is

International Small Business Journal 25(3)

International Small Business Journal
Copyright © 2007 SAGE Publications
(Los Angeles, London, New Delhi and Singapore)

bj
http://isb.sagepub.com
[DOI:10.1177/0266242607076524]
Vol 25(3): 220–244

Entrepreneurship and Social Capital

Analysing the Impact of Social Networks on Entrepreneurial
Activity from a Rational Action Perspective

M A R K C A S S O N a n d M A R I N A D E L L A G I U S TA
University of Reading, UK

Governments have invested heavily in building local and regional entrepreneurial

networks in order improve economic performance and regeneration. However,
there are many types of network, and different types of network are appropriate
for different purposes. Some types of network 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.

KEYWORDS: broker performance; entrepreneur; network; obligation; social capital; trust

Introduction and Plan of Paper

The concept of social capital is widely agreed to be ambiguous. It has many differ-
ent connotations, and so the scope for confusion is considerable (Anderson and
Jack, 2002). There are tensions between the way the concept is used in sociology
and political science on the one hand (e.g. Putnam, 1993, 2001) and economics on
the other (e.g. Dasgupta and Serageldin, 2001). One way of resolving this tension
is to apply the rational action modelling of economics to the processes of social
interaction studied by sociologists. This approach was pioneered by Coleman (1988)
and has been followed up both theoretically (Della Giusta, 1999) and empirically
(Knack and Keefer, 1997).
The question arises as to how social interaction between rational actors is to be
modelled when there is a large number of actors to be considered. The economic
analysis of social networks offers a way forward in this respect (Casson and Rose,
1997). Networks facilitate social interactions between their members through
investments in high-trust channels of communication. ‘Networking’ is often regarded

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 Casson & Della Giusta: Entrepreneurship and Social Capital
as a manifestation of social capital, and many of the insights of social capital the-
ory can be found, quite independently, in the network literature (Brown and
Duguid, 2002; Himanen and Castells, 2004). Indeed, scholars familiar with the so-
cial network literature might well regard some of what is written on social capital
as a ‘re-invention of the wheel’.
Network analysis is not the only way of analysing social relations between a
large number of actors. An analysis based on social class offers an alternative way
forward (Anderson and Miller, 2003) but this is rejected here because it imposes
a structure on relationships between network members that is too restrictive for
the purposes of this article.
Economists and sociologists tend to use the concept of capital in different ways.
Sociologists typically regard capital as a stock that is accumulated steadily over
time, while economists tend to adopt a forward-looking approach in which capital
is valued in terms of the benefits derived from its future use. In accounting terms,
sociologists tend to value capital in terms of its ‘historic cost’, while economists use
the ‘market value’. This market value is reflected in the expected net present value
of the future stream of benefits generated by the asset. The market value approach
is the one that is best adapted to the requirements of this article.
It has been noted that certain forms of social capital – such as capital embedded
in the personal loyalties between members of a drugs cartel – may have a negative
impact on society. It must therefore be recognized that in certain contexts social
capital may have a negative value (Bowles and Gintis, 2002).
The network literature suggests that social capital can be defined in terms of
the creation of high-trust social networks, and this is the approach adopted here.
Specifically, social capital is defined as ‘the capitalized value of improvements in
economic performance that can be attributed to high-trust social networks’. Em-
phasizing networks highlights the ‘social’ aspect of social capital, while emphasiz-
ing the value of future improvements highlights the ‘capital’ aspect.
Since they are key terms, definitions of ‘network’ and ‘trust’ will be offered as
well. As the specific focus of this article is on networks involving entrepreneurs, a
definition of entrepreneurship is provided too.
Definitions that are too narrow can exclude important issues. To avoid this prob-
lem, the definitions offered in this article are very broad. As a result, it is possible
to construct a typology of each of the key concepts. Inspection of these typologies
reveals important distinctions between different types of network, and different types
of trust. There is an enormous range of phenomena that exhibit a network structure,
and so the important research question is often not ‘Is a network involved?’ but
‘What type of network is it?’. It is also pertinent to ask not only ‘Is there trust?’ but
also ‘What type of trust is it?’
Given the social emphasis, it is appropriate to construe economic performance
broadly, to include not just the usual range of goods and services included in the
national accounts, but also a range of un-priced factors, such as visual amenity, which
enter into ‘quality of life’. Placing too much emphasis on qualitative factors can,
however, lead to the trivial conclusion that networks are useful simply because people

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International Small Business Journal 25(3)
enjoy belonging to them. The focus of this article is therefore on the ‘instrumental’
benefits of network membership, such as the promotion of productivity and
trade, rather than ‘intrinsic’ benefits, such as personal recognition and emotional
support.
A rational actor will pursue both intrinsic and instrumental benefits, although
he may advertise one and conceal the other according to the situation in which he
finds himself. Thus when working for a private firm a rational actor may emphasize
the instrumentality of his actions to the pursuit of profit, while at home he may em-
phasize intrinsic domestic pleasures instead, and play down the instrumental side
of family life. As we shall see, this ambivalence about objectives permeates social
capital, where the overt pursuit of one type of benefit may be associated with the
concealed pursuit of another.
The impact of social networks can be explored at either the ‘local’, ‘regional’,
‘national’ or ‘global’ level. The unit of analysis is quite important. Where face-to-face
contact is important, it is natural to focus on the local level. Where the utilization
of specific resource endowments is concerned, the regional level is often the most
appropriate, since it is at this level that the impact of networking on specific sectors
such as mining and tourism, and on specific activities, such as university spin-out,
can be discerned. The national level is important for the formulation of government
policy initiatives, while the global level is the most appropriate level at which to study
the role of networks in international trade and capital movements. The main focus
in this article is on the local and regional level, but the analytical approach is valid
for any geographical unit of analysis.
Social networks can affect economic performance through a number of channels.
For example, a strong extended family may promote entrepreneurship by provid-
ing inter-generational capital flows that can compensate for a lack of bank finance
for the family business, and may also provide flexible childcare, which allows family
members to increase family income by taking part-time work. In the first case the
network helps to overcome deficiencies in the provision of bank finance, while in
the second case it compensates for a missing childcare system that could have been
provided by the state. The analysis in this article aims to capture a range of network
effects. Furthermore, the generality of the approach means that it can be extended
to incorporate other effects as well.

Role of Networks in Promoting Entrepreneurship

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). Modern economic theories of the entrepreneur, as summarized
recently by Shane (2003), provide a more balanced view of entrepreneurship
than the popular perception. By synthesizing the ideas of great thinkers such as
Cantillon, Knight, Schumpeter and Hayek, modern theory affords a coherent view
of the socially embedded entrepreneur advancing the coordination of activities in
a complex economic system.

