The articles discussed so far in lectures are about social capital and how an individual may build such a social network. A few advantages are being reviewed in the article by Lin (1999). First, social capital facilitates the flow of information, second, it may influence the agents who play an important role in the decision making process and third is social ties can be considered as a qualification of the individuals social network.
Slotte-Kock & Coviello (2010) state that an entrepreneur must be aware of the social network surrounding him, since it can help them them understand the market better that they operate in. Entrepreneurs should also understand that they are involved with managing in a network rather than management of a network. This crucial difference is not be underestimated.
A friend of mine is a young entrepreneur and he stated that the network his father acquired was very significant when he started his own business. Since his father had many years of building social capitol in that specific market he was able to establish himself faster than without the help of his father. An organizational outcome he used was that he was taken more seriously by using his father’s social capital. In other words, the social ties were an indirect qualification of the capabilities of the individual. If the use of the existing social capital of his father was not possible, he probably would not have been able to start his business at all because that specific sector is largely based on reliable trust connections made between business partners. As a new kid on the block, instant success is extremely difficult without any social capital to start with. Although it may look to others like a false start, in this particular example, the entrepreneur has now established his own network of social capital and is running his business without any help of his father. It shows that a little push in the back while starting a company using existing social capital can be very helpful.
Lin, N. (1999). Building a network theory of social capital. Connections, 22(1), 28-51.
Slotte‐Kock, S., & Coviello, N. (2010). Entrepreneurship research on network processes: a review and ways forward. Entrepreneurship Theory and Practice, 34(1), 31-57.