Entrepreneurship Theories

The Weak Ties Theory: Why Acquaintances Matter More Than Friends Why do some people seem to have access to better opportunities than others? The answer often lies in their network—but not the part of the network you might expect. The Weak Ties Theory was put forth by sociologist Mark Granovetter in 1969 (published widely in 1973). In a groundbreaking study of job seekers, he found that 75% of people found their jobs through acquaintances, not close friends. Surprisingly, the rate was even higher for high-income earners. Strong Ties vs. Weak Ties The core insight of the theory is that "Weak Ties" are paradoxically more powerful than "Strong Ties" when it comes to gathering new information. Strong Ties (Close Circle): These are roommates, nuclear family, and best friends. While they offer trust, they provide very little new information. Because you move in the same circles, you already know what they know. It is an echo chamber. Weak Ties (Acq...

Too often, entrepreneurship is viewed as a solo job. This myth is perpetuated because of the heroic status that many entrepreneurs are conferred. Stories of Richard Branson, Steve Jobs, and Elon Musk reinforce the idea that entrepreneurs are individuals carving out a new world on their own. In reality, entrepreneurs work in social networks to get their ventures up and running. From a Social Network Theory perspective, entrepreneurship is embedded in networks of enduring social relations (Walker et al., 1997). What is Social Capital? Social capital is loosely defined as the value of a venture founder’s network resources . Networks may act as substitutes for investment capital. Private information flows over networks that can only be accessed through social interactions. An entrepreneur’s ability to recognize opportunities is largely related to their ability to access private information within these webs. Granovetter: The Strength of Weak Ties One of the classic studies was c...