Organizational Membership and Business Success: The Importance of Networking and Moving Beyond Homophily

Abstract

The homophily principle is that similarity breeds connection and affects the structure of personal networks in all kinds of social structures. The result is that networks become very homogeneous. The “birds of a feather flock together” limit social worlds because they restrict the movement of information received by people, the attitudes they form, and the interactions in which they engage. Research has shown that homophily is strongest in race and ethnic interactions, followed by divides in age, religion and gender. This paper examines organizational membership, business networking and homophily among entrepreneurs engaged in classic enterprises such as retail and service industries. The search for information and resources to improve entrepreneurial enterprises is a major task of the self-employed. Using a sample of black entrepreneurs, this work examines the impact of networking outside of the structure of homophily. We ask if this networking is perceived as improving the overall operation of the business. We examine the characteristics of entrepreneurs and how these characteristics affect the decisions to move outside of familiar homophily networks. Granovetter’s network theory of strong/ weak ties is used to describe the process of networking in both types of voluntary organizations.