THE ROLE OF SOCIAL NETWORKS IN ENTREPRENEURSHIP RESEARCH

THE ROLE OF SOCIA
ENTREPRENEURSHIP

IEEE WORKSHOP ON
BUSINESS APPLICATION OF SOCIAL

Suresh Bhagavatula

NS Raghavan Centre for Entrepreneurial Lea
Indian Institute of Management Bangalore

AL NETWORKS IN
RESEARCH

NETWORK ANALYSIS, 2010

arning

What is entrepren

Do you think you can stud

neurship research?

dy entrepreneurship?

Enigma called…

Entrepreneurship

Why so?

How sub-atomic particles
How to travel in space
We now have higher qua
ago.
Development is due to bu
We understand the least

s function

ality of living than 50 years

usiness
about it

Scot Shane (2003) says,

“ a visitor from another planet
time would think that entrepr
understood subjects examine
academics... Since capitalism
entrepreneurship as a corner
understanding of it is quite li

who came to earth for the first
reneurship was one of the best
ed by business school
m itself relies on
rstone…but alas scholarly
imited”

What do we know

We know that many peopl

We also know that many o
bankrupt in their first few y

We also know that some p
against the tide and becom

w?

le set up enterprise

of these enterprises go
years of operation

people are able to swim
me successful

Entrepreneurial Su

Survival

Approximately 750,00 new b
USA
For every one firm that starts
start
About 40% of these fail to su
64% fail within five years
75% fail to cross the 10 year
88% fail to survive twenty ye

uccess

businesses are founded every year in
there exists another ‘firm’ that could not
urvive one year
r mark
ears

Entrepreneurial Su

Growth

In Employment or in Sales

Fewer than 10% of new fir

Fewer than 4 percent of al
100 employees

So if your firm is growing t
entrepreneur

uccess contd.

rms ever grow
ll new firms become larger than
then you are a successful

Entrepreneurial Su

Operational profit

About 8% of self employ
employed men are able

IPO

The firm signals to the ca
safely purchase equity in

uccess Contd.

yed women and 21% of self
to generate profits.

apital markets that investors can
n the firm.

What is entrepren

Entrepreneurship is an activ
evaluation and exploitatio

to do
introduce new goods and serv
find new markets,
develop new processes,
identify new raw material, etc

neurship?

vity that involves discovery,
on of opportunities
o what?
vices,

c.

Benefits of network

Access they provide to in

to recognize entrepreneu
Seek resources (financial
obtain emotional support

ks for entrepreneurs

nformation and advice.

urial opportunities
l, talent, legitimacy, etc.)
t for entrepreneurial risk-taking

Benefits of networ

The reliance on networks
start-up stage.

Entrepreneurs continue to
business information, adv

with some contacts provi

rks

s is not constrained to the

o rely on networks for
vice, and problem solving

iding multiple resources

A defining characteristic
within entrepreneurship r

a focus on the dynamics o
their impact on entrepren

Network structure is defi
and indirect ties between

c of a network perspective
research is

of social structures and
neurial phenomena.

ined as the pattern of direct
n actors.

Network structure o

of an entrepreneur

Entrepreneur

Who helps in a jo

Each of us have a set of c

We interact often with the

Most of these contacts

Know one and another
move around in the same s
the information they provid

ob search?

close friends and family
em

social circles
de is not new

The strength of the

We rarely meet our acqu

They also have friends an
around in different social

Act as antennae into diffe
The information they provi
There are high chances of
information
Act as bridges

e weak tie

uaintances

nd family but they move
circles.

erent parts of the society
ide is different
f providing valuable

Society Network

Bridges

Abstraction of net

Relational aspects

Strong ties
Weak ties

Structural aspects

Sparse networks
Dense networks

tworks

Bonding and bridgi

Bonding Network

ing Social capital

Bridging Network

Bridging Capital

Information is not evenly d
Entrepreneurship is knowin
your competitors do not.

Provides non redundant in

Advantages for an entrep

Access
Timing
Referrals
Brokering advantages

distributed in the society.
ng some information that

nformation
preneur

Networking efficie

Time 1 Tim

ently

me 2 Time 3

Networking efficie

ently (Contd)

Research Findings

36 to 40% more likely to
evaluation
43 to 72% more likely to
42 to 74% more likely to
company

s

o get a top performance
o get a promotion
o be retained by the

To conclude this section, th
networks that provide brid
sources of social capital

hese set of scholars suggest
dging opportunities are

Challenge to wea

Noise (Uzzi 1997)
Exit (Aldrich 1995)
Trust (Coleman 1990)

ak ties/stuct. Holes

Bonding Capital

A network is deemed clos
every other member

D • Tr
B •P
•F
A E
C

sed if every member knows

Trust
Problem solving situations
Fine tuned information