On the strategic advantage of taking the road less traveled

This study combines ecological theory and social network theory to examine the role of prominence and organizational form on niche formation. A network and failure rate analysis of specialist and generalist government licensed venture capital companies, U.S. Small Business Investment Companies (SBICs), is used to explore how prominence affects generalist and specialist niche formation differentially. Findings show that prominence exposes mainstream generalists to more competition from other prominent generalists, while prominent specialists are less susceptible to this liability of prominence. Thus, an organization's niche is defined not only by its organizational form, but also by its social network position.