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 Casson & Della Giusta: Entrepreneurship and Social Capital
Entrepreneurship is sometimes identified with self-employment, but this is mis-
leading because there are many industries – such as household plumbing – which
are dominated by self-employment simply because employees are difficult to
monitor when they are working away from the firm – e.g. in other people’s homes
(Shane, 2003). It is also misleading to identify entrepreneurship with owner-managed
firms. While many firms are owner-managed when they are founded, successful
firms may grow into joint-stock companies run by a team of salaried managers. The
salaried managing director of a fast-growing medium-size firm may be much more
entrepreneurial than the owner-manager of a small ‘lifestyle’ firm.
In ordinary discourse, the term ‘entrepreneur’ signifies someone who exploits op-
portunities that other people did not realize existed. The opportunity may involve
doing something new, such as marketing a novel product, although in other cases it
may simply involve switching some resource to a better use.
Entrepreneurship is usually seen as a risky activity. However, the entrepreneur’s
perception of risk differs from that of other people. It is possible that he possesses
information that others do not have. Alternatively, he may be the only person to
recognize the significance of an item of public information. Thus, where other people
see only risk, the entrepreneur perceives an opportunity that he is sufficiently
confident to exploit.
Entrepreneurs seek out the sort of opportunities that they consider they are best
equipped to recognize and exploit. An entrepreneur may have believed for some
time that an opportunity of some particular type was likely to appear, although he
did not know when or where. When the information comes through, he is alert to it
because he recognizes it as the signal for which he has been waiting. On this view,
it is the entrepreneur’s capacity to take a wider view of a situation that differentiates
him from other people. Thus when an entrepreneur acquires an information ad-
vantage, it is not necessarily because he is socially privileged, but because he knows
what information he is looking for and where he is most likely to find it.
In the economic theory of entrepreneurship, the defining characteristic of the
entrepreneur is that he specializes in taking judgemental decisions (Casson, 1982).
These are the risky decisions described earlier, which are typically based on privileged
information sought out as a result of a distinctive perspective on the situation. This
distinctive perspective is often the result of an unusual personal background that
has involved living in different countries, working in different sectors or researching
different subjects.
While everyone takes judgemental decisions from time to time – choosing a
career, a spouse and a nice place to live – the entrepreneur specializes in taking
these decisions by managing funds invested by other people in a business that he
controls. The entrepreneur does not need to own the business – he can be rewarded
for his judgement by a generous salary, which he will lose if he does not perform
well. Managing a large and growing business involves a series of judgemental
decisions – where to invest, how much to borrow, whom to employ, and so on. The
quality of these decisions, taken on behalf of the investors, is the measure of how
well he performs.
Given the importance of information to the entrepreneur, it is not surprising
that networks are of considerable significance to entrepreneurial activity. Social

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International Small Business Journal 25(3)
networks channel information to the entrepreneur that he can use to identify a profit
opportunity. The next section of the article therefore examines the concept of a net-
work. It turns out that the concept is far subtler and has much wider ramifications
than most scholars have appreciated.

Networks: Concepts and Typology

A network is a very general concept – it is far more general than is suggested by
the specific contexts in which it is often used. The defining feature of a network is
‘connection’. A set of ‘elements’ that are connected to each other form a ‘network’.
The elements are the ‘members’ of the network. The connection is created by some
kind of ‘relationship’ between the elements. Every pair of members is connected,
either ‘directly’ or ‘indirectly’; indirect connections are effected through other
members of the network.
In a local business network, for example, the elements may be business owners
who live in the area. The relationship is that they are in regular contact with each
other. Every member does not necessarily know every other member personally, but
every member knows some other member who knows some other member, and so
on, so that every member can in principle be put in touch with every other member
using the resources of the network.
In a social network the elements are generally people – either single individ-
uals, or social units such as a families and clubs. The links between them involve
communication – i.e. the transmission of information in symbolic form. Different
types of relationship generate different types of social network (Doreian and
Stokman, 1997) – e.g. parentage creates family networks, trade creates commercial
networks, and so on.
In a physical network, by contrast, the elements are generally natural features,
buildings or equipment linked by channels along which some kind of traffic flows
(Haggett and Chorley, 1969). Physical networks that have a significant economic
impact include transport infrastructure (roads, railways, etc.), communications infra-
structure (telephones, Internet), distribution systems (pipelines, electricity grids)
and disposal systems (drainage ditches, sewage systems).
Physical and social networks, while distinct, are closely related. The exploita-
tion of a physical network for economic ends almost always involves a coordinating
system based on social networks. For example, a trading network is physical, but the
networks of communication that set up the trades are social (Casson, 1997). The
physical network consists of flows of goods and services while the social network
consists of flows of business enquiries, price quotations, sales orders and consignment
notes. The economic value of social capital is strongly influenced by its contribution
to the development of trade, as explained in greater detail later.
Just as physical networks comprise physical capital, such as the infrastructure used
by transport and utility industries, so social networks represent social capital – an
‘invisible infrastructure’ comprising high-trust relations between members. Physical
capital supports flows of tangible goods and resources, together with flows of people
through transport systems, while social capital supports intangible flows involving
the communication of information and knowledge.

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 Casson & Della Giusta: Entrepreneurship and Social Capital
Most engineered networks are embedded in a structure of natural networks. Thus
canals developed from cuts made in navigable rivers, and railways followed river
valleys because the gradients were easy. In the social sphere, the members of clubs
and communities are invariably members of families too. Any given network is
almost invariably part of a wider system. Each element is connected not only to other
members of the same network, but to members of other networks too. Members of
the network may be linked not only by their connection through the network, but
through connections via other networks too.
The only network that is not part of a wider system is the global network that en-
compasses the totality of all the networks: it is the network that links every person,
every resource and every location, directly or indirectly, to every other, through
different types of physical and social connection. Every other network is a subset of
this encompassing network. It is necessary to base analysis on subsidiary networks
because this encompassing network is so complex that, while it can be analysed at
a high level of aggregation, it is too large to analyse fully at a disaggregated level.

