Research
We often think of networks as “pipes and prisms” that help new firms overcome their liability of newness by providing access to resources ("pipes") or legitimacy ("prisms"). My work extends these perspectives by highlighting how network ties can also function as "handcuffs" for new ventures: patterns of mutual obligation that, while often beneficial, can impose unexpected constraints on entrepreneurs through expectations of reciprocity or retribution. I explore these dynamics in the context of high-tech firms, startup financing, family businesses, and entrepreneurial communities around the world.
Peer Reviewed & Under Review
Foley, A., Huang, R. [title omitted for peer-review]
Under Review (Organization Science)
The paper examines how actors in village economies achieve relational balance in multiplex market exchanges.
Mazzelli, A., Nason, R., Foley, A. [title omitted for peer-review]
Revise-and-Resubmit (Management Science)
The paper explores the relationship between firms' governance structures, kinship ties, and controversial corporate practices.
Working Papers
Foley, A., "Honor Among Thieves: Vulnerable Network Positions, Norms of Reciprocity, and Exit Rates in the Biotechnology Sector" Manuscript in preparation for submission
Indirect ties to competition through a powerful intermediary may expose young firms to resource misappropriation. Prior work has demonstrated that certain attributes of the relationship between a young firm and an intermediary – such as the amount of physical distance or the level of mutual commitment between them – may attenuate these risks and that young firms often seek to further protect themselves via an array of strategic defense mechanisms. I focus here on exchange relations among powerful intermediaries and how these relations can impact the success and failure of the young firms to which they are connected. In a longitudinal study of venture capital deals in the biotechnology sector, I find that venture capitalists investing in many competing firms in this industry face incentives to redirect information and resources away from firms in their portfolios with weaker financial fundamentals but that they will refrain from doing so when these firms are also in the portfolios of other venture capitalists to whom they are socially indebted via norms of reciprocity. I thus offer the insight that exchange relations between powerful intermediaries play a key role in determining whether a given network position represents a strategic vulnerability for young firms.
Foley, A., Lief, D., Bruegger, T., "On the Basis of Sacred Bonds: Sacred Social Capital and Entrepreneurial Renewal Following the Financial Crisis" Manuscript in preparation for submission
This paper examines how the basis of a community’s bonding social capital – not just the strong ties between residents, but the conditions that give rise to them - shapes entrepreneurial resilience and recovery following economic crises. Prior research suggests that dense community ties help actors “get by” by buffering existing firms from economic shocks but inhibit their ability to “get ahead” by constraining new venture creation. However, this literature typically treats bonding social capital as conceptually undifferentiated. We argue instead that bonding ties differ systematically depending on the conditions under which they form – its “bases”. In particular, we distinguish between “secular” bonding capital, built on the basis of shared group membership, and “sacred” bonding capital, built on the basis of shared religious adherence. We propose that sacred bonds—grounded in shared deontological responsibility—are more “portable” across communities than secular ties. As a result, they sustain intra-community cohesion while also encouraging inter-community exchange, thereby facilitating access to the broad resources and opportunities needed for new venture creation. We test these ideas using a 2000–2020 U.S. county-level panel dataset around the 2008 financial crisis. Results show that secular bonding capital buffers existing firms but does not promote new firm creation. In contrast, sacred bonding capital both mitigates performance losses and increases entrepreneurial entry. Denominational analyses further support the proposed mechanism. Together, these findings demonstrate that bonding social capital is not monolithic: the bases on which it is built condition whether communities merely endure crises or also support entrepreneurial renewal.
Foley, A., Ahuja, G. "Recombination & Rank: The Role of Status Configurations on Tertius Iungens Brokerage in Creative Projects" Manuscript in preparation for submission
In this paper, we systematically integrate the literatures on status and structural holes to develop a theoretical model of tertius iungens (TI) brokerage in creative projects. Our model contributes to the literature on structural holes in creative projects in four ways. First, it calls attention to the fact that the TI model, with its focus on coordinating diverse alters, explicitly raises issues of status differentiation in ways that other models of brokerage - such as the Tertius Gaudens (TG) - do not. Second, it explicitly accounts for the fact that TI brokerage in creative projects is not simply an event, but is rather a multi-staged process. Third, our model accounts for and explains the risks associated with brokerage strategies at each phase of the brokerage process; these risks stem from the uncertainty associated with convening diverse actors of different skill and rank together from across a structural hole. Fourth, we also explain how differences in status among a broker and their alters exacerbate or mitigate these risks. In so doing, we draw greater attention to the role that alters - and not just the broker - play in the dynamics of brokerage in creative projects.
