faulker077

The weak ties theory was put forth by Mark Granovetter in 1969 as a theory that explains why some people seem to access to more and better opportunities than others. He conducted a study of around 200 people who had just gotten new jobs and asked them how they got their jobs and most of them, around 75% had got them from acquaintances. The rate was even higher for the higher income earners in his sample. The core idea is that weak ties are more important than strong ties in terms of providing you with novel and actionable information. Close ties refer to individuals that we interact with on a nearly constant basis, such as roommates, nuclear family members and a few good friends. Close ties provide very little new information because most of the individuals within the clique of a close tie network share many of the same relations. Weak ties refer to social connections to individuals who are not closely related. Rather, weak ties may be part of disparate networks. These weak ties form ...

Social exchange theory regards trading relations as built on norms of reciprocity and mutual attraction (Emerson, 1981; De Clercq et al., 2010). Reciprocity is the exchange of privileges between parties on the basis of mutual trust. For instance, a lunch or round of drinks may be purchased by one individual, with the understanding that other will pay back the debt at some unspecified time. In extended reciprocity, the assumption is that the environment will pay it forward to ensure repayment, even if indirectly over time. Mutual attraction implies that one party is not predating on the other, that both parties that have something to gain. There is therefore an assumption of trust between the parties. There seems to be some budding evidence that the mechanisms that allow social exchanges to occur matter considerably. Overall, the advice coming from this stream of research is that we should probably give each other the benefit of the doubt. In contrast to other theories about entreprene...

The theory of procedural justice was introduced by  John Thibaut  and Laurens Walker (1975) and has then been applied to the organizational strategy context (e.g., Kim & Mauborgne, 1991), and most recently to help explain entrepreneurial success from a financing-availability perspective.  Thibaut and Walker propose that procedural justice focuses on the processes of justice rather than the outcomes of such processes (i.e., distributive justice), because the processes are more important in the evaluations of participants. Processes take place over time, whereas outcomes are more like events. For example, a client may be more willing to accept concessions suggested by a lawyer that assures him or her that the negotiation process is normal and offers are within the bounds of acceptable behavior for an opponent's council.  According to Sapienza and Korsgaard ,  we do not yet know much about how entrepreneurs manage their relationships with investors. Entrep...

Social identity theory came out of Henry Tajfel and John Turner (1979) experiments showing that the slightest priming of group membership creates prejudice. “Blue eyes, a preference for the paintings of Wasily Kandinsky over those of Paul Klee, and calling some people over-estimators and others under-estimators were sufficient to produce a preference for fellow group members and to elicit discrimination against outsiders” (Huddy, 2001:132). Social identity theory has been used to explain why human personalities and behaviors seem to be context-specific. A given individual may act differently depending on which groups they perceive themselves to belong. The theory suggests that personal identity plus environmental conditions shape social identity, which in turn leads to categorization of others into in-groups and out-groups. Obschonka et al. (2012) argue that individual beliefs and attitudes are unlikely to be the main drivers of entrepreneurship. Rather, they use social identity theor...

Critical theory may be attributed to Max Horkheimer 's 1937 essay Traditional and Critical Theory . The Frankfurt School of sociology has developed critical theory from a combination of Marxian and Kantian ideas about critiquing traditional theories. Alvesson and Willmot (1992: 89) state that: "Emancipation describes the process through which individuals and groups become freed from repressive social and ideological conditions, in particular those that place socially unnecessary restrictions upon the development and articulation of human consciousness". The majority of the entrepreneurship literature takes a functionalist (rational or empirical) perspective, where there is an objective reality that can be measured and hypotheses that can be tested against that reality. However, there are many problems with scientific methods in the social sciences. For one, theories that work in one temporal-spacial context may not work in another. Very few studies have adopted alternati...

Information Processing Theory is explained by Allen Newell and Herbert A. Simon (1972) in their book entitled Human Problem Solving . The book focuses on how humans think and process information. They view the human system as including the sensual, memory and arousal subsystems. Hansen and Allen (1992) borrow the theory of information processing to explain and predict the creation of new ventures. They start with the assumption that business environments produce information in varying quantities and varieties. For instance, a very simple environment might produce a small amount of very similar information, whereas a complex environment produces a large quantity of heterogeneous information. A complex environment might match a fast-paced, ever-changing high-tech industry, whereas a simple environment might match a slow moving traditional industry such as the restaurant industry. A single individual may find it difficult or impossible to cope with the information load that a complex e...