Social Networks: Structural Variations

A popular impression of a social network is that it is a collection of people who meet
fairly regularly on a casual basis in order to share their experiences. Networks are
often described as ‘self-organizing’, because no one appears to be in charge: people
show up at meetings simply because they expect others to show up, and provided
others do indeed show up, a spontaneous equilibrium is maintained.
In fact, social networks take a variety of forms (Wasserman and Faust, 1994). Some
social networks are purely ‘transitory’ – they may be a group of people attending a
party who then disperse to go their separate ways. Such networks can be useful for
making contacts, but their individual importance is low. Since there are many such
meetings, however, their combined effect can be significant. Most networks, though,
‘persist’ for a considerable time. Long-term persistence requires that the network
renew itself by recruiting new members to replace those who have died, retired or
moved away. Families, for example, persist through the recruitment of spouses and
the production (or adoption) of children. Persistence is usually associated with high
levels of commitment between members (Granovetter, 1985).
Some networks are quite ‘unstructured’: there is no internal differentiation of roles.
A group of commuters travelling together on a train exemplifies an unstructured
network. No one is in charge, and if one or two members leave, the network may
disintegrate.
The larger the network, the greater the advantage of structure. A leadership role
may emerge, occupied by someone who exerts influence over the other members,
and represents them in negotiations with outside groups. With the emergence of a
leader, a network may acquire an identity, represented by a collective name, and
possibly symbolized by a logo, crest or flag. A structured social network may be
described as a social group.
A group can be structured either ‘formally’ or ‘informally’. An informal structure
may be based on a personality cult around the leader, while a formal structure is
more likely to involve a codified constitution. A formally structured group may be

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International Small Business Journal 25(3)
termed an ‘organization’. An organization has an authority system, which determines
who is authorized to take what decisions. Authority is normally conferred on of-
fices or roles, rather than on particular individuals, and the constitution then deter-
mines how people are allocated to a role.
A formal group may develop into a corporate ‘institution’. It acts as a fictitious
person, making contracts with other institutions as well as with individual people.
All the well-known forms of institution – including firms, markets, governments
and clubs – may be regarded as highly structured, highly formalized social groups.
A firm is a for-profit organization, while a club or charity is a non-profit organization.
Both firms and clubs operate on the voluntary principle whereby people decide
whether they wish to become members or not; by contrast, government is a com-
pulsory organization that conscripts its members and coerces a subscription
through taxation. A market economy is a distinctive kind of institution with a
highly decentralized authority system in which control over resources can be traded
between individual members without the specific consent of the group as a whole.
From a network perspective all these forms of organization merge into each other:
there is a continuum of organizational forms, and careful definition is required to
determine which organizations are of which particular type.
It is possible to have networks composed of networks, creating a hierarchical
structure in which low-level networks belong to higher-level networks. The high-level
networks coordinate relations between the lower-level networks. Where the lower-
level networks are organizations or institutions, this leads to inter-organizational
and inter-institutional networks.
Inter-organizational networks are important in trade: a large amount of trade in
intermediate products is inter-firm – particularly raw materials, components, pro-
prietary technology and business services. Trade between individuals and firms is
also large – for example in consumer product markets, and in factor markets where
people take jobs with firms, buy shares, or invest their savings in a bank. Inter-
personal trade is much less common, except for second-hand goods sold through
garage sales or over the Internet.
The interpersonal aspect of a social network is always fundamental, however,
because inter-organization networks are maintained in practice by interpersonal
communication between representatives or leaders of the respective organizations.
Turnover of personnel can undermine inter-organizational relationships if successors
are not properly briefed when they take over. Indeed, many inter-organizational
relationships are often little more than impersonal formalizations of highly personal
relationships, and therefore dissolve as soon as one of the key people dies, retires or
moves on. The discussion that follows therefore focuses on the role of interpersonal
networks, on the grounds that inter-organizational networks are usually based on
interpersonal networks linking the representatives involved.

Configuration of Networks
A significant feature of any network is its geography, and in particular the location of
hubs. Hubs are points at which an unusually large number of connections converge:
they act as consolidation centres and distribution centres for the traffic over the

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 Casson & Della Giusta: Entrepreneurship and Social Capital
network. Hubs are often connected to other hubs by trunk connections that carry
high-volume traffic. The relationships between the ordinary members of the network
and the hubs, and among the hubs themselves, determine the ‘configuration’ of the
network (Watts, 2003).
Considerable research has been carried out into the configurations of physical
networks, but remarkably little into the configuration of social networks. Con-
versely, far more research has been carried out into the nature of relationships in
social networks than in physical networks. Only a small number of writers, such as
Leibenstein (1978) and Burt (1992), have integrated the analysis of relationships
with the analysis of configurations.
Most writers on social networks tend to assume one of two configurations. For
an unstructured network, they assume a Web configuration (see Figure 1) while
for a structured network they assume a Hub configuration (see Figure 2). In these
figures, individual members are represented by circles and the connections between
them by lines. In the Web every member is directly connected to every other member,
whereas in the Hub only the central person is directly connected to everyone else and
other people are only indirectly connected through the centre. Allied to this, it is
usually assumed that the Web involves ‘symmetrical’ relationships between people
of equal status, while the Hub involves an ‘asymmetrical’ relationship of influence or
authority, directed from a high-status person at the centre towards ordinary lower-
status members around the periphery.
By contrast, writers on physical networks allow for a far wider range of configur-
ations. A glance at a map will quickly establish that a variety of network config-
urations have evolved in transport systems such as roads, rivers and railways in
response to the uneven distribution of centres of population and the need for routes
to avoid geological obstacles between them.
There are perfectly good reasons why configuration plays a greater role in the
analysis of physical networks than it does in social ones. ‘Geographical distance’ is
a paramount consideration in many physical networks, whereas it is ‘social distance’
that is of the greatest significance in social networks. Geography is important to social

Figure 1. A Web Figure 2. A Hub

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International Small Business Journal 25(3)
networks because it determines the scope for regular face-to-face communication.
However, once a successful face-to-face meeting has taken place, it is often possible
for people to sustain and develop their relationship through remote communication,
by letter, telephone or email. Furthermore, the cost of setting up face-to-face meetings
can be reduced by arranging meetings at a major metropolis, or an international
conference or trade fair, so that the cost of travel can be spread over many meetings
with different people. By contrast, geographical distance in a physical network incurs
a recurrent penalty in terms of time and energy costs.

