Homophily and entrepreneurship: a process perspective from venture creation to financing

Homophily, the tendency of individuals to associate with others who are similar to themselves, shapes entrepreneurial behavior and outcomes by influencing how entrepreneurs connect, collaborate and access resources. Despite a growing research interest, the field still lacks a comprehensive overview of the role of homophily in the entrepreneurial process, especially as digital technologies fundamentally reshape patterns of social interaction. This monograph integrates entrepreneurship and finance literature to examine the connections between homophily and entrepreneurship across venture creation, development and financing. The authors highlight that homophily affects the entrepreneurial process in multiple ways. On the one hand, it facilitates trust, cooperation and resource mobilization during venture creation; it influences team composition and strategic choices during venture development; and it shapes access to finance. On the other hand, homophily can also produce exclusionary effects by limiting diversity, innovation and access to investors. They discuss how the digital transformation of entrepreneurial ecosystems is reshaping homophilous relationships. Digital platforms, social media and algorithmic matching tools have altered patterns of social interaction, introducing new forms of network formation and potentially amplifying or mitigating homophilic bias. They offer insights into analyzing homophily in the digital age and outline directions for future research.