Hannan and Freeman's (1977) population ecology theory hangs on the assumption that environments can only handle a fixed number of organizations of each type. After a certain point is reached, there are diminishing returns to density that eventually balance out through the mortality of organizations. The theory is about the tension between the need to be considered as legitimate in order to compete, but also the need to be competitive. As more organizations enter the market, they become increasingly legitimate, but this leads to greater competition making survival more challenging. Thus, the early market is dominated by the need for legitimacy , while the later market is dominated by competitive forces of selection. As environments change, often due to innovations introduced by organizations within them, mortality rates increase for organizations experiencing high levels of resistance to change. Inertial forces guarantee that most innovations will come from new entrants and not from...

Too often, entrepreneurship is viewed as a solo job. This myth is perpetuated because of the heroic status that many entrepreneurs are conferred. For instance, the stories of Richard Branson , Steve Jobs, Bill Gates, Elon Musk and others reinforce the idea that entrepreneurs are individuals carving out a new world on their own. More often entrepreneurs work in social networks to get their ventures up and running, to grow and to thrive. From a social network theory perspective, entrepreneurship is viewed as embedded in networks of enduring social relations (Walker et al., 1997). Research on entrepreneurship from a social network perspective has gained steam and evidence that networks are useful tools for gaining access to resources has emerged. Social capital is loosely defined as the value of venture founders’ network resources! Networks may act as substitutes for investment capital. Private information flows over networks that can only be accessed through social interactions. An entre...

Jeffrey Pfeffer and Gerald R. Salancik (1978) proposed the resource dependency theory as a way to explain the behavior of organizations by looking to the contexts in which they operate. Organizations are influenced by numerous external contingencies, thus the theory views the role of the manager as acting to reduce dependencies, especially the power of other actors to exert control over vital resources, often by increasing the power of the focal organization. The assumptions of the theory are that organizations are the main units of analysis for understanding society. Organizations are viewed not as autonomous, but rather, they are seen as constrained by webs of dependence relationships with other organizations that can exercise power. Success and survival are uncertain because of the ever-changing power relations among organizations. Organizations manage inter-dependencies creating new patterns of inter-dependence and inter-organizational power. Power is typically exerted in a way ...

Institutional theory is about conforming to the rules of the game to gain legitimacy in an institutionalized environment (North, 1991; Scott, 2001; 2005). The rules of the game may be formal, informal, or taken-for-granted assumptions about the nature of the business environment. Institutions set forth expectations that economic actors seek to conform to in order to be treated as legitimate actors in economic society. Entrepreneurs that do not heed the institutional logic of their social contexts risk failure because they may be seen as illegitimate and unworthy of support. This is related to the " liability of newness ", where risk of exit or failure is higher in the earlier years of an organization. When young organizations lack legitimacy, they may not receive the vital support of their stakeholders. The main hypothesis of the theory may be that: Culturally varying social forces shape entrepreneurial success more than does economic efficiency, therefore, entrepreneurs shou...

Human capital theory was developed by Dr. Gary Becker , an American economist at the University of Chicago, and others. According to Becker, human capital is different kind of capital from physical and financial resources. Education, technology and etiquette training, and health expenditures are capital too because they improve wellbeing , health, earnings, and appreciation. Expenditures on education, training, and health care are investments in human capital. Human capital also refers to an individual or group’s stock of knowledge, routines, personality characteristics and social habits. Human capital even includes creativity that can be usefully applied to an economic purpose, and thus is considered to be a type of wealth. Countries, organizations, and groups with greater human capital are expected to be better able to accomplish goals to bring about economic improvement. Several studies have found a positive association between human capital and economic development, including inn...

William J. Baumol was an American economist at New York University. His theory of entrepreneurship starts with the assumption that every society is endowed with their share of entrepreneurs. However, the way in which entrepreneurs use their energies depends upon the institutions—the rules of the game—in place in a given society. He argues that entrepreneurs may engage in productive (i.e., innovation) or unproductive (rent-seeking and crime) forms of entrepreneurship depending on what a country’s institutions encourage. Baumol argues that the notion of a “spirit of entrepreneurship” is useless for policymakers because there is really nothing they can do to improve it. He proposes that by altering the rules of the game, policymakers can actively invigorate productive entrepreneurship in their societies and reduce unproductive or destructive forms of entrepreneurship. Changes to the rules of the game can vary but include changes to tax rules, regulations, subsidies and support programs. ...