Entrepreneurs’ Social Network and Corporate Risk Contagion: A Dynamic Evaluation and Simulation Approach

Table 1

Notations in model.

Decision variables	Explanation
εt^ki, k ∈ {, s}	Effort made by entrepreneur ei to maintain his social network at period t
λ^i	Proportion of cash invested in venture projects by corporation ci
D	Influence radius of venture projects
Control variables
R	Risk-free interest rate
A	Parameter of entrepreneurs’ cost function
B	Parameter for entrepreneurs seeking for help when financial accident occurred
Statistical variables
Wt^i	Capital possessed by corporation pi after period t
rt^i	Realized return of venture project pi after period t
Δt^i	Decision bias of entrepreneur ei at period t
Lt^i	Total amount funded to corporation ci at his financial accident period t
χT	Survival rate of corporations that measures system risk during time interval [0, T]
ϕT^i	Probability of expected loss that measures individual risk of ci during time interval [0, T]
ρT^i	First time corporation ci suffers financial accident during time interval [0, T]
γt^ki, k ∈ {, s}	Degree of centrality of corporation ci in social networks at period t
φT^ki, k ∈ {, s}	Embeddedness of corporation ci in his social networks during time interval [0, T]
, k∈{, s}	Spillover effect of social networks of corporation ci during time interval [0, T]
Functions
d(ci,pj)	Distance of corporation ci and venture project pj
Kt^i(εt^ij), i ∈ {, s}	Tightness of social network at period t. The type of network is represented by superscript
C(εt^wi, εt^si)	Cost for entrepreneurs to maintain their social networks
π(ci, t)	Expect return of investment of corporation ci at period t
Sets
	Set of entrepreneurs
	Set of corporations
	Set of venture projects
Ct^i	Set of venture projects in which corporation ci invests at period t
Ht^i	Set of venture projects that can be directly accessed by corporation ci at period t
At^i	Set of potential investment opportunities of corporation ci at period t
Lt^ki, k∈{, s}	Set of entrepreneurs with whom ei connects in weak (strong) network at period t
Jt^i	Set of projects which is invested by ci and realized return is lower than r at period t
Bt^i	Negative list of venture projects for entrepreneur ei after period t
Dt^i	Set of entrepreneurs who may fund corporation ci in financial accident at period t
Other notations
ei, i∈{1, 2, …, N}	Specific entrepreneur whose identity is represented by subscript
ci, i∈{1, 2, …, N}	Specific corporation whose identity is represented by subscript
pi, i∈{1, 2, …, m}	Specific venture project whose identity is represented by subscript