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Entrepreneurial growth expectations and information flows in networks

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  • Daskalopoulou, Irene
  • Petrou, Anastasia

Abstract

The study analyzes entrepreneur’s expectations regarding future growth by analyzing the relationship between information flows from networks and the perceived risk of decisions associated with the future size of a firm. The main proposition is that growth expectations might be the outcome of superior judgment stemming from privileged information derived from networks. To provide evidence in support of this hypothesis a sample selection model is estimated using a two-step estimation procedure. Cross-section questionnaire data are used in the empirical analysis. Evidence is provided on the role of inter-firm contacts and relationships as a mechanism able to assist entrepreneurs in better assessing and even reduce the risk and uncertainty associated with their present and future decisions regarding firm growth. The study provides evidence on the factors affecting expected growth rates while it explicitly formulates and tests the hypothesis that expectations regarding growth might be the outcome of superior judgment stemming from privileged information derived from networks. Analysis indicates that networks are indeed information mechanisms, however, such information should be specific to problem solving firm processes. Better informed entrepreneurs are those that foresee higher growth in the future, yet they are not blocked in only local networking.

Suggested Citation

  • Daskalopoulou, Irene & Petrou, Anastasia, 2010. "Entrepreneurial growth expectations and information flows in networks," MPRA Paper 22663, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:22663
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    File URL: https://mpra.ub.uni-muenchen.de/22663/1/MPRA_paper_22663.pdf
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    References listed on IDEAS

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    Cited by:

    1. Murmann Johann Peter & Korn Jenny & Worch Hagen, 2014. "How Fast Can Firms Grow?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(2-3), pages 210-233, April.

    More about this item

    Keywords

    small firms; expected growth; networks; information; Greece.;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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