Summary
When entrepreneurs try to get their foot in the door of a major corporation, whom should they approach? Entrepreneurs often assume that the higher level they reach, the better. But is it really the case?
In our recent study, published in the Journal of Management Studies, we found that contacts’ intra-organizational status has a U-shaped effect on their tendency to refer entrepreneurs to their organizations for acquisitions. In other words, middle managers are less likely to refer entrepreneurs to M&A directors, refer them to fewer organizational members, and take longer than high- or low-status actors. Why?
The “middle-status” puzzle
We refer to this systematic hesitation among middle-status actors as the “middle-status freeze”—a reluctance to put one’s status on the line when evaluating uncertain entrepreneurial opportunities. While previous literature focuses on entrepreneurs’ agency in networking, it often overlooks a critical factor: the perspective and agency of the contacts. They are not passive messengers but active evaluators who must decide whether to put their own status on the line by referring an outsider—an entrepreneur with great uncertainty to their organizations. What makes one person say “yes” and another hesitate?
The common assumption is that managers at any level will help if the deal is good enough. Yet, under uncertainty, middle-status conformity theory suggests that middle-status actors are most concerned about status loss. Unlike high-status contacts who are secure in maintaining their status, or low-status contacts who have nothing to lose, those in the middle are most concerned about losing status if the venture they recommended fails. Additionally, our interviews with managers further reveal that the likelihood of status loss also varies across levels due to different role expectations. The tops do not have time to screen projects themselves, and the bottoms are not expected to be able to because they do not know the corporate strategy. Middles, in contrast, are expected to have the capability and information to screen potential acquisition targets, and are therefore more likely to have their judgment ability questioned when a referred venture performs poorly. Therefore, we hypothesize that middles will be most hesitant about referring entrepreneurs to their organizations for acquisitions.
How we studied it
We constructed a unique dataset of 12,103 business card exchanges between entrepreneurs and their contacts in prospective acquiring organizations from 2010 to 2019 in China. We tracked three dimensions of contacts’ referring actions: quantity (i.e., how many organizational members are referred to), quality (i.e., whether entrepreneurs are referred to the key decision-maker—M&A directors in this case), and efficiency (i.e., speed of referring). We further identify key contextual factors that moderate the effect of status on referring actions, including organizational ownership and norms. Organizational norms were measured by three indicators: the organization’s history of acquiring new ventures, the proportion of initial contacts who referred an entrepreneur to the organization’s M&A directors, and the dynamic norm for one’s peers at the same level to network with new ventures. Based on these measures, we are able to observe how a contact’s organizational contexts condition their referring actions.
What we found: The “U-shaped” effect
Our analysis revealed a consistent pattern of the U-shaped effect of contact status on referring quantity, quality, and efficiency. We also found that organizational contexts matter. In publicly listed firms, where market scrutiny is intense, referral actions are low at all levels. Accordingly, entrepreneurs should plan for longer timelines when engaging with such firms. For organizations that do not actively acquire new ventures, entrepreneurs may try their luck with low-status contacts, who may refer them to more individuals or directly to M&A directors. For organizations that do not encourage referring or networking with new ventures, entrepreneurs can target high-status contacts who are less bound by these organizational norms. However, when organizational norms are open to new ventures, the “middle-status freeze” begins to thaw.1
Why this study matters
We extend prior research on entrepreneurial networking by shifting attention to the agency of contacts. Rather than treating contacts as passive conduits, we highlight their roles, concerns, and actions in shaping entrepreneurs’ access to organizations. We also show that acquisition target search is not confined to top executives; organizational members at all levels can identify and transmit potential opportunities. The study also offers practical guidance for entrepreneurs seeking to get their foot in the door of major corporations as acquisition targets. For organizational leaders, the implications are just as important. Middle managers often sit at critical junctions in information and opportunity flows, but their concern with status loss can create bottlenecks in organizational alliances. By setting norms that are open to new ventures, leaders can transform these cautious gatekeepers into powerful bridges for innovation.
Who should read this
This paper is intended for entrepreneurs seeking to establish a foothold in major corporations as acquisition targets. It offers guidance on how to approach corporate contacts strategically by identifying which actors are more likely to facilitate referrals and how organizational contexts shape access. It also speaks to organizational leaders looking to capture opportunities through alliances or acquisitions with new ventures, showing how referral bottlenecks arise and how norms can be designed to encourage opportunity identification. In addition, the study contributes to scholars interested in network agency, status dynamics, and M&A strategies by theorizing contact agency and revealing how status and organizational contexts shape the referring actions of organizational members in acquisition settings.
Closing Thought
Entrepreneurial networking success is not just about who you know, but where they stand. Not all gatekeepers are equal—and the most cautious ones may sit in the middle. Understanding the “middle-status freeze” can turn stalled introductions into strategic opportunities.
