How homophily hurts high-growth entrepreneurship

How homophily hurts high-growth entrepreneurship

How homophily hurts high-growth entrepreneurship

Homophily refers to the tendency for people to form connections with others like themselves. This tendency has been found to occur broadly across age, race and political inclination. Homophily has also been found to influence many types of relationships ranging from personal friendships and marriage to business-related work advice and support. No surprises then, that homophily also affects Venture Capitalists (VCs) in their hiring behaviors as well as in funding of high-growth entrepreneurs. In fact, recent research by Gompers & Wang (2017) identified patterns of homophily-based hiring by VCs and homophily-induced information flows. Both of which have resulted in fewer women choosing to be high-growth entrepreneurs or VCs.

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