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Entrepreneuring In Social Networks

Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closure

This paper takes a structuration view of entrepreneuring in online social networks. Social capital theory informs the idea that network entrepreneurship is a function of brokerage and closure qua agency and structure, respectively. The purpose of this undertaking is to extend existing theory to the emerging phenomenon of network entrepreneuring as it applies to a little understood, yet rich in potential, area of social action, online networking. The importance of this contribution is to extend existing theory to, and indicate the empirical potential of, online social networks, while revealing the entrepreneurship dynamics that are essential to the networks’ formation.

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Entrepreneuring In Social Networks

  1. 1. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fCh Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and ClosureAbstractThis paper takes a structuration view of entrepreneuring in online social networks. Socialcapital theory informs the idea that network entrepreneurship is a function of brokerage andclosure qua agency and structure, respectively. The purpose of this undertaking is to extendexisting theory to the emerging phenomenon of network entrepreneuring as it applies to a littleunderstood, yet rich in potential, area of social action, online networking. The importance ofthis contribution is to extend existing theory to, and indicate the empirical potential of, onlinesocial networks, while revealing the entrepreneurship dynamics that are essential to thenetworks’ formation.Introduction In online social networks, connecting strangers is entrepreneuring. Wikipedia defines avirtual community as “a social network of individuals who interact through specific media,potentially crossing geographical and political boundaries in order to pursue mutual interestsor goals. One of the most pervasive types of virtual community includes social networkingservices, which consist of various online communities.1” Using the internet to enable individualsthe traversal of boundaries defines network entrepreneurship; successful entrepreneuringresults in online social networks. Online social networks have come a long way from the early days of Usenet, theworldwide-distributed discussion system organized by subject, yet we know little about how therole of the network entrepreneur. Today’s online social networks represent the “ new era ofdemocratic and entrepreneur networks and relations where resources flow and are shared by alarge number of participants with new rules and practices” (Lin, Cook et al. 2001). Facebook,arguably the most successful online social network to date, boasts an active membership inexcess of 500 million, that spends over 700 billion minutes per month on its website as reflectedalso by the “over 900 million objects that people interact with (pages, groups, events and1 Page 1 of 19
  2. 2. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fChcommunity pages). 2” Flickr, an online network of photography enthusiasts reported on its blogthat it hosted 5 billion photos as of September 19, 2010.3 As well, by January 2011, LinkedIn,the online networking site for professionals, has reached over 90 million members at amembership rate of one new member per second.4 These data points suggest that onlinenetworks are emerging as an important social phenomenon whose implications can hardly beoverstated, yet we are only beginning to grasp. The internet, as network of networks, makes it trivial to set up networks, yet people donot seem to simply aggregate in online social networks. This is the role of the networkentrepreneur, to identify the networking opportunity round a social focus, and create the socialnetwork accordingly. The current work is a theory driven exploration that considers theentrepreneurial opportunity in online social networks as interplay between agency andstructure. The thrust of the theoretical argument is one whereby the perception of valuebetween brokerage and closure explains, and is explained by, the structural evolution of thesocial network. The contribution is a model describing entrepreneurial opportunity in onlinesocial networks. This work continues by theoretically positioning network entrepreneurship as astructuration process whereby the entrepreneur is prompted by network structure andassociated perceptions of value into action. Next, the connection between network structure andvalue is made by means of social capital. After a summary of the relations along networkstructures, types of social capital and network actions is created, the whole analysis is redone inthe particular context of online social networks, which change the prior relations amongstructure, value and action. Next, a couple of examples from Flickr illustrate differentalignments along structure, value and action. In closing, there is the section discussing theresults and evaluation the methodological implications for future research.Theory Social networks present alert agents with entrepreneurial opportunities rooted inarbitrage.5 To reveal the entrepreneurial opportunities in online social networks, we take asocio-economic approach, which rests on two assumptions. First, the type of network value the2 Accessed January 20, 2011.3 Accessed January 20, 2011.4 Accessed January 20, 2011.5 The entrepreneurial opportunity rooted in arbitrage was defined by Kirzner who considers entrepreneurship to be“alertness” to, and discovery of, buy low sell high opportunities, followed by profitable action or arbitrage (1973:31,32,67). Page 2 of 19
