Asymmetric Market-Scale Effect on Peer Network Diversity
RCTReview
Cross-country network heterogeneity affects entrepreneurs differently depending on their home country size, as small-country entrepreneurs benefit from international exposure while large-country entrepreneurs suffer from diluted local familiarity.
Picture this
Think of a small island startup joining an international tech hub to access novel global markets, versus a large-city startup being placed in an international hub where missing local connections hinders immediate domestic execution.
What the evidence says
In Small Countries, Virtual-Across interaction yields a highly significant positive network peer effect on intensive quality ($\beta = 0.476, p < 0.01$) and extensive quality ($\beta = 0.537, p < 0.01$). In Large Countries, Virtual-Across interaction yields no statistically significant peer effect on submission ($\beta = 0.014$), extensive quality ($\beta = 0.060$), or intensive quality ($\beta = 0.087$).
- Who was studied
- N = 3,333 entrepreneurs in Large-Country Sample across 5 countries; N = 1,057 entrepreneurs in Small-Country Sample across 44 countries.
- How
- RCT comparing Virtual-Across treatment in Small Countries (where only cross-national groups were feasible) versus Large Countries (where both Virtual-Within and Virtual-Across arms were implemented).
What to do
Assign entrepreneurs from smaller or less saturated markets to international heterogeneous networks to boost idea innovation, while keeping entrepreneurs from large domestic markets in nationally homogeneous groups to drive engagement.
From the source
"In the set of small countries, where only virtual-across interaction is possible, there are positive and significant peer effects on both extensive and intensive quality but not on submission... Instead, when entrepreneurs of large countries are exposed to virtual-across interaction, no significant peer effects arise in any of the three outcomes."
Peer Networks and Entrepreneurship- a Pan-African RCT.pdf