Business Success through Social Networks? A Comment on Social Networks and Business Success

By Egbert, Henrik | The American Journal of Economics and Sociology, July 2009 | Go to article overview

Business Success through Social Networks? A Comment on Social Networks and Business Success


Egbert, Henrik, The American Journal of Economics and Sociology


I

Introduction

KRISTIANSEN (2004) FOCUSES ON the influence of social and cultural aspects on entrepreneurial success. He refers to the concepts of social network and social capital in order to elucidate the idea that those entrepreneurs who can activate more resources through social networks are more successful than those who cannot. He concentrates on an African context, in particular on entrepreneurs with an African and Asian background in the Tanzanian city of Tanga. His empirical data were collected in 1999 and consist of 12 qualitative case studies on businessmen, all active in the wood business. From the empirical findings he draws conclusions and makes suggestions about possible political measures.

In 1997, I conducted a six-month field research on entrepreneurship in the city of Tanga. I sought to answer the question of whether the social networks of entrepreneurs can be considered a resource or a constraint for their enterprises; in other words, I focused on a research question very similar to that of Kristiansen. The entrepreneurs who I interviewed were the owners of private companies, active mainly in the production sector. The companies were both small (5 to 19 employees) and medium (20 to 150 employees), and their owners were of African, Asian, and Arabic ethnic origin. The data were collected by employing half-standardized questionnaires as well as in-depth interviews, open interviews, and case studies, thus combining quantitative and qualitative methods. Interviews with state authorities and managers of parastatal companies provided additional information. A total of 131 entrepreneurs were interviewed. The results are presented in several papers (for

an overview, see Egbert 2004; for complete results, see Egbert 2001). The topics are the influence of the entrepreneur's religious community on business success (Egbert 1998), the effects of the entrepreneur's family on business success (Egbert 1999a), and the impact of organizational networks on business success in the wood and timber sector (Egbert 1999b).

The fact that two social scientists focus on almost the same research question and conduct research at the same place, (1) unaware of each other's efforts, prompted me to an open response and to discuss research findings critically. In what follows, I draw on my quantitative and qualitative data collected in 1997 to comment on Kristiansen's article. The perspective I choose is that social networks can be considered institutions and that institutions are not cost-free. Concerning Tanzania, transaction costs related to networks are likely to be lower than those of markets. Taking account of this, I follow a new institutional economics perspective on social networks (see also Egbert 2006). Before I proceed with the comment on selected aspects of Kristiansen's research, I would like to emphasize that I agree with many of the points he makes. However, three aspects do deserve more attention, to my mind. They are: (1) social networks as constraints to entrepreneurial success, (2) human capital and social networks, and, (3) generalizations and political recommendations regarding social networks. I focus on these aspects below.

II

Social Networks and Entrepreneurship

A. Social Networks as Constraints to Entrepreneurial Success

The statement I make that social networks (2) of an entrepreneur can be considered constraints as much as they can be considered resources requires a few notes on the term "success." Indicators for business success of a company are the number of employees, profit, turnover, working capital, capacity utilization, and the years of operation of a company, to mention but some prominent ones. Additionally, the temporal development of the indicators provides further insights, and correlations between indicators also can be helpful to validate the data. For measuring the success of an enterprise I use the following indicators in my quantitative analysis: the level of capacity utilization, the development of capacity utilization and of the number of employees over the last years, and the company profits. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Business Success through Social Networks? A Comment on Social Networks and Business Success
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.