  3. 3. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fChagent seeks to realize is a function and determinant of network structure. Network membersmay value any combination, and/or extent, of setting up or joining communities of interest, andincreasing the number or the intensity of social relations. Network structure constraints andenables the type of value available to network members, usually in terms of content andsocializing. Once value is realized, network structure may change, depending on the type ofaction undertaken by the agent. Second, the network members are Giddens’ reflexive agentswho possess “the evaluative judgment of conduct” and monitor their own actions (Giddens1986). Those reflexive agents who perceive and decide to pursue structural opportunitiestoward establishing communities of interest are the entrepreneurs of the online social networks.While not going into individual-level motivations for how the reflexive agents decide to pursuevalue, we keep the analysis at the level of the generic agent whose actions are observableelements of network structure. If the relative position of the network members and the type of relations between themare the sociological observable patterns in a network, and the value choices of the agent(s)determine the evolution of the network, the idea is to capture the interplay between theseobservables in a model recognizable in practice. This dynamic describes a structuration processbetween network structure and network members’ agency (Giddens 1986), as illustrated in thenext figure: Advantage: Closure Network Reflexive Agent Structure agent Action Advantage: Brokerage Page 3 of 19
  4. 4. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fChAccording to Giddens, [network] structure is the medium and outcome of the conduct itrecursively organizes, while agents reflexively monitor their own actions within the structure.The recursive nature indicates a longitudinal process that can be in any state; of actionprompted by value perceived in network structure, which changes or maintains networkstructure depending on the perception of value. For Giddens, structures are rules and resources,or process and outcome, a view similar to that of social capital. Next, we introduce the conceptof network structure as it relates to social capital.Network-Structure, -Value, and -Action Borrowing from graph theory, social networks are defined as social structures made upof agents, individuals or organizations, called nodes, which are connected by one or more typesof relationships, called ties. Granovetter classifies the network ties by their strength, “a(probably linear) combination of time, the emotional intensity (mutual confiding), and thereciprocal services which characterize the tie” (1973). Thus, the ties between pairs of nodesrange from weak to strong according to 1) interaction opportunities, and 2) frequency ofcommunication (Burt 2010). In turn, the types of ties among the nodes indicate patterns ofconnectivity; the groups whose nodes are connected by strong ties are said to have closure. Theother structural category of interest in social networks is the one in which two nodes can connectthrough an intermediary, but not directly. This is an age-old situation that was first introducedinto the sociology of networks by Georg Simmel as the tertius gaudens, or the third whobenefits.6 In the entrepreneurship literature, Kirzner conceptualized it in terms of arbitrage(1973).7 Burt reframed the role of the intermediary node in terms of brokering across structuralholes, or entrepreneurial opportunity, in social networks (1992). It is this structural element ofsocial networks that explains how entrepreneurs perceive opportunity and act to changenetwork structure. Value in social networks has been extensively theorized as social capital, which was firstdefined by Bourdieu as “the aggregate of the actual or potential resources which are linked topossession of a durable network of more or less institutionalized relationships of mutual6 The reference to Simmel is from Burt, who also quotes Italian and Dutch proverbs describing the situation of theindividual who benefits from the disunion of others (1992: 31).7 Arbitrage, or Kirznerian, entrepreneurial opportunity is due to market inefficiency, and it is quickly exploited bythe entrepreneur observing the discrepancy between two parties (Kirzner 1973). This type of opportunity is usuallydefined in contrast to innovative, or Schumpeterian, entrepreneurial opportunity that is related to creating newcombinations of goods and services, raw materials, and production methods (Schumpeter 1934). In reality, thesetwo types of opportunities are stylized facts to assist in analytical clarity. Page 4 of 19
