The Role of Social Capital In the Business Start-up And Essay

The Role of Social Capital In the Business Start-up And Entrepreneurial Development - Essay Example When people work as a group, there are high chances that they will share common understanding towards the goal to be achieved. On the other hand, in can also be seen that â€Å"social capital theory refers to the ability of actors to extract benefits from their social structures, networks, and memberships (Lin, Ensel and Vaughn, 1981; Portes, 1998, as cited in Davidsson and Honig, 2003, p.8). In theory and practice, people use their social structures to determine the things they need in their lives. After deciding what they want, the information is communicated to all members and they are given the opportunity to air their views about the measures that can be implemented in order to transform those ideas into action. All this can happen as a result of social networking where the people exchange their views and ideas such that they can utilise the resources available to transform their lives. There are different types of social networks that exist in different communities. It can be seen that social networks â€Å"provided by extended family, community-based, or organizational relationships are theorized to supplement the effects of education, experience, and financial capital,† (Bourdieu, 1983; Coleman, 1988; 1990; Loury, 1987). It can also be seen that social capital can exist at individual or organizational levels (Nahapiet and Ghoshal, 1998). Individuals in an organization can create links with others so that they can determine the direction to follow when they execute different tasks that are meant to generate wealth. Networks involving family members in business are essential since they promote cohesion among the members involved. Family members as well as relatives have a strong bond among themselves because they... This essay stresses that entrepreneurship is about is about creating wealth by doing something new and/or innovative in order to add value to the society. The underlying themes here include the following: creating wealth, innovation and opportunity. There are different business opportunities that exist in the business environment that are often overlooked by large corporations. Entrepreneurs can identify these opportunities and try to create value to the targeted people. Not all businesses are successful and it can be seen that there are various reasons for this. This paper makes a conclusion that it can be seen that entrepreneurship is mainly concerned with identifying a business opportunity, creating wealth through innovation. As discussed above, it can be observed that this is not an easy feat as many people may think since there are quite a lot of factors that ought to be taken into account. It has also been noted that the aspect of social capital is very important in as far as entrepreneurship is concerned. Social capital is about how people network in order to create value from the resources available. People usually exchange views and opinions through networking and this can help them to generate knowledge which can be transformed into new business ideas. People are likely to be innovative if they share ideas. Thus, it can be seen that social capital is very important to entrepreneurs who want to start new business ventures.