From Offline Social Networks to Online Social Networks: Changes in Entrepreneurship

Abstract

The paper reviewed studies of entrepreneurship based on the emergency of online social networks. Similar to offline social networks, entrepreneurs' online social networks have their own unique characteristics. We first reviewed the offline network based research on entrepreneurship. Then we reviewed the studies of entrepreneurship in the context of online social networks including those focusing on topics of network structures and network ties. We highlighted online network communities based on the data collected from LinkedIn, Facebook and Twitter. Our research implies that both researcher and entrepreneurs are facing new opportunities due to the emergence of online social networks.Keywords: Online social network, network, social capital, entrepreneurship1 IntroductionThe nature of business and society is undergoing fundamental changes in light of the information age. Use of online communication is increasing and has become widespread. This trend also contributes to significant changes in internal and external organizational environments. Aggarwal identified the underlying relationship between technology and globalization, arguing that technology fosters globalization while globalization affects technological development, which leads to a new era of economy with a growing number of knowledge-intensive enterprises [1]. Emerging online networking has also opened the door for innovative companies to connect with each other and to operate more efficiently [20], [54]. The duality of financial crisis and numerous opportunities offered by the Internet has created an economic environment where the role of effective, knowledge-intensive businesses, so-called startups, have increased and become highly important. This trend is largely premised on the assumption that entrepreneurship has a positive effect on economic progress.The role of entrepreneurship in economic development has been the focus of earlier studies. Entrepreneurship is a multidimensional concept because it can be defined at the level of firms, industries and nations and is of importance in modern economic development [63]. Globalization and advances in information and communication technology have brought about structural organizational change, hence, entrepreneurship has garnered a more important role in economic growth than ever before. Although it is obvious that not all entrepreneurial activities contribute equally to economic growth, knowledge-based enterprises might lead to the revitalization of the economy by influencing innovation, competition and industry dynamics. However, many early-stage businesses still face a lack of capital and background information about markets and competition that interfere with future opportunities. Investigating entrepreneurial success and survival of newly founded businesses, many researchers have come to the conclusion that social contacts-combined with social networks-are essential to thriving businesses [9], [11].The popularity of online websites for networking is increasing and they provide a new platform for socialization and business. A recent study of online social media carried out by Comscore revealed that European Internet users spent an average of 27 hours online every month [14]. Looking more in depth, it has been found that social media sites are frequented by users on average of 6.7 hours per month, thus making them the most-visited webpages [14]. Besides personal users, who mainly sign up to follow their friends, social media is also being leveraged by many businesses [39]. Previous studies mainly focused on social media as a marketing tool, but recently a growing number of entrepreneurs have realized its diverse potential [12],[64]. There has also been research to suggest that entrepreneurs with broader social networks are more likely to receive funding from investors and accomplish business development [5]. Furthermore, Hong argues that an increasing number of venture capitalists rely on social media sites and monitor promising startups' social-media efforts to assess the investment potential of each entity [37]. …