  5. 5. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fChacquaintance and recognition; [it is] made up of social obligations (‘connections’), which isconvertible, in certain conditions, into economic capital” (1986).8 As such, social capital has been operationalized at individual or relational level, (e.g.,Granovetter 1973; Burt 1992), and group level (e.g., Coleman 1998). For example, Granovetterlooked at how individuals in a community obtained employment and observed that informationabout new jobs is more likely to come through “weak ties,” or ties characterized by lowinteraction opportunities and communication (1973). Indeed, informal personal contacts, asopposed to family or friends, who were in different occupations from the respondent, werefound to be more likely sources of information leading to job changes (Granovetter 1974).Alternately, strong ties were found to improve economies of time and search (Uzzi 1997), orclosure in the social structure of the New York diamond traders community decreasedtransaction costs among its members (Coleman 1988). Members in groups with closure tend tomaintain structure due to the value of membership (Bourdieu 1986; Coleman 1988). Instructures with closure, social capital protects against information decay and norm breaking(Burt 2000). Finally, the intermediary position gives its occupant benefits associated with thebrokering between the two otherwise disconnected individuals who cannot connect directlydespite the benefits of doing so (Burt 1992). The two types of entrepreneurial payoffs one mayseek from brokering across structural holes are: 1) practices and information that are new forone’s own group, and 2) control advantage of intermediating between parties across structuralholes.9 Since weak ties signal structural holes, both Granovetter and Burt relate probabilisticallythe chance for network agents’ success to the number of ties developed and maintained(Granovetter 1983; Burt 1992).10 As well, at aggregate network level, studies show that networksspanning structural holes are correlated with overall entrepreneurial success, e.g., innovation(Burt 2005). It follows that the entrepreneur seeking to maximize the value of the network willmodify its structure by increasing the number of (weak) ties with the idea of improving chancesfor entrepreneurial success from brokerage, with a preference for seeking control opportunities.8 After its introduction, social capital has been conceptualized in three major streams 1) the rational strain rooted inthe works of Gary Becker and James Coleman; 2) the democratic strain rooted in the work of Robert Putnam; and 3)the critical strain rooted in the work of Pierre Bourdieu. Without going into the particularities of each stream, wecan think of each one as addressing social capital at a different level of analysis. Of immediate relevance is therational stream through the works of Coleman and Burt.9 The control benefits are sometimes more important than information benefits, for they are a function of size of thetension between the parties that need to communicate across the structural hole (Burt 1992; 2005).10 Granovetter made the argument that “all bridges are weak ties” (1973), and Burt consolidated the argument byobserving that “the causal agent in the phenomenon is not the weakness of a tie but the structural hole it spans. Tieweakness is a correlate, not a cause” (1992). Moreover, "The task for a strategic player building an efficient-effective network is to focus resources on the maintenance of bridge ties” (Burt 1992: 31). Page 5 of 19
  6. 6. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fChHowever, the resources of the agent limit the number entrepreneurial opportunities one canpursue.11 The agent has to balance between increasing the number of ties with outsiders andmaintaining the strong ties within the agent’s group; in other words, invest in new relations witha higher yet uncertain payoff vs. reinvest in existing relations with a lower yet certain payoff.The network broker is Kirzner’s alert-, or Giddens’ reflexive-agent who pursues entrepreneurialopportunities presented by the network structure, and will also act to change the structure of thenetwork. In the following table is the summary of the relations between structure, value andaction in social networks. Weak ties Closure Structural holes Value Novelty (Granovetter) Norms, efficiency Brokerage, control, (Coleman, Uzzi) effectiveness (Burt) Locus of Embedded in the dyadic Group asset Individual asset value relation Action Create new ties Reinforce group Look for, or create structural holes and broker them In the above table, entrepreneurial action prompted by structural holes is in oppositionto the action prompted by closure. However, before looking at how entrepreneuring occurs asinterplay between structure and value in online social networks, it is worth reflecting on Burt’sinsight about the brokerage and closure as complementary sources of value: "Brokerage is about coordinating people between whom it would be valuable, but risky, to trust. Closure is about making it safe to trust. The key to creating value is to put the two together. Bridging a structural hole can create value, but delivering value requires the closed network of a cohesive team around the bridge" (2005): 164).Despite the incompatibility between brokerage and closure, as reflected by the literature,including Burt’s own earlier accounts, the above paragraph suggests that the highest value insocial networks comes from brokerage and closure. The argument I will make is that suchconfiguration characterizes the structuration process whereby entrepreneurs build groups orcommunities with-in online social networks.11 For example, the individual agent’s commitment to the agent group is a resource limitation. Page 6 of 19
