Opening Closure : Intercohesion and Entrepreneurial Dynamics in Business Groups

The twinned challenge for entrepreneurial groups is recognizing new ideas and implementing them. In one view, connectivity reaching outside the group channels new ideas while closure makes it possible to act on them. We argue that entrepreneurship is not about importing information but about generating new knowledge through recombining resources. In contrast to the brokerage-plus-closure perspective, we identify a distinctive network position, intercohesion, at the overlap of cohesive group structures. The multiple insiders at this intercohesive position participate in dense cohesive ties that provide close familiarity with the operations of the members in their group. But because they are members of multiple cohesive groups, they have familiar access to diverse resources. We first test whether intercohesion contributes to higher group performance. Second, because entrepreneurship is a process of creative disruption, we test intercohesion's contribution to group instability. Third, moving from dynamic methods to historical network analysis, we demonstrate that coherence is a property of interwoven lineages of cohesion built up through separating and reuniting in an ongoing pattern of interweaving by which business groups manage instability while benefitting from intercohesion. To study the evolution of business groups, our dataset records personnel ties among the largest 1,696 Hungarian enterprises from 1987-2001