Entrepreneurial embeddedness and innovativeness in the start-up process

Using data collected in 45 countries over three years (2002-2004), this study investigates the influence of entrepreneurial embeddedness on innovativeness as nascent entrepreneurs (N=7,067) are in the process of starting new businesses. Previous studies have investigated the effect of entrepreneurial embeddedness on the likelihood that individuals choose to start a business rather than pursue other vocational opportunities. The current study expands this focus, from looking at the vocational decision, to how entrepreneurial embeddedness influences the level of innovativeness once individuals have decided to start a business. In so doing, this study makes an original contribution. The results indicate that knowing someone who has started a business within the last two years (entrepreneurial embeddedness), across nations worldwide, has a significant impact on level of innovativeness in the start-up process. Specifically, it was found that entrepreneurial embeddedness has a positive impact on newness to customers, newness of technology, level of export, and growth. Thus, if nascent entrepreneurs are embedded in an entrepreneurial network (know other entrepreneurs who recently started a business) it increases the likelihood that they expect to launch a product that is new to customers, that they expect to use new technology, that they expect to export, and that they expect growth.