  7. 7. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fChAn Entrepreneurship Model in Online Social Networks Network Usenet and bulletin board systems (BBS) are the earliest examples of online socialnetworks. They are constituted round hierarchical categories of common interest. Thecategories are social foci “organizing social activities and interaction” (Feld 1981).12 The earlynetworks had tree-like structures: a generic focus for the root, e.g., sci.math for the Usenetwhose focus is mathematics; micro-foci with attending groups branching out, e.g.,sci.math.geometry being the group adjacent to the root whose focus is geometry. The socialcapital in such social networks is a collective resource in the form of network content orknowledge created through social interactions—e.g., blogs, wikis, photos, video, tutorials,questions and answers, forum discussions, codes of behavior. Three observations are necessary.First, online content remains available to any member as long as the community itself. It isusually archived and retrievable upon request. Second, online content as common good isprotected against decay-by-use. An additional digital copy has a near-zero marginal cost.Three, the commonwealth is protected by the norms and rules individuals accept upon joining.The codes of online behavior, or netiquette, have evolved to include a wide range of rulesranging from the use of capital letters to copyright.13 Functionally speaking, online groups ofinterest resemble Coleman’s social structures with closure whereby "social capital is defined byits function. It is not a single entity, but a variety of different entities, with two elements incommon: they all consist of some aspect of social structures, and they facilitate certain actions ofactors […] within the structure” (1988). The network content is for anyone’s benefit as long asnetiquette is observed. Over time, the online social networks have become also structured around people notonly interests. Taking this evolution into account, Boyd and Ellison (2007) define socialnetwork sites as “web-based services that allow individuals to (1) construct a public or semi-public profile within a bounded system, (2) articulate a list of other users with whom they sharea connection, and (3) view and traverse their list of connections and those made by otherswithin the system” (p. 211). This definition centers on the individual member, and suggests thatsocial capital in these communities is an individual resource embedded in the dyadic relation.12 “Relevant aspects of the social environment can be seen as foci around which individuals organize their socialrelations. A focus is defined as a social, psychological, legal, or physical entity around which joint activities areorganized (e.g., workplaces, voluntary organizations, hangouts, families, etc.). As a consequence of the interactionassociated with their joint activities, individuals whose activities are organized around the same focus will tend tobecome interpersonally tied and form a cluster” (Feld 1981: 1016).13 An example of a netiquette rule is: “Respect the copyright on material that you reproduce. Almost every countryhas copyright laws” (IETF RFC 1855). Available at: Page 7 of 19
  8. 8. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fChThe network structure is flat and consists of several overlapping ego-networks, that is, dyadicrelations with a common node. The individual member lacks the constraints and advantagesassociated with one’s relative position in the network. Indeed, there is nothing to prevent twomembers from connecting directly even though a third one might have made them aware of thestructural hole in between. So, while the social capital in these networks is of the Granovetter’sweak ties type, it cannot be of Burt’s—control and brokerage of structural holes. In fact,according to Burt, on the internet, the network itself becomes the broker (2010). In today’s reality, the structure of the online social networks has evolved to the pointthey consists of a mix of interest groups and ego-networks, just as their social capital is bothgroup resource and individual resource embedded in dyadic relations, respectively. Moreover,online social networks are likely to be open registration networks in which strangers can connectbased on shared interest.14 As well, forms of social homophily observed in real world socialnetworks (for review, see (McPherson, Smith-Lovin et al. 2001) have also been empiricallyobserved in online social networks (Lewis, Kaufman et al. 2008; Huang, Shen et al. 2009). We can assert now that network members connect online in structures based oncommon interests and/or likeness. This is to say that people tend to connect online aroundvalue. Additionally, the network structures based on social focus are likely to be groups ofstrangers with various levels of closure, while the structures based on homophily are likely to beego-networks. Creating online collective social capital, content or knowledge, has the value ofdrawing from a wealth and variety of individual resources otherwise fragmented by time anddistance. The coordination of these resources is done in groups with closure—it is effective toaggregate round a given focus, it is efficient to achieve pro-social individual conduct withingroups with norms and rules. Conversely, individual social capital is relational in nature