Foundations and Trends® in Entrepreneurship > Vol 1 > Issue 2

Social Capital and Entrepreneurship

Phillip H. Kim, Department of Sociology, University of North Carolina at Chapel Hill, USA, pkim@unc.edu Howard E. Aldrich, Department of Sociology, University of North Carolina at Chapel Hill, USA, howard_aldrich@unc.edu
 
Suggested Citation
Phillip H. Kim and Howard E. Aldrich (2005), "Social Capital and Entrepreneurship", Foundations and TrendsĀ® in Entrepreneurship: Vol. 1: No. 2, pp 55-104. http://dx.doi.org/10.1561/0300000002

Published: 01 Jun 2005
© 2005 P.H. Kim and H.E. Aldrich
 
Subjects
Business formation
 

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In this article:
1 Introduction
2 Observation 1: Social networks tend toward homogeneity, not diversity
3 Observation 2: Not all relationships are the same
4 Observation 3: Some people are sought out more than others
5 Summary and conclusions
Acknowledgements
References

Abstract

We offer a critical review of the concepts and principles of social capital and social networks as applied to entrepreneurship. Our review is intended for junior scholars and graduate students in the field of entrepreneurship who wish to learn the basic vocabulary of social network and social capital analyses. We illustrate several interesting research questions and a toolbox of methods to answer them. First, we use a popular new website, Friendster, to show the potential power of social capital accessed via social networks. Then, we show that the potential of social networks often cannot be realized because of various socio-cultural constraints. Taking account of these constraints, we offer three empirical generalizations about social networks and show how the concepts of homophily, social boundaries, and bounded rationality provide a framework for understanding the observations. As we discuss each generalization, we discuss some well-established theoretical contributions and empirical findings from the social capital and social networks literatures. Throughout the text we explain various research designs for studying social networks and issues raised in trying to use them. We conclude by noting the tension between the properties of social networks used in entrepreneurship researchers' models and the limited perspective on networks available to practicing entrepreneurs.

DOI:10.1561/0300000002
ISBN: 978-1-933019-10-9
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ISBN: 978-1-933019-58-1
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Table of contents:
1 Introduction
2 Observation 1: Social networks
3 Observation 2: Not all relationships are the same
4 Observation 3: Some people are sought out more than others
5 Summary and conclusions

Social Capital and Entrepreneurship

Social Capital and Entrepreneurship provides a critical review of the concepts and principles of social capital and social networks as applied to entrepreneurship. The authors examine interesting research questions and offer a toolbox of methods to answer them. First, a popular new website, Friendster, is used to show the potential power of social capital accessed via social networks. Unfortunately, the potential of social networks often cannot be realized because of various socio-cultural constraints. Taking account of these constraints, the authors offer three empirical generalizations about social networks and show how the concepts of homophily, social boundaries, and bounded rationality provide a framework for understanding the observations. In reviewing these generalizations, well established theoretical contributions and empirical findings from the social capital and social networks literatures are provided to help the reader understand these concepts. Throughout the text, various research designs are explained for studying social networks, as well as the issues around their use. Social Capital and Entrepreneurship concludes by examining the tension between the properties of social networks used in entrepreneurship research models and the limited perspective on networks available to practicing entrepreneurs. Social Capital and Entrepreneurship is intended for scholars and graduate students in the field of entrepreneurship who wish to learn the basic vocabulary of social network and social capital analyses. In addition, entrepreneurs can gain insight into the use of social networks in practice.

 
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