The Concept of Trust

There are two main determinants of social distance: the ease of communication, and
the degree of trust. Ease of communication is facilitated by a common language,
common culture and effective channels of information flow. Common culture avoids
misunderstandings that are caused when differences in basic values and beliefs lead
to information being interpreted in an unintended way. The risk of misunderstandings
is further reduced when a message is conveyed using a variety of media, such as
speaking, writing, and gestures, so that a misleading impression given in one medium
can be corrected through the others. Until fairly recently, speaking and gestures
were characteristic of face-to-face communication, but not any more: telephones
facilitate speaking and TV communicates gestures.
In business networks ease of communication is not normally a critical issue.
Trust is absolutely crucial, however. Unfortunately, trust, like the other key concepts
discussed earlier, is potentially ambiguous (Casson and Della Giusta, 2006).
If an entrepreneur with a bad reputation reneges on a deal, a previous victim
of that entrepreneur might exclaim ‘Trust him not to deliver!’ This does not mean,
of course, that he considers him trustworthy – it simply means that he considers that
his dishonesty is predictable. ‘Predictability’ is the first meaning of trust.
If a reputable person were introducing an entrepreneur to a banker at a reception,
he might say ‘You can certainly trust him’. This would have the more usual meaning:
that he can be relied upon to honour his obligations. A ‘propensity to honour obli-
gations’ is a second meaning of trust.
To be trusted is not the same thing as to be trustworthy (Gambetta, 1988). Trust-
worthiness is an objective characteristic of an individual in a given type of situation,
but it cannot be directly observed. Trust is the belief that the other person holds
about them (Hardin, 1993). This belief may or may not be correct. This leads to an
important distinction between naive trust and warranted trust. ‘Naive trust’ sig-
nifies a misplaced belief in the character of the other party whereas, by contrast,
‘warranted trust’ signifies a belief that is correct. In economic terms, warranted
trust is an equilibrium concept, since expectations are fulfilled, and so there is no
reason to change them. On the other hand, naive trust is a disequilibrium concept
because the expectations are not fulfilled and so need to be revised.
Some business transactions require mutual trust, while others depend only on
unilateral trust. In ‘mutual trust’ each party trusts the other, whereas in ‘unilateral
trust’ one party trusts the other, but the feeling is not necessarily reciprocated.
For example, if an entrepreneur supplies a customer though mail order then if the

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 Casson & Della Giusta: Entrepreneurship and Social Capital
customer pays in advance, the entrepreneur does not need to trust the customer, but
the customer needs to trust the entrepreneur. Conversely, if the customer only pays
when he receives the goods then the entrepreneur needs to trust the customer, but
the customer no longer needs to trust the entrepreneur. But, if the goods and the
payment are liable to cross in the post then they both need to trust each other.
Taking all these factors into account, trust is most usefully defined as a ‘con-
fident and warranted belief that the other party will honour their obligations’.
Confidence gives predictability, while the warranted nature of the trust ensures
that the predictions are broadly correct. Mutuality is not required by this definition,
as it is not always necessary.

Nature of Obligation
The definition of trust in terms of obligation raises the issue of why anyone would
accept an obligation in the first place. The simple answer is that they get something
in return. If they recognize an obligation to another party then the other party will
recognize a reciprocal obligation to them. This is the basis on which social groups
are formed. All the members of a group accept an obligation to respect the rights
of the other members in return for respect from others. Trust therefore normally
develops within the context of a social group.
Different types of social group emphasize different types of obligation.

Contractual Obligations
In business dealings, keeping promises is regarded as being of paramount import-
ance. A contract is a reciprocal set of promises in which the seller agrees to deliver
in return for the buyer agreeing to pay. An entrepreneur promises to repay a loan to
a bank; an employee promises to work hard and obey orders; a supplier promises
to deliver quality products on time, and so on. Defaulting on a contract is a very
serious matter.

Customary Obligations
When people do not have a contract, obligations may still apply. Customary obli-
gations allow people to behave towards each other in a predictable fashion even
though there has been no prior communication between them. People are expected to
reply to business correspondence, and to compromise in negotiations, even though
they have not specifically promised to do so. People therefore have a common obli-
gation to observe business customs although they have not made a contract. Indeed,
without respect for custom, contracts would be difficult to negotiate.

Considerate Obligations
Entrepreneurs may feel obliged to consider the wider implications of their actions.
They do not confine their obligations to respecting customs and honouring con-
tracts. The paternalistic employer, for example, accepts an obligation to care for his
workers, and even their dependents, in times of sickness or stress. A philanthropic
banker might extend a loan against his better judgement because if the borrower
went bankrupt many people would lose their jobs. Business people who accept

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International Small Business Journal 25(3)
considerate obligations can be trusted to take account of the wider implications
of their impacts of their decision in a way that those who merely enter contractual
obli-gations cannot.

Philanthropic Obligations
Some entrepreneurs may even accept a duty to society that extends beyond the
parochial boundaries of their firm. They move beyond paternalism to philanthropy.
They sponsor hospitals or holiday homes for the use of everyone and not just
their own employees. In modern jargon, they take corporate social responsibility
seriously.
For any given type of obligation, trust is greater the larger the value of resources
involved. An individual who can be trusted to repay a debt of £1000 cannot neces-
sarily be trusted to repay a debt of £1m. When people commit themselves to honour-
ing obligations, there is an implicit restriction on the size of the obligation that they
are willing to accept. The significance of this restriction may not be appreciated
until unusual circumstances arise. People can often train themselves to be honest
in regular dealings but can be caught out by temptations they cannot resist when
they are confronted with a type of situation they have not encountered before. Thus
unanticipated circumstances are more likely than anticipated circumstances to
precipitate dishonest behaviour.

Applications of Network Analysis to Social Capital and

Entrepreneurship
Social networks influence several different aspects of entrepreneurship. It is useful
at the outset to distinguish three aspects of entrepreneurship: opportunity seeking,
resource acquisition, and project implementation. From the standpoint of network
analysis, the organization of a new market is the most important aspect of project
implementation, and so this is the focus of the following discussion.

Opportunity Seeking
‘Opportunity seeking’ is mainly about gathering information. Coordination fail-
ures provide opportunities for entrepreneurs to correct them. In a simple case, an
entrepreneur might spot an opportunity for arbitrage – for example, a brownfield
industrial site that could be converted to residential use. The entrepreneur might
use networks to discover the existence of the site, to assess the potential local de-
mand for housing, and obtain an estimate of local construction costs. In practice, a
combination of direct personal observation, social networking, private publications
and official information sources will be used.
In opportunity seeking, much of the information gathered will be ‘spillover’ in-
formation acquired from people who cannot use the information themselves. The
entrepreneur is not looking for commercial secrets acquired by eavesdropping on
business rivals, but rather information obtained from non-competing sources that
is surplus to their requirements. Information about a prospective brownfield site
could come from a conversation with a manufacturer who is planning to close

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 Casson & Della Giusta: Entrepreneurship and Social Capital
his factory, while information about the demand for housing could come from a
recent arrival to the area who has found it difficult to buy the type of home that he
requires.
This type of information can be acquired at social events such as receptions, club
meetings, or even through conversation at the school gates. People barter surplus
information through their contributions to general discussion. An entrepreneur can
influence the information that they acquire by turning the conversation in particular
directions. Normally there is no reason to believe that the other party is lying, because
they have no hidden agenda, and so trust is not a crucial issue.
It is, however, important for the entrepreneur that the people to whom he is talk-
ing have relevant information to contribute to the conversation. This suggests that
the people invited to a reception, or accepted for club membership, should be suit-
ably influential or wealthy. A diversity of members’ interests is also useful, as the
entrepreneur will learn little that is new by talking to people who have exactly
the same background as him.