and themore likely network structure is the dyad or ego-network. Then, given the diversity of the waysin which people can be alike, (e.g., beliefs, values, education, status, kinship, etc.), it is less of aprobability that likeness characteristics are transitive across groups of people, yet one may wantto invest in ties along each characteristic of likeness. If several people share a likenesscharacteristic and want to develop social capital, the characteristic in question becomes a socialfocus and chances are they form a group with closure round it. The next figure illustrates fourtypes of action-states available to the network agent.14 There are two types of online social networks, those adopting open registration (e.g., Flickr), and those that areinvitation only (e.g., Facebook, LinkedIn). However, over time, the popular networks of the latter type have evolvedtowards the open registration model. For example, both Facebook and LinkedIn have turned open registration. Page 8 of 19
  9. 9. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fCh Group The whole network Groups with closure Potential social capital Collective social capital IV I Open Closed III II Ego network Strong ties Individual social capital Relational social capital DyadOn the vertical axis, there are the two types of network structure, groups and dyads. These aremember states; one can be part of a group and/or dyadic relations. The horizontal axis, Open-Closed, represents the continuum between relative openness and closure as applied to thestructural state in which a member is. For example, given two non-identical groups, the onewhere the member’s investment in the observance of rules and norms is higher would be placedto the right of the other group. The left-most groups would be those whose norms and rules arethe default option for the overall network15 Alternatively, given two non-identical ego-networks,the one with a lower normalized sum of tie-strengths would be placed to the left of the other. Weare now in a position to consider a model for the online network entrepreneur. The online network entrepreneur is the alert and reflexive agent who identifies a socialfocus, and creates a group round it. According to Burt, the entrepreneur is the agent that createsbrokerage and closure (2005:164). The entrepreneurial resources are invested in identifying thesocial focus, deciding the level of closure, and creating the group, all iterative processes withuncertain outcomes. The group becomes the bridge on which strangers connect acrossstructural holes of space and time to develop social capital on a given theme. Online networkentrepreneurs create groups with closure.15 The relation between the social capitals of the two groups is more problematic, for the value of each one is neitherconstant in time, nor entirely measurable on objective scales. Page 9 of 19
  10. 10. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fCh The actions of the agent, and chances of entrepreneurial success, depend on the pre-exiting network structure. For example, higher chances of success are associated with creating agroup round a social focus not yet addressed by existing network groups—effectiveness ofaction. As well, differences in the level of closure can enable the existence of several groupsaddressing similar foci—efficiency of action. In turn, creating a group and deciding the level ofclosure are actions that change the structure of the network. To create a group is to increase thesocial capital of the group, which is precisely the type of social capital in Coleman’s or functionalterms, enabler and outcome (1998). We shall leave for further study the process by which increasing social capital attractsnew group members, in itself a factor for structural change in the network. Suffice it to say atthis point that increasing group membership is a function of random discovery just as much asexisting members’ drawing their connections into the group. Of topical relevance is theobservation that the entrepreneur can be in any of the four quadrants of action-states.Following is the illustration of the updated structuration process characterizing online networkentrepreneuring. New group opportunity Network Reflexive & Create group with Structure alert agent closure Increase social capital To theoretically position the sources of value motivating the entrepreneur, given thatonline networks cannot firmly hold the arbitrage benefits of the brokers in real life networks, weshould make two observations from the extant literature on social capital. One, social capital isindeed fungible capital that can be appropriated in different ways by different people (Nahapiet Page 10 of 19
