Chapter 6: Entrepreneurial Networks as Social Capital with Marina Della Giusta
Successful entrepreneurship relies heavily on access to social networks, which provide both information and trust. Membership of a network not only provides useful contacts that can be trusted – it can also enhance an entrepreneur’s own reputation for trustworthiness. Trust is important to entrepreneurs because they need to know that the information they obtain from others is reliable, in order to manage risk. Access to networks is sometimes restricted, however, and this may impair the generation of trust. Governments have invested heavily in building local and regional social networks in order to stimulate entrepreneurship, in the expectation that this will improve economic performance and facilitate regeneration. However, there are many types of network; some are most useful in the early stages of entrepreneurial activity and others at later stages. Careful definitions are necessary in order to analyse the role of networks in generating interpersonal and inter-organizational trust, and hence in augmenting the stock of social capital. Effective networks are normally intermediated by reputable trust-brokers. The reputation of government gives it a significant role as a trust-broker, but there is a danger that its reputation may be undermined when it extends its activities into areas where it lacks the competence to intervene effectively. 6.1 INTRODUCTION Although the popular perception of entrepreneurship is very much that of an individualist, there is ample evidence that entrepreneurship is, in fact, socially embedded in network structures (Aldrich, 1987; Aldrich and Zimmer, 1986; Johannison, 1988). The precise nature of this embeddedness is not always clear, however. Just...
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