Resource Acquisition
Once an opportunity has been identified, the entrepreneur must decide how best
to implement it. This will require mobilizing resources of labour and capital. At this
point trust becomes a major issue. The entrepreneur needs to trust the financier to
reach a quick decision and deliver the funds, and to trust employees to work hard
and remain loyal. Social networks help the entrepreneur to make contact with reli-
able people. He can meet suitable people face-to-face outside the formal environ-
ment of the office interview. He can compare the way they behave in a more relaxed
environment, and use this to predict how they might react to an unexpected problem.
Depending on the trust that develops, the entrepreneur may decide to make a deal
on the basis of a handshake, to make a deal on the basis of a formal contract, or not
to make any deal at all.
Trust is also important because of the confidentiality issue. The entrepreneur
requires at least a temporary monopoly of exploitation in order to recover the cost
he has sunk in seeking out the opportunity – including the time spent networking.
This monopoly would be undermined if a prospective financial backer or prospective
employee set up in competition with him. Fear of imitation means that the
entrepreneur cannot afford to disclose his opportunity to people he does not trust.
Meeting people socially allows him to assess how far these people are discreet.
The entrepreneur can also check out the people he meets with other members of
the network. He may be able to talk to customers of the bank from which he plans
to borrow, and to former employers of the people he plans to hire. It is therefore
useful if the network contains a mixture of people who have already made contracts
with each other and those who are about to do so. It is also useful if there are some
experienced people present – perhaps as chairmen or speakers – who can advise the
entrepreneur on the criteria he should use for assessing the most suitable business
partner.
A useful type of network for building trust is a church, charity, sports club or
hobby club. There is an opportunity for regular meetings, and for the discussion of
important issues that will reveal the fundamental values and beliefs of the person

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involved. Religious commitment, degree of compassion, team spirit and single-
mindedness can all be assessed from organizations of this type. In general, non-
profit voluntary organizations are extremely useful in building trust because the role
that a person plays in such an organization, and the way that they play it, signals
the degree of commitment that can be expected from them in other situations too.
These organizations also provide a safe environment for open discussion because
they are not being run in the interests of a profit-seeking owner who could make
strategic use of the information being shared.
Resource acquisition therefore calls for a different type of network to the discovery
of opportunities.

Market Organization
‘Market organization’ is a key aspect of most large-scale entrepreneurial activity.
If the entrepreneurial opportunity relates to the innovation of a new product, or a
better or cheaper variant of an existing product, then the entrepreneur will need to
establish an organization to sell the product. Even if he simply sets up a wholesale
operation to hold a better range of stock, or a new retail operation to serve a grow-
ing residential area, he will need to invest in market organization. The entrepreneur
appropriates his reward by altering the network of trade in the product concerned.
He diverts trade away from existing channels into new channels that he has set up
for this purpose.
To implement the diversion of trade the entrepreneur needs to win customer
support. In terms of social networks, he needs to encourage potential buyers to join
his customer club. To attract interest he must advertise his product and display it at
a convenient location – typically close to existing outlets where his target customers
normally go shopping. He lures them with introductory offers and then locks them
in, as far as he can, through a loyalty scheme.
Innovative entrepreneurs marketing consumer products will join the established
agglomerations at major retail centres. By locating next to established rivals, they
can intercept customers before they make their usual purchases. If successful, they
will take market share from their rivals and may even drive some of them out of
business; but they may in turn be replaced by other innovators following in their
footsteps. In this way agglomerations renew themselves by attracting successive
waves of innovators.
Innovation, therefore, alters the configuration of trade in markets. The geography
of trade may be unaffected, in the sense that agglomerations at strategic centres such
as river estuaries and the feet of mountain passes continue to be the major hubs, but
the control of trade will change. New firms, created by innovative entrepreneurs,
and dealing in novel products, now own the products from the point at which they
leave the factory (or before) to the point at which they are placed in the customers’
hands. Entrepreneurship, therefore, provides a dynamic to networks – it exploits
networks to discover and implement opportunities, but the implementation of the
opportunities feeds back to change the network structures on which the next gen-
eration of entrepreneurs depends.
This discussion suggests that each stage of entrepreneurship benefits from mem-
bership of a particular type of network.

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 Casson & Della Giusta: Entrepreneurship and Social Capital
The opportunity seekers’ network involves a regular programme of social events
that provide plenty of opportunity for people to circulate. Conversation may be
primed by a short lecture or debate, after which there is a reception that affords op-
portunity for discussion. Members barter surplus information, so there is no particu-
lar need for confidentiality. People can circulate freely, and leave as early or as late
as they wish. However, participants have to have interesting and important infor-
mation to ‘trade’, and so attendance is by invitation only. The guest list is designed
to ensure a variety of people from different areas. The event may be tailored to a
particular sector, but beyond this, it is pointless to target particular categories of
people because no one can predict exactly where opportunities are likely to occur.
The resource acquisition network engages key people in activities that reveal
how far they can be trusted. It involves highly structured social groups, usually with
non-profit objectives. These groups have a dual role: they support society through
good works, and also act as a market place where people can meet prospective
business partners, and check up on them at the same time. Networks of this type
are particularly valuable to bankers looking for businesses in which to invest, and
owners of growing businesses looking for additional funds.
The market organization network is essentially a customer club. It may consist of a
database of regular customers who receive mail-shots about new products, together
with their credit ratings. The club exists to strengthen the firm’s reputation and to
boost its brand. Celebrities may be paid to ‘join the club’ and endorse the brand.
The firm’s product may even become a fashion icon that identifies the consumer as
a member of the club. A supplier club may also be useful, based, for example, on a
list of suppliers who can be invited to bid for various types of work.