  11. 11. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fChand Ghoshal 1998; Portes 1998; Lin, Cook et al. 2001; Adler and Kwon 2002). Second, even inBurt’s competitive contexts the entrepreneur can choose to maximize non-economic returns oninvestment in social capital (1992). Consequently, when we look for entrepreneurial returns oninvestments in online social capital, we should do so only if we acknowledge the many varietiesin which social capital exists and is appropriated. Below is an operational definition of socialcapital that captures these observations, and informs the next section where the entrepreneurialprocess is illustrated by two examples from an online social network. Social capital is: “[1] investment in social relations by individuals through which they [2] gain access to embedded resources to [3] enhance expected returns of instrumental or expressive actions” (Lin 1999: 39). The embedded resources enhance the outcome of actions due to the following elements information, influence, social credentials and reinforcement--these are intrinsic to social capital, yet not explained by other forms of personal capital (Lin, Cook et al. 2001)We can say that it is a higher level of influence, social credentials and reinforcement that theonline network entrepreneur aspires to by creating online groups with closure—higher than thelevels at which regular network members obtain these forms of social capital.Flickr, Two Group Dynamics Sketches The empirical lens is applied to Flickr, the leading online social network focusingon photo sharing. There are three reasons for the choice of social network. Being amonothematic community, Flickr lends itself to insights with analytical clarity. Flickr alsomakes a good stand-in for the social networks whose revenue model is a combination ofadvertising and membership fees, the dominant model at this time.16 The fact that Flickrpresents the social scientist with the option of empirically testing theoretically drivenhypotheses is the third reason for the choice. Like many similar networks, Flickr makesavailable the application-programming interface (API) to its systems so that network data canbe collected automatically. Flickr is a web service for hosting, sharing and managing image-, and video-content, andonline community of based on open registration. It offers two types of membership levels: Free16 To further support this point about choice representativeness, there is also Boyd and Ellison’s empiricalobservation that the “key technological features are fairly consistent” across social networking sites(2007). In Annex 1, this point is also illustrated by reference to two social networks whose themes are different, yetsocial schemes equivalent. Page 11 of 19
  12. 12. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fChand Pro accounts. Free account members are allowed to upload 300 MB of images a month and2 videos. Also, the non-paying members can only display the most recent 200 photos in theirphotostreams. Pro accounts allow users to upload an unlimited number of images and videosevery month and receive unlimited bandwidth and storage. The revenue model of the overallnetwork is a mix of advertising and membership fees. The non-paying members are exposed toadvertising. From the perspective of the Flickr corporate owner and the adversities, freeaccount members become valuable assets once they become characterized by their actions andespecially group membership(s). For example, at the time of this writing, the list price of thephoto camera Leica M9 is $6995.17 Advertisers are likely to pay a premium to be able to targetthe demographic segment of Leica enthusiasts , who are likely to be members of the Leica M9group on Flickr.Dolphins and Artistic Street Photography18 “I like photography and dolphins. I’m also passionate about photos of dolphins” isseldom heard in our daily lives. Usually, something like this comes up prompted by a contextualelement pertaining to one’s likes or dislikes, or more specifically to photography or dolphins.Moreover, since dolphin-photography is indeed my hobby, chances are that people surroundingme are not impressed, for lack of interest in photography or dolphins. On internet there areseveral hundreds of us, mostly strangers, to share the interest on dolphins and photography.Flickr is one of the social networks that makes grouping round this social focus possible. Asillustrated in Annex 2, the group DOLPHINS bridges structural holes of space and time zonesfor 709 enthusiasts. This is a 6-year-old open group, with the default levels of closure. Thecontent of this group consists of 2,975 photos and videos, and 22 conversations. Browsingthrough the photos reveals that there are conversations going on, but they take place alongdyadic connections in what seems to be the ego-networks of the photographer. Moreover, thesame photo has been submitted to several groups. This pattern of behavior suggests thatmembers in open groups look for comments and similar content. To illustrate this perspective, Iqueried the Flickr database for “your comments,” and selected the first displayed photo. Themember who published the photo wrote back to the community: “Thank you all my friends for your wonderful support.17 Listing source: Amazon.com18 The summaries of the two Flickr groups featured below are presented in Annex 3. Page 12 of 19
