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Social Capital and Entrepreneurship
Author(s): Phillip H. Kim;Howard E. Aldrich
Source:
Journal:Foundations and Trends® in Entrepreneurship
ISSN Print:1551-3114, ISSN Online:1551-3122
Publisher:Now Publishers
Volume 1 Number 2,
Document Type: Article
Pages: 50 (55-104)
DOI: 10.1561/0300000002
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.
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