Schematic Summary
Because networks are inherently complex, it is useful to employ a schematic approach
to summarize the arguments. Figures 3 to 6 use an information systems approach to
represent the various links in a network. They develop the symbolism of the preceding
figures, which in turn followed the conventions established in previous applications
(in particular Casson, 1997).
Consider an entrepreneur who believes that there may be an opportunity to
enter an established market with a new product. The initial state of the market is
represented in Figure 3. Upstream from the entrepreneur’s proposed point of entry
are suppliers, represented by the top row of circles, whose capacity is currently
devoted to meeting the needs of established intermediaries, while downstream are
potential customers for the product, represented by the bottom row of circles. The
precise nature of the suppliers and customers depends on the stage of production
at which entry is contemplated. To fix ideas, it is assumed that the suppliers provide
either finished products that the entrepreneur sells on through a wholesale or retail
operation, or components that the entrepreneur converts into finished product.
At the outset the entrepreneur faces two established rivals that divide the market
between them; these firms intermediate between the suppliers and the customers, and
are therefore positioned in the middle row of the figure. Two of the suppliers work
for one of the intermediators and two for the other. The physical pattern of trade is

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International Small Business Journal 25(3)

Suppliers

Market-making
entrepreneurs

Customers

Figure 3.

illustrated by the lines and arrows, which show product flowing from the suppliers
to the intermediators, and from the intermediators to the customers.
Each intermediator has many customers. They serve two separate segments of
the market that initially do not overlap. However, some customers in each segment
may be prepared to switch to the new product. Each customer base therefore contains
two groups, one of which may be prepared to switch (represented by the two circles
in the middle of the diagram) and one of which is not (represented by the circles at
the left-hand and right-hand sides of the diagram).
To identify such an opportunity and confirm its existence the entrepreneur needs
to make contact with suppliers and customers to discover whether they would indeed
be willing to switch. He needs to talk to dissatisfied customers of the established
firms who constitute the group that may be prepared to switch. He also needs to talk
to suppliers that either have excess capacity or are dissatisfied with the terms they
receive from the established intermediators who buy from them. Both customers
and suppliers have an incentive to negotiate once he has made contact with them.
He also needs to obtain information about the established intermediators, but
since they will be unwilling to talk to a potential rival he must simply observe their
activities instead.
The entry strategy is summarized schematically in Figure 4. The entrant is rep-
resented by the shaded circle in the centre of the middle row. His information re-
quirements are represented by the thin black lines. He needs to carry out market
research through dialogue with representative customers who may be prepared to
switch. He also needs to talk to representative suppliers to assess the terms on
which they would be willing to supply. Dialogue involves two-way flow of infor-
mation and is indicated by arrows that point in both directions. Observation of
established rivals, by contrast, involves a one-way flow of information from the
rival to the entrepreneur, and so a single arrow is shown.
The entrepreneur may find it difficult to make direct contact with suppliers and
customers. A social network can provide him with the opportunity he requires. He
may be able to attend a trade fair at which he can meet suppliers, while if the po-
tential customers are local businesses he may be able to meet them through the
Chamber of Commerce or Rotary Club. If there is a shortage of suitable networks,
then government-sponsored events may help.

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 Casson & Della Giusta: Entrepreneurship and Social Capital

Suppliers

Market-making
entrepreneurs

Customers

Figure 4.

Just as the entrepreneur intermediates between suppliers and customers, so a so-

cial network can intermediate between the entrepreneur and the people he wishes
to meet. The situation is illustrated in Figure 5. Two contact-brokers are shown, each
of whom is in touch with both the entrepreneur and a group of people that he wishes
to meet. The customer contact-broker provides a forum where the entrepreneur can
make contact with potential customers, while the supplier contact-broker provides
a forum where the entrepreneur can make contact with potential suppliers. While,
in principle, a single broker could introduce the entrepreneur to both groups, this
is unlikely, since if the two groups found it easy to make contact with each other
then there would be no demand for entrepreneurial intermediation, and hence no
profit in the activity.

Leaders of
social groups

Supplier contact-broker
and reputation-broker

Suppliers

Market-making
entrepreneurs

Customers

Customer
contact-broker

Figure 5.

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International Small Business Journal 25(3)
The supplier contact-broker is more than a mere contact-broker, however; as
shown in the figure, he is a reputation-broker too. He can provide an independent
assessment of whether the suppliers whom the entrepreneur has met can be trusted
or not. While entrepreneurs are interested in the trustworthiness of customers and
suppliers, an entrepreneur entering a mass market is normally more concerned about
quality assurance in the supply chain than in customers’ ability to pay. Personal cus-
tomers who lack reputation generally pay at the time they receive their goods, and
specialized intermediaries already exist to manage credit risks relating to customers
who pay in arrears.
While the reputation-broker may base his judgement on his own previous business
experience, he can also utilize information about the clubs and societies to which
the suppliers belong. If the supplier belongs to a group that is noted for its strong
business morals then the broker can factor this information into his assessment. The
use of this information is illustrated in the figure by the link between the reputation-
broker and the leader of a representative social group to which a supplier belongs.
The link between the supplier and the leader is shown by the vertical line, while the
link between the leader and the reputation-broker is shown by the angled line. The
link between the leader and the supplier involves the leader influencing the moral
obligations of the supplier, and is indicated by the flow of values from the leader to
the supplier. Using the link between the leader and the broker, the leader confirms
to the broker that the supplier is a member of his group and provides a ‘reference’
for him. The broker then passes on this information to the entrepreneur through
the vertical link that appears in the middle of the figure.
Having checked out his customers and suppliers, the entrepreneur can move into
the implementation phase. This involves setting up his own network, as shown in
Figure 6. The most important step is to make contact with potential customers. The
entrepreneur therefore advertises his product. Since it is difficult to target advertis-
ing precisely, the messages may also be directed to customers who have little interest

Leaders of
social groups

Suppliers

Market-making
entrepreneurs

Customers

Figure 6.

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 Casson & Della Giusta: Entrepreneurship and Social Capital
in the product. In any case, the entrepreneur may be unsure who exactly falls into
the group that is likely to switch as opposed to the group that is not. This is captured
in the diagram by the way in which communication fans out from the entrepreneur
to all the customers in the market.
The entrepreneur may also wish to strengthen his relationships with his sup-
pliers. Although he knows that they belong to reputable groups, he may believe that
their sense of obligation is even stronger towards fellow members of their group.
He may therefore attempt to join the structured groups to which they belong in
order to reduce his risks. This strategy will vary according to the type of group; it
could involve studying for a suitable professional qualification, changing religion,
or marrying into a supplier’s family. The entrepreneur’s affiliation to the sup-
pliers’ groups is illustrated by the lines that connect the entrepreneur directly to the
leaders of the relevant groups.

