In this blog for Entrepreneurship and Networks I will talk about the topic of social capital and bring this into practice for an entrepreneur.
The premise of social capital is that social networks have value. This social capital is captured from embedded resources. Lin (1999) discusses three explanations that can be offered as to why embedded resources in social networks improve the outcomes of actions. First, social networks can facilitate the flow of information (information about opportunities and choices otherwise not available). Second, these social ties may exert influence on the agents who play a critical role in decisions involving the actor. Third, these social tie resources may be conceived by the organization as certifications of the individual’s social credentials.
To show the importance of social capital I will use my brother who is an entrepreneur in the music business. He is a producer/dj named MOTi and used his social network to get to the point were he is now. When he started producing music he did that just for fun and did not have the intention of making that his work. The first time that came to mind was when his friend were telling him it was really good and he should sent a demo to an already known dj. His friends provided him with the information about an opportunity and that is how he started. The flow of information of his social networks is now also very important. At moment he works together with several other producers and together they try to combine the information they have and use that to create a new track. By working together they are maybe able to produce something they cannot produce when they are working alone. But the most important advantage he has from his social network is the influence his social ties have on other organizations. He now works together with people who have a lot of influence in the music business. This is an advantage when it comes to performing at big festivals and famous clubs. These organizations notice he is working together with influential people and are therefore more likely to work together with him. This provides him with better shows and more income. So social capital is probably the most important factor of his business.
Lukas Romme 2008025