Social Networks and Entrepreneurship

Article excerpt

We study network activities of entrepreneurs through three phases of establishing a firm in four countries. Entrepreneurs access people in their networks to discuss aspects of establishing and running a business. We find that entrepreneurs build networks that systematically vary by the phase of entrepreneurship, analyzing number of their discussion partners, and the time spent networking. Entrepreneurs talk with more people during the planning than other phases. Family members are present in their networks in all phases, particularly among those who took over an existing firm. However, women use their kin to a larger extent than men, and even more than men when they take over an existing firm. Experienced entrepreneurs have the same networking patterns as novices. Moreover, these networking patterns are the same in all countries. However, there are country differences in size of discussion networks and time spent networking.


Students of entrepreneurship increasingly recognize that entrepreneurs embed their business decisions in social structures (Borch, 1994; Hansen, 1995; Larson & Start, 1993; Reynolds, 1991; Start & MacMillan, 1990). We use a structural approach to study how entrepreneurs use social relations to get advice and resources to launch a business (Granovetter, 1985, 1992). We note that establishing a business requires different contacts and resources in different phases. The structural approach further implies that entrepreneurs in diverse cultural settings access their social relations in similar ways to get these resources.

In this paper, we study the use of social relations in the business establishment process. We describe how entrepreneurs develop and maintain social contacts during three early phases of establishing a business in four countries. Our comparative focus on structural features of entrepreneurship enables us to understand how entrepreneurs in similar phases of establishment use their contacts to acquire resources. Some structural analysts find that social networks have similar properties in different countries (Wellman, 1999). Therefore, we look for common features and what may distinguish the entrepreneur's networks in diverse cultures. We identify how entrepreneurs draw on social networks to discuss aspects of establishing and running a business in the initial phases of entrepreneurship.

An entrepreneur is commonly defined as one who owns, launches, manages, and assumes the risks of an economic venture. This definition also includes people who take over an existing business. We distinguish entrepreneurship from a corporate or intrapreneurial effort (Gartner, Shaver, Gatewood, & Katz, 1994).

The Social Network Approach. Focusing on social network analysis turns attention to relationships between entrepreneurs and others that provide the resources that are important in establishing a business (Johannisson, 1988; Larson, 1991). Entrepreneurs have ideas to test, and some knowledge and competence to run the business, but they also need complementary resources to produce and deliver their goods or services (Teece, 1987). They get support, knowledge, and access to distribution channels through their social networks. Entrepreneurs are also linked to people and organizations that interact among themselves, and these contacts can widen the availability of resources that sustain a new firm (Hansen, 1995).

Social networks are not fixed; they are the social context of businesses and can be activated according to different needs (Granovetter, 1985; Burt, 1992). To fit their enterprise needs, entrepreneurs bring both those that are closer and distant to them into their business decisions. Family members can play a critical part. As they entertain, plan for, and actually set up a firm, entrepreneurs call on their family and others in their networks for different kinds of help and support (Rosenblatt, de Mik, Anderson, & Johnson, 1985). …