often influence corporate governance (
Li et al. 2020), monitor and enhance innovation, as well as domestic and international venturing (
Calabrò et al. 2021) also thanks to knowledge spillover (
Del Bosco et al. 2021). The so-called political or policy entrepreneurs can increase their own interests by influencing policy outcomes (
Cohen 2016). For biotech companies, having a friend with such power could mean that new horizons of economic possibilities, in or outside their ecosystems of reference, may be more easily reachable. Membership to various external associations also allows ‘political’ entrepreneurs and those who are friends with them to benefit from external connections in terms of interactive learning (
Figueiredo et al. 2020). This would help entrepreneurs to overcome knowledge barriers and boost creativity engagement (
Cheng and Yang 2019). On this subject, external networks may be of service in a sector where life-changing products also need to be successfully commercialized (
Shimasaki 2020).
Through our data, we show that political engagement allows entrepreneurs to be sought by their peers to a larger extent for the consequent signalling of higher commitment proxies as higher knowledge applicable to their business.
Hypothesis 3a. Working in a public company may influence actors’ centrality network positions.
While the amount of private investments received by a company in the previous 5 years preceding do not attribute epistemic authority or popularity to the entrepreneur, the fact of working in a public company significantly does. The hypothesis was verified in both years of investigation. In 2008 and 2013, an entrepreneur working in a public company was, respectively, 69 and 60 percentage points, significant at the 1% level, more likely than someone who was not to be considered a friend among his peers. A similar pattern was found for in-degree advice centrality. This may be explained by the information (trading) advantages friends can benefit from before the company becomes an IPO (
Ozmel et al. 2019), the IPO peer effects that may make the entrepreneur an expert against many competitors in the sector (
Aghamolla and Thakor 2022), as well as higher possibilities for R&D investments (
Guo et al. 2021), crucial in biotech.
IPOs become an additional source of positive signalling for entrepreneurs due to the possibility that stem from this process in building future additional ‘observable resources’ and potentially keeping them over time. When entrepreneurs partake in the process, they become crucial ‘symbols of legitimacy’ in the eyes of friends interested in increasing innovativeness and productivity, given that IPOs guarantee the emergence of other alliances and, consequently, commercial advantages.
Hypothesis 3b. Working in the capital city (Paris) may influence actors’ centrality network positions.
Working in a company based in Paris contributed to explaining entrepreneurs’ centrality. Given that we investigated a population of French entrepreneurs, what we observed may be due to a capital effect granted to Parisian entrepreneurs, naturally more exposed to international and national networks as well as more aware of the emergence and development of biotech startups and corporations. In other words, individuals may be attracted to entrepreneurs who, being based in multicultural Paris, are able to exploit and recognize entrepreneurial opportunities more easily (
Vandor and Franke 2016). In line with our Hypothesis 3b, we found that, with respect to friendship centrality, Parisian entrepreneurs had a comparative advantage over non-Parisians equal to 30 and 49 percentage points in 2008 and 2013. Entrepreneurs interviewed in 2013 were also 42 percentage points more likely to be considered advisors or experts.
Controls
When looking at our models, we also accounted control variables. With respect to age, we observed that it had a significant effect only for the advice network in 2013.
When accounting for structural variables, we found the reciprocity (a), transitivity (b), and solidarity (c) coefficients to be good predictors of centrality within the network. For instance, in 2008 and 2013, the ‘if you are my friend, I am also your friend’ characteristic (a) increased friendship centrality by, respectively, 79 and 65 percentage points. The effect of ‘my friends are friends too’ (b) was only visible in 2008 for friendship, thus not consistent over time or across types of interpersonal ties. When it came to ‘the advisor of my advisor should not need my advice’ feature (c), we observed that the non-solidarity coefficient was almost always significant confirming hierarchy structures among entrepreneurs. An exception was registered for 2008 (−0.02), when the biotech industry was still emerging, and entrepreneurs could have potentially exchanged advice regularly and independent of their rank.
6. Conclusions
The link between entrepreneurs’ network centrality and innovation performance has been broadly studied in knowledge-intensive industries such as biotechnology. Extensive research has focused on the role of formal ties such as patents and R&D contractual relations. In this article, we considered the induvial and organizational trajectories that allow entrepreneurs to build a centra position in the peer’s interpersonal networks at the inter-organisational level.
Particularly, we accounted for interpersonal ties such as friendship, representing social status, and advice, representing epistemic status. Advice has been a relevant exchange system used to explore how epistemic credentials may affect innovation. As highlighted by
Galloway et al. (
2019), entrepreneurs will be more likely to rely on advice from peers they believe possess valuable knowledge applicable to their business. Exchange of information and resource, (a) symmetrical liking, and continuous interactions over time allow entrepreneurs to identify friends within their network. In this regard,
Muller and Peres (
2019) recently showed how growth, including innovativeness and performance, is especially present in networks where cohesion (i.e., mutual influence), connectedness (i.e., high number of ties), and conciseness are observed.
Based on this, we argue that the exchange of tacit knowledge may be conditioned to the entrepreneur’s epistemic and social status, and that the sources of these status can be explore by looking at the induvial and organizational trajectories. To test our hypotheses, we draw on three dimensions through which entrepreneurs may build their central position; namely, their professional experience, their political inter-organizational engagement, and company financial and geographical situation. We collected qualitative and quantitative data in 2008 and 2013 on 138 and 126 biotech entrepreneurs, respectively, and perform a series of regression analyses.
