Social capital/social networks is one of the most heavily studied topics in the field of entrepreneurship. This is because personal relations are increasingly being viewed as the key to the construction, functioning and effectiveness of a viable business enterprise (Granovetter, 1973; 1985). It is increasingly recognized that success in business is linked to not what you know, but who you know. When considering who people know, it is certainly true that “birds of a feather flock together”. Homophily, or the ‘like-me’ principle, dictates that individuals deliberately choose to associate with others on the basis of similar ascribed or achieved characteristics like race, gender or cultural values (McPherson, Smith-Lovin et al. 2001) Social similarity is said to increase levels of liking, trust, understanding and attraction between associates (Aldrich, Carter et al. 2002) and may lead to better communication amongst interactants and greater predictability of behavior (Ibarra 1992). One of the earlier observers of the phenomenon, Almack (1922: 52) remarked:
“The clerk, the artisan, the street laborer work by and with those that are assigned to places by them, and perhaps it never occurs to them, and never to the employer that the inefficiency and discontent that pervades the establishment may be due to mal-adjustment of co-operating or contiguous individuals and groups. Homogeneity is one of the requisites for efficiency in socialization”
Thus, demographic and social similarity increases liking and influence amongst interactants, and increased liking can influence the flow of resources. Studies show that resources are more likely to be distributed within-group when members of a group share a common identity or a sense of regard, are friends, perform interdependent tasks or share demographic attributes (McKnight, Cummings et al. 1998; Anderson and Miller 2003) This can have beneficial effects on task outcomes. For example, gender-based homophily of entrepreneurial teams has been found to raise sales volumes (Fertala 2005).
Homophilious tendencies therefore lead men to associate with other men and women with other women. Gender itself clearly shapes patterns of interaction (e. g. who associates with whom, and in what situations), but so too does context. A crucial point is that homophily may occur as a result of structural as well as agential forces (Feld 1982; McPherson, Smith-Lovin et al. 2001). McPherson and Smith Lovin (1987) distinguished between ‘ choice homophily ’ — the result of personal preferences — and ‘induced homophily’, arising from the availability of similar others.2 In other words, in certain contexts (an all-female high school, for example), homophily is almost inevitable. In their study of voluntary association members, although they found evidence of both types, same-sex relationships developed largely because of induced homophily. But, women and minorities tend to have less homophilious networks than white males. In her study of the employees of one advertising firm, Ibarra (1992: 425) concluded that “preferences for homophily and status will tend to coincide for men and exist in competition for women”. That is, men’s tendency toward gender homophily simultaneously allows them access to high status others, but rational women may view interaction with men as a more effective strategy in the pursuit of power and influence. As a result, women carved out differentiated, gendered networks: pursuing friendship and support from their relations with females, but instrumental resources and influence from their relations with men.
The problem is that in contexts in which there are few high status women, homophilious strategies are harmful to women and detrimental in their efforts to access resources (Cabrera and Thomas-Hunt 2007). This means that nontraditional women entrepreneurs may be constrained towards interactions with those best positioned to enhance their access to resources — men — despite preferences with same-sex associations. Mehra and colleagues (1998) provide some evidence for this hypothesis. In their study of the friendship networks of a prestigious MBA program, they found significant levels of gender homophily, but for women, homophily was induced by their lower levels of attractiveness as associates to males. The authors concluded: “the marginalization of women resulted more from exclusionary pressures than from their preferences for women friends” (Mehra, Kilduff et al. 1998: 447).