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.
Tags: instrumental variables, structural holes and network connectivity, entrepreneurial performance, rural entrepreneurs