In line with the idea that upper echelons’ work experience, especially from the bio-pharmaceutical sector, affects their ability to receive generous endorsements (
Higgins and Gulati 2006), our results show the elements, on the individual and organizational track of a venture, significantly predicts the likelihood of becoming a central friend and advisor. Being a company’s founder is a strong predictor of social and epistemic status. This connects to the idea that founding a company may create a legitimacy to which individuals may want to partake as well as build an activity undertaken by a competitor (
Hegeman and Sørheim 2021). This could play a role in identifying a founder as a friend, especially in the biotech industry, where competition is fierce (
Yu et al. 2019). Studying abroad, and in a weaker extent, having a scientific training, is a strong and consistent predictor of social and epistemic status. This result shows that international education helps to promote the position of entrepreneurs in their filed, shaping the exchange of information and ideas, the distribution of resources, and the normative preferences in the partnership (
Menashy and Shields 2017). Paris-based entrepreneurs held higher centrality positions in the analysed networks. They are more exposed to international and national networks and, therefore, more aware of entrepreneurial opportunities (
Vandor and Franke 2016). They benefit from the higher level of resources in their local ecosystem, thus attracting relationship among their peers. Finally, political engagement also predicts high centrality, together with being part of companies that went public. In one hand, boards can often influence corporate governance (
Li et al. 2020), monitor and enhance innovation, as well as domestic and international venturing (
Calabrò et al. 2021). In the other, working on a public company, as the signal of financial success, is a credential that strongly consolidate the position of a entrepreneur in its professional network.
Our study showed that as innovators, entrepreneurs in the biotechnology field need to be also social actors. We provide evidence on the role of social mechanisms in shaping entrepreneurs’ centrality and, therefore, ability to enhance the sector’s economic performance. In other words, we found that identifying entrepreneurs as advisors or friends allows for aligning induvial and organizational performative and relational scopes. What is particularly interesting is to note that epistemic authority and social status evolved as norms evolved. In 2008, the biotech sector was still emerging in France, with scientists being sought for advice and financial experts not fully present in the picture. As time went by, the sector grew and looked out for professionals. As a result, in 2013, scientists remained active in biotech companies but as ‘friends’, while entrepreneurs with experience in founding companies, participating in boards, and building on v international networks became the new norm in epistemic terms. Overall, a more homogenous network of scientists and businessmen characterizes the biotechnology sector, strengthening the link between centrality, performance, and institutional or social change.
Our results have several implications. First, they imply that the legitimacy built by the entrepreneur through work, international, political, and founding experience in the biotech industry, significantly and positively predict his opportunity to be acknowledged as a friend and advisor, hence providing him with central power over the business. The fact that the entrepreneur is granted high epistemic status and is considered an expert in the field makes his decision-making more reliable and robust in the eyes of his peers and, therefore, easier to achieve. This also connects to the recognition given to the entrepreneur in terms of well-established knowledge that he is able to share for the benefit of the business. In other words, levels of trust are raised. On this subject, the fact that the manager is recognized as a friend further encourages exchange within the business or the team, whether at the formal or informal level. Due to spillover effects, the expert manager will allow his peers to absorb the values and ideas derived from his knowledge, enhancing research and innovation practices. At the same time, the leadership position achieved by the manager should not favor specific friends but rather encourage improved team performance, cohesion, as well as satisfaction. In other words, centrality through expertise and friendship has a two-fold benefit for businesses. On the one hand, it guarantees higher levels of competitiveness and trust due to efficient and knowledgeable leadership, strategy of communication, and sharing of expertise, potentially changing the way some managers think or act. On the other hand, it guarantees positive team dynamics, team stability, and a developed workplace culture.
While we specifically focused on France, further research may investigate how centrality is shaped in other European regions as well as internationally in the US and Asia, where epistemic authority may be reached differently. On this subject, it would be interesting to investigate alternative interpersonal and informal ties that could affect the identification of an entrepreneur as a friend or advisor. This is especially true for family firms, where social capital plays a fundamental role (
Coeurderoy and Lwango 2012). We also focused on a particular sector and a particular timeframe. Results may be significantly different in non-scientific sectors, while contexts such as the pandemic may have overturned the social mechanisms entrepreneurial ecosystems were used to. In general, however, it is evident that the creation of value through centrality should be further explored in line with the idea that hybridization of practice is growing (
Cristofini 2021) and so are the mechanisms to develop creativity (
Dechamp and Szostak 2016), and ultimately innovation.
Engineers in the future will be the essential means of connection between biology and technology, with the objective of providing scientific solutions to problems of healthcare, the environment, industry, agriculture, and our lifestyles more in general. Biotechnology, in particular, will have to deal with the rapid emergence of automation and robotics, requiring engineers to acquire skills necessary to handle complex automated systems, as well as with the consequent ethical needs between the development of advanced products and their safe application in society. Overall, engineers in the biotech sector will be encouraged to collaborate with other specialists (e.g., biologists, computer, environmental scientists) and exploit interdisciplinary skills in the best possible way. As new techno-economic paradigms come societal changes (
Perez 2002), the social role of engineers will become even more crucial to drive progress and increase life quality. As studied by
Shah and Nowocin (
2015), engineers achieve leadership roles only insofar as they also absorb managerial skills. In an ever-changing future, a successful engineer will manage multi-disciplinary teams, communicate effectively, recognize ethical issues, and acknowledge environmental issues. Similarly,
Williamson et al. (
2013) showed that the most satisfied engineers are those who are teamwork-oriented, open to new experiences, and resilient. These are all traits that individuals with high centrality develop through their educational, industry, political, and international experience. In a society that demands inclusivity and interpersonal exchanges, becoming an expert and a friend is necessary to develop a technological culture understanding of societal changes. As described by
Ravesteijn et al. (
2006), ‘the importance of the communicative competence involved in creating a social base for innovation is underpinned’. The entrepreneurs who manage to raise performance and productivity are good innovators but also good social actors, able to understand the social dynamics of technology and the importance of communicating ‘on the level of facts, values, and emotions’.