Horizontal and Vertical Networks

The example given focused on ‘vertical’ relations within a market. Contacts were
made, and trust developed, in order to support a flow of product from customers
to suppliers through an intermediator. The emphasis was on flows of information
between people at different stages of the market process, or involved in different
types of activity.
In some contexts, however, flows between people at the same stage of the mar-
ket process, or involved in the same activity, are required for coordination. Within
a team, for example, members doing similar jobs need to communicate with each
other in order to coordinate production. Similarly, funding a business may require
different investors to team up together. Networks that connect people at similar
stages, or doing similar work, are known as ‘horizontal’ networks.
It is often suggested, with good reason, that vertical networks contribute more
to the economy than horizontal ones. The danger with horizontal networks is that
they promote collusion: one of the more spectacular examples is the drugs cartel
mentioned in the introduction. Buyers may collude to exploit monopsony power,
or sellers collude to promote monopoly power. The exercise of market power
not only redistributes income but leads to a wasteful restriction of trade, inde-
pendently of whether the collusion is legal or not.
One form of collusion encourages the other. Buyers who believe they are victims
of monopoly may collude to exert countervailing monopsony power – e.g. through
a consumer co-operative – while sellers who believe they are victims of monopsony
may seek countervailing monopoly power through a trade association – e.g. defence
contractors who believe they are exploited by government. In the labour market,
the monopsony of the employers’ association may confront the monopoly power of
the trade union, resulting in collective bargaining over the wage rate. It is for this
reason that horizontal networks are often studied in the context of industrial re-
lations, and class conflict generally.
Horizontal networks can also improve economic performance, however – in
appropriate circumstances. A group of local producers in a particular industry
may benefit from local resources that can only be supplied on a scale too large for

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International Small Business Journal 25(3)
any individual producer to support. Specialized transport infrastructure may be
required, or a training facility tailored to industry needs. Standards may need to
be set to facilitate the interchangeability of components, and to reassure the buyers
of durable goods that they will not be locked in to any one supplier of replacement
parts. Basic R & D may generate new sector-specific know-how that different firms
can commercialize in different ways.
In a sense, however, these productive uses of horizontal networks are related
to the existence of a vertical network reaching back to a previous stage of produc-
tion. The firms collaborate in setting up organizations or facilities to supply
better transport services, better training, greater standardization and more tech-
nological opportunities. Each of the firms is networked to the supplier of the relevant
input that is shared by all the user firms. In so far as it is the horizontal initiative
that establishes the vertical structure, however, it remains the case that horizontal
networking can be said to promote economic performance.

Policy Interventions
The argument that networks promote economic performance is often used to just-
ify political interventions that subsidize networking. Most developed economies
now promote entrepreneurial networks through fostering partnerships between
academic institutions, businesses, venture capitalists and government. It is, how-
ever, quite difficult to appraise policy interventions based on ‘soft’ activities such
as networking. Performance measurement indicators can be used to estimate the
impacts of policies on the productivity and profitability of supported firms, relative
to the public expenditure involved. But it is an ‘act of faith’ to interpret the meas-
ured outcomes as pure ‘networking’ effects.
The analysis of social capital developed in this article suggests an alternative
approach to evaluation, in which impact of policy is measured by the increase in
the value of social capital attributable to government support. An initial estimate
is obtained by interviewing the participants in the networking activity. The social
interactions between members of the network are then mapped out using the
schematic technique set out earlier. The mapping is used to assess how far the ef-
fects identified by participants can be safely attributed to the network investments
funded by government.
Government interventions involving any kind of business support are typically
justified by appeal to market failure. In the absence of public subsidies, market fail-
ures may cause private firms to under-invest in networks, leading to a sub-optimal
level of communication within the economy. In this context, the ‘null hypothesis’
used in an evaluation is that the economy already supports an optimal number of
business networks, so that there is no need for any subsidy. Network affiliation is time
consuming, and a successful entrepreneur will be well aware that ‘time is money’.
As a result, it can be argued, encouraging business managers to network may sim-
ply mean that they spend too much time networking, and too little time attending
to their ordinary business affairs.
A straightforward argument for additional networks is that existing ones are
simply not good enough. The fact that there is a shortage of really effective networks

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 Casson & Della Giusta: Entrepreneurship and Social Capital
does not, however, mean that more should be created. Effective networks require
effective leadership, and leadership, like any other resource, is scarce. If new networks
are created without effective leaders then they are likely to perform worse, not
better, than existing ones. There is no way of overcoming the basic problem that
scarcity of resources affects both the quantity and quality of the services that can
be supplied.
It could be argued that while potential leaders exist, there are inadequate rewards
for leadership. It has already been noted that many structured networks are based
on non-profit principles. It is usually assumed that leaders derive non-pecuniary
rewards from their roles; they may be committed to charitable causes supported
by the network, or value the status they achieve, or appreciate the respect they
receive from their members and their peers. In a selfish and materialistic culture,
however, people may place the pursuit of profit ahead of more traditional non-profit
objectives. As a result, potential leaders in the non-profit networks may be diverted
into concentrating purely on maximizing the performance of for-profit businesses
instead. The solution to this problem lies more in cultural change than in the creation
of additional networks, however. Government may be able to improve the supply
of leadership by increased public recognition of non-profit leaders. Unfortunately,
the promotion of enterprise culture is usually associated with the public recognition
of successful businessmen and celebrity entertainers instead.
A variant of this argument is that leaders are frustrated and demoralized by the
difficulty of recruiting members – especially active members who will share the ef-
fort of running the network. This is consistent with the recent experience of many
churches and charities, and public bodies that rely on unpaid volunteers to join parish
councils, school management boards, and so on. The basic problem is still the same,
however; it lies in the way in which people prioritize competing demands on their
time. The ‘long hours’ culture – particularly evident in the USA and UK – leaves
people little time for non-work activities. This explanation suggests that voluntary
networks will be dominated by people who are either in retirement or are working
only part time. Ironically, the UK government itself is widely seen as endorsing such
trends, through the deregulation of shopping hours, the liberalization of the media,
and its opposition to the limitation of working hours (Bunting, 2004). An unintended
by-product of its policies may therefore be the erosion of the social infrastructure
on which entrepreneurial activity depends.
Social exclusion is sometimes invoked as a reason why more networks are
needed (Andall, 2000; Pang and Lau, 1998). However, networks focused on the so-
cially excluded may not appeal to other people. A network of excluded people
may well prove successful in tackling local social problems such as vandalism on a
housing estate. But a network of this type is unlikely to promote enterprise unless
the excluded people have sufficient business experience and financial resources
to benefit from contacts established between them. While some networks, such
as immigrant ethnic networks, may well contain people of considerable entrepre-
neurial ability who generate significant benefits for other members (Basu, 2004),
a network composed entirely of people who have failed in business may well
develop a ‘victim’ mentality that actually discourages them from making a fresh
start. Although public sector professionals may facilitate such groups, in order to

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International Small Business Journal 25(3)
encourage positive thinking, they may not possess the experience, or the credibility,
to promote an entrepreneurial outlook.
If special groups cannot address exclusion, then it could be suggested that ex-
cluded people should be admitted to established groups. The difficulty here is that
it can be dangerous to meddle in the operation of established groups. If exclusion
is based on ignorance and prejudice then, when the new members join, they will
be welcomed once they are recognized as an asset to the group. But if the people
who were excluded disrupt a group when they join then its performance will be
impaired; bad members will drive out good, and the group will go into decline.
New groups will be set up by the former members and the previous discrimination
by type of member will be reproduced. Indeed, the division may be even worse as
the new groups become even more exclusive in the light of previous experience.
There is insufficient evidence at present to say whether or not the limitations of
networking policies outlined earlier are significant or not. While the network
approach to social capital set out in this article raises a number of potential con-
cerns, this does not mean that these concerns represent significant constraints in
practice.

