Measuring the Role of Social Networks in Entrepreneurship

Social networks and social networking are often mentioned in discussions about innovation and entrepreneurship. But these terms can have widely varying definitions and, at present, there is no clear way to measure social networks in the context of entrepreneurship. Consequently, there is no quantitative way to determine the relationship between social networks and entrepreneurial success.

A team of researchers from NC State is setting out to change that, with support from the Ewing Marion Kauffman Foundation. Jeff Pollack, Jon Carr and Tim Michaelis – all faculty in NC State’s Poole College of Management – are serving as co-principal investigators on a two-year project aimed specifically at developing and validating two new metrics: one focused on social network embeddedness, and the other focused on social network engagement. The researchers will be working closely with NC State’s Entrepreneurship Clinic.

To learn more about the project, and why it’s important, we talked with Pollack, an associate professor of management, innovation and entrepreneurship, and Lewis Sheats, executive director of the Entrepreneurship Clinic and NC State’s assistant vice provost for entrepreneurship.

The Abstract: The term “social network” gets thrown around a lot, but you use it in a very specific way in describing this grant. Specifically, you talk about developing tools for measuring “social network embeddedness” and “social network engagement.” What do those two terms mean in this context?

Jeff Pollack: Social networks of entrepreneurs are a critical asset that enables better creativity, opportunity identification and resource acquisition. However, all individuals do not have equal access to social networks. Overall, the lack of a social network and the ability (or knowledge and skill) to engage key stakeholders who can provide information and resources serves as a barrier to entrepreneurship.

Lewis Sheats: We see social network embeddedness in terms of access, depth and reach of an entrepreneur’s network online and off. As we look at social network engagement, we will study the methods, levels and frequency with which the entrepreneur interacts and/or utilizes the members and resources in his or her network.

TA: Why do you want to find a way to measure those things, and what do they have to do with entrepreneurship?

Pollack: There are no current measures or measurement tools in place to capture critical characteristics of an entrepreneur’s social network – the people with whom they interact. This represents the primary motivation for the present research. Overall, in the field of entrepreneurship, we understand very little about the social networks that facilitate entrepreneurship growth both at the individual and aggregated geographic levels. Thus, there is a measurement gap that is hindering the advancement of both academic as well as policy-based inquiry into how social networks affect entrepreneurs and the ecosystems in which they operate.

Sheats: By identifying and measuring components of the entrepreneur’s network, we should be able to provide education and recommendations on how entrepreneurs can focus on weaknesses or under-utilized aspects of their current social network, as well as areas to work on development and growth of more meaningful and deeper social networks.

TA: Do you already have some idea of what these metrics might look like? In other words, how you might measure embeddedness and engagement?

Pollack: The goal of this grant is to develop and validate two new metrics.

The social network embeddedness index is a spatial representation, both quantitative and qualitative, that shows where a person is within his/her network (i.e., an entrepreneur’s reach).

The social network engagement index is a quantitative representation that shows the relationship of entrepreneurs’ outbound communication to their inbound communication on social network platforms. It will offer an assessment of the entrepreneurs’ inbound and outbound communication that will facilitate the identification of communication patterns (e.g., more inbound vs. outbound, etc.).

TA: Once you have created these tools, do you have some idea of how you might use them? Do you have any particular studies in mind already?

Sheats: We envision using these tools to aid in the growth, preparation and success of entrepreneurs. By better understanding their social networks and the use of them, an entrepreneur will be positioned to learn faster, respond to changing circumstances more quickly, and drive new venture value creation.

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