Wednesday, May 5, 2010

A network view of entrepreneurship

Here is a definition of entrepreneurship that I came across in another one of Mark Granovetter's articles called The Impact of Social Structure on Economic Outcomes. He writes:
Schumpeter defined entrepreneurship as the creation of new opportunities by pulling together previously unconnected resources for a new economic purpose.
Granovetter goes on to say:
One reason resources may be unconnected is that they reside in separated networks of individuals or transactions. Thus, the actor who sits astride structural holes in networks (as described in Burt, 1992) is well placed to innovate. The Norwegian anthropologist Fredrik Barth (1967) paid special attention to situations where goods traded against one another only in restricted circuits of exchange. He defined “entrepreneurship” as the ability to derive profit from breaching such previously separated spheres of exchange.
Schumpeter's is an interesting definition and now ranks as the one I like best. Most of the other definitions of entrepreneurship I have seen approach it from the point of view of the outcome (new value created through product innovation etc.) rather than the process of network reconfiguration. The process point of view is more generalizable though because most new businesses are not all that innovative in product and fail many other definitions.

Links back to my post on more connected women being more successful..

1 comment:

  1. Tara,

    All interesting possible interpretations (of more connected women being more successful) and I've been thinking along similar lines. The thought behind gathering data on the frequency of travel (to nearby villages, towns, cities etc) was really to capture 'exposure' to life outside the village among women. This is a quality that doesn't necessarily come through in standard demographic information (such as education) but its very apparent in conversations that its a key differentiator along many dimensions: confidence, whether she has a 'liberal' family (that allows her to leave the village), and her basic view of the world (of what's possible to do) -- all interconnected factors that are likely to lead to a more effective use of the loan. (This also relates to an earlier comment that 'travel' could be related to some third factor which enables better loan use).

    The loan could of course enable such exposure and create a virtuous cycle, which as you point out is what Madura seeks to do.