Foley, A., Choi, J., Peterson, A., Sine, W. - "Interorganizational Endorsements or Golden Handcuffs? The Role of High-Status Ties on Startup Pivoting"
Manupscript in preparation for submission
High-status ties are often referred to as “interorganizational endorsements” for young ventures. Prior work has found, for instance, that such ties can help young firms overcome the “liability of newness” by granting them legitimacy and higher perceived status in the eyes of potential resource providers; this legitimacy, in turn, should increase their survival rates. However, much of this prior work has tended to assume that the new venture would continue to pursue the strategic direction it undertook at the time the high-status tie was formed. In this paper, we suggest that high-status ties may have a detrimental effect on young ventures by restricting their propensity to “pivot” and pursue new opportunities, thereby reducing their survival rates. These effects will be strongest in nascent or turbulent industries in which uncertainty – and hence a need to experiment - is highest. These relationships are also mediated both by the feelings of overconfidence and greater fear of loss that such ties instill in entrepreneurs. We test our hypotheses via a novel combination of archival and laboratory studies. Analyses are still underway, but we currently find broad support for our claims.
Mazzelli, A., Nason, R., Foley, A. Hard to Enter, Harder to Leave: Family Ownership and Wealth Offshoring under Different Tax Incentives
Manupscript in preparation for submission
International business research has focused on the internationalization of operating businesses, but has yet to examine the growing phenomenon of capital internationalization, increasingly conducted through offshore wealth structures. For wealthy families, offshore entities offer mechanisms for wealth preservation and intergenerational transfer that operate in opaque environments where moral considerations are a primary non-financial criterion. We theorize that families face distinct "moral costs" when entering morally contested practices such as using offshore entities, but these costs become sunk post-entry, shifting the decision calculus toward financial optimization. Leveraging the Panama Papers data leak, we examine 49,119 offshore entities across 192 countries. We find that family-owned entities exhibit significantly lower incorporation rates than nonfamily entities, consistent with moral barriers at entry. However, family-owned entities show markedly lower deactivation rates, consistent with post-entry persistence driven by sunk moral costs and long-term wealth preservation goals. Inheritance tax repeals trigger stronger deactivation responses among family owners, particularly in high pre-repeal tax countries. Our findings distinguish capital from operating internationalization, introduce sunk moral costs as a mechanism explaining post-entry persistence, and demonstrate that family offshore participation is institutionally contingent.
Research in-progress
Foley, A. "Economic Action & The Problem of Indebtedness: the Mutually Contingent Effects of Relational Embeddedness and Reciprocity on the Success of VC Deals"
Data collection complete; Data analysis in progress
This project attempts to reconcile theoretical tensions between social exchange theory (Blau, 1964; Cropanzano et al., 2016) and the embeddedness view of networks (Granovetter, 1985; Uzzi, 1996). This tension stems from the fact that, while exchange theory suggests that individuals often form ties through a process of social exchange in which one sends the tie and the other receives it, the majority of the embeddedness literature takes any level of relational embeddedness as given. In other words, the embeddedness literature tacitly ignores the process of exchange that leads to various levels of embeddedness. In response, I build theory suggesting that the effects of relational embeddedness on economic action – which generally stem from shared norms and ease of information transfer - will be contingent on whether a single actor in a group has initiated a majority of the ties within the group. I test these hypotheses in the context of VC syndication data over a 20-year period and observe how relational embeddedness (the number of times two investors have previously coinvested) and patterns of exchange (who has sent more deals to whom) interact to influence: 1) rates of deal failure within syndicates and 2) the primary mode of exit pursued by a syndicate’s investments. This paper aims to contribute to the embeddedness literature by suggesting that the effect of relational embeddedness on economic behavior will often be contingent on the patterns of exchange and reciprocity that generated it.