Networking Frictions: Evidence from Entrepreneurial Networking Events in Lomé

By: Stefan Dimitiadis and Rembrand Koning

Format:Print
| Language:English
| Pages:99

Abstract

Spatial proximity between firms plays a crucial role in entrepreneurship by creating knowledge spillovers, enabling resource sharing, and sparking productivity gains. Building on these insights, research has explored whether institutions and organizations can engineer these agglomerative conditions through events that encourage knowledge spillovers, collaboration, and resource sharing, regardless of proximity. Here we argue that the primary value of such events often lies more in catalyzing connections between neighbors, rather than engineering connections no matter how far participants are from one another. Using data from a networking event in Togo, during which entrepreneurs were randomly assigned to meet with peers from across the city of Lomé, we find that entrepreneurs who were assigned to neighboring peers were much more likely to sustain a relationship with them, learn from their management knowledge, and in turn benefit more: profits increase by 10% when entrepreneurs get to know three neighbors during the event who are on average 1 km closer after the event. Our results highlight the important role distance plays in both shaping the “search costs” of meeting a new peer and the “relational costs” of sustaining relationships with them.