Conclusion
This article has examined in detail the key concepts of networks, trust and social
capital. Each of these concepts links in to a large literature that connects the
discussion of social capital to a bewildering variety of topics. Concepts such as
‘network’ and ‘trust’ have different meanings in different contexts, but equally, there
are certain core ideas that are independent of context. Connectivity, for example,
features in all the applications of these concepts.
This article has focused on the issue of building entrepreneurial networks that
will improve the performance of the economy. It has argued that different types of
social network are required for different purposes. Some types of networks are most
useful in the early stages of entrepreneurial activity and others at later stages.
Policy interventions need to be precisely targeted in order to maximize their im-
pact, but targeting cannot be effective if the underlying analysis is fuzzy. Effective
networks are created around reputable people. In the long run, reputable institu-
tions sustain their reputations through the calibre of the people they employ. It is
important that government does not overestimate its own reputation, and assume
that any network that it sponsors will ‘leverage’ its reputation successfully.
Government reputation, like any form of reputation, is specific, and ‘extending
the brand’ to encompass new forms of business support may take government into
areas where its reputation carries little weight. There are already many different
social groups that support business activity, either directly or indirectly, and it is pos-
sible that government might achieve better results by strengthening the activities
of these groups, rather than by subsidizing the establishment of new groups that
compete with them. Rigorous evaluation is needed to inform decisions on the ap-
propriate types of network to support.

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Heinemann.

MARK CASSON is Professor of Economics and Director of the Centre for Institutional
Performance at the University of Reading. He is also Leverhulme Major Research Fellow
in the Economics of Social Networks, 2006–9. He is the general editor of The Oxford
Handbook of Entrepreneurship, 2006. Please address all correspondence to: Director,
Centre for Institutional Performance, University of Reading Business School, Whiteknights,
Reading, RG6 6AA, UK. [email: [email protected]]

MARINA DELLA GIUSTA is Lecturer in Economics at the University of Reading. She

has published widely on the economics of trust and reputation, with special reference
to micro-finance and economic development, including a recent survey of the economic
literature on trust in The Handbook of Trust Research, 2006. Address: Department of
Economics, University of Reading, PO Box 218, Reading RG6 6AA, UK.
[email: [email protected]]

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 Casson & Della Giusta: Entrepreneurship and Social Capital

L’esprit d’entreprise et le capital social

Analyse de l’impact des réseaux sociaux sur l’activité entrepreneuriale d’un
point de vue rationnel
Mark Casson et Marina Della Giusta
Université de Reading, RU

Les gouvernements ont investi de vastes sommes dans l’établissement de réseaux

entrepreneuriales locaux et régionaux, dans un souci d’améliorer les performances et la
régénération économiques. Ceci dit, nombreux sont les types de réseau en existence, ces
différents réseaux étant destinés à des fins différentes. Certains d’entre eux trouvent des
applications plus utiles au cours des étapes Initiales d’une activité entrepreneuriale, alors que
d’autres à des stades ultérieurs. Toute définition doit donc être formulée avec soin si l’on veut
analyser le rôle des réseaux dans la création d’un climat de confiance interpersonnel et inter-
organisationnel et, à partir de cela, dans la hausse des actions du capital social. Normalement,
les réseaux performants sont gérés par des agents fiduciaires dignes de confiance qui agissent
en tant de médiateurs. Par ailleurs, la réputation que possède un gouvernement lui permet
de jouer un rôle décisif en tant qu’agent fiduciaire, mais il ne faut pas oublier qu’il met sa
réputation en jeu lorsqu’il étend ses activités à des sphères où il manque des compétences
nécessaires lui permettant d’intervenir efficacement.
Mots clés: performance de l’agent fiduciaire; entrepreneur; réseau; obligation; capital social;
confiance

La capacidad empresarial y el capital social

Un análisis del impacto de las redes sociales sobre la actividad empresarial
desde una perspectiva de acción racional
Mark Casson y Marina Della Giusta
Universidad de Reading, RU

Los gobiernos han invertido cuantiosas sumas en el desarrollo de redes empresariales locales
y regionales para mejorar el comportamiento y repunte de la economía . No obstante, hay
muchos tipos de redes, y las diferentes redes son apropiadas para diferentes fines. Algunos
tipos de redes son más útiles en las etapas iniciales de la actividad empresarial y otras más
adelante. Se necesitan definiciones bien formuladas para analizar el papel de las redes en
la generación de confianza interpersonal e interorganizativa y, por consiguiente, aumentar
las acciones del capital social. Las redes efectivas son normalmente gestionadas por agentes
fiduciarios acreditados que actúan de mediadores. La reputación del gobierno le permite jugar
un papel decisivo como agente fiduciario, pero se expone a perder su buena fama si extiende
sus actividades a esferas donde carece de competencia para intervenir con eficiencia.
Palabras clave: actuación del agente; empresario; red; obligación; capital social; confianza

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International Small Business Journal 25(3)

Unternehmertum und Sozialkapital

Analyse der Auswirkungen von Sozialkapital auf unternehmerische
Aktivitäten aus einer Vernunftsperspektive
Mark Casson und Marina Della Giusta
Universität Reading, Großbritannien

Regierungen haben stark in den Aufbau von lokalen und regionalen unternehmerischen
Netzwerken investiert, um wirtschaftliche Leistung und Erneuerung zu unterstützen. Es
gibt jedoch viele Arten von Netzwerken, und die verschiedenen Arten von Netzwerken
dienen unterschiedlichen Zwecken. Einige Arten von Netzwerken sind sehr nützlich
am Anfang unternehmerischer Aktivitäten, andere zu späteren Zeitpunkten. Es bedarf
genauer Definitionen, um die Rolle von Netzwerken mit Bezug auf die Entstehung von
zwischenmenschlichem und zwischenbetrieblichem Vertrauen - und somit die Vermehrung
des Sozialkapitals - zu analysieren.
Effektive Netzwerke werden normalerweise von seriösen Vermittlern aufgebaut. Das Ansehen
einer Regierung teilt ihr eine wichtige Rolle als Vermittler zu, doch es besteht auch die
Gefahr, dass dieses Ansehen geschädigt werden könnte, wenn es seine Aktivitäten in Bereiche
ausweitet, in denen die Kompetenz zu effektivem Einschreiten nicht gegeben ist.
Schlüsselwörter: Vermittlerleistung; Unternehmer; Netzwerk; Obligation; Sozialkapital;
Vertrauen

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