  13. 13. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fCh Fantastic moments, to read all your comments, to see your invites and to count all the faves.”If most comments are short lines praising the photo or the photographer, we can infer that thesocial capital created is minimal. The value of network entrepreneuring in this case seems to benot much higher than that of the regular members. In contrast to the group with little closure, the Hardcore Street Photography (HCSP) is a6-year-old group with high closure. Being able to post only two photos a week and having noguarantee of their surviving the editorial review, which references top artist photographers asmodels, is a high standard. The content of the group consists of 2,713 photos, which is not a lotespecially considering that this group has 42,671 members. Given that there are 2,250discussion topics, of which the most active has received 14,864 replies in 3 years, we can inferthat this group is not made only of free riders, but an active membership looking to developknowledge through group interaction.The HCSP’s social capital develops along all four dimensions in Lin’s definition, information,influence, social credentials and reinforcement, and is likely to reward entrepreneur-founderswith the benefits of associated with brokerage and closure. In the case of Flickr, the size of thebrokerage component can be approximated by the number of group members, closure by thenumber of members divided to the number of photos. The size of the social capital is the sum ofcontent items and conversation items. These empirical sketches, by contrast, illustrate the entrepreneurial opportunity ingroups with closure, which were shown to evolve as structuration between network structureand agent action. As the investment required by maintaining closure in HCSP is much higherthan in DOLPHINS, the alert and reflexive agent(s) must undergo the structuration process on acontinuous basis—to enforce the editorial policy, for example. While longitudinal data is absentfrom the analysis at this time, this is only a temporary limitation at most.Discussion and Methodological Implications The above examples, illustrate with some specificity the idea that networkentrepreneurship is rather a function of brokerage and closure. These are observable structuralelements of social networks that, together with the agency towards realizing entrepreneurial Page 13 of 19
  14. 14. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fChvalue, illustrate Giddens’ structuration process in online network entrepreneuring. Moreover,all the theoretical points brought in support of this paper place dualities of some sort on areflexive orbit. Giddens’ structuration, Feld’s foci, social capital, and homophily are all dynamicdualities consisting of process and outcome. The research opportunity of studying online socialnetworks has the potential to address these phenomena beyond the metaphoric. Since networkentrepreneuring is likely to grow, in for profit and not for profit contexts alike, exploring andunderstanding the phenomenon is very timely. Recently, Ronald Burt authored a working paper in which he makes the case for thegeneralization of insights obtained in virtual worlds (2010). Virtual worlds offer “good-quality,time-stamped, micro-level data on social networks in large, heterogeneous populations. Modelscan be formulated and tested with a precision impossible to match with standard sociometricsurvey methods. More, social skills can be learned in virtual worlds that require years ofexperience in the real world, and remain in many people underdeveloped” (ibid.). To these Iwould only add the possibility to obtain longitudinal data, which are the only type that canillustrate structuration types of processes. It needs to be stressed once again that people invest in social networking not always withthe idea of maximizing economic utility. I feel the need to make this point for a couple ofreasons. For one, social capital has been employed in this work mostly from the rationalistaccounts of Coleman and Burt. However, Georg Simmel (2008), the antipositivist sociologistfrom the beginning of the 20th century, made us aware of the “impulse to sociability in man.”Sociability is described as “associations...[through which] the solitariness of the individuals isresolved into togetherness, a union with others," and it is achieved through "the free-playing,interacting interdependence of individuals” (ibid. p. 158-163). The quantification of sociabilitymay prove to be a fool’s errand because the amount of resources individuals pour into socialnetworking escapes the typical equilibrium equation positivist scientists employ. The numbersof content items and conversation items relative to the group members in the two cases suggeststhat patterns of interaction follow anything but causal/linear paths. For those who find the online networks data an irresistible opportunity to quantify thesocial phenomena in such networks, self-adaptive complex systems may provide goodcandidates for concepts and techniques to not only help us understand social reflexivity, but alsosuggest patters of future behavior. To think of a mechanism accounting for the evolution ofonline social networks, I should observe that they are open systems, characterized by simplestructures relative to their size, and consist of large numbers of agents, connected intosubsystems, and potentially interconnectable at multi-level and in any combination possible. In Page 14 of 19
  15. 15. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fChthe view of organization theory, such structure is complex and characterized by hard to predictbehavior, due to its nonlinearity associated with feedback loops (Anderson 1999). In conclusion,successful online social networks appear to behave like complex adaptive systems (CAS) in thatthey self-organize while continuing to import energy. In reviewing the literature on complexityand organizations, Anderson indicates that CAS“-models represent a genuinely new way ofsimplifying the complex. They are characterized by four key elements: agents with schemata,self-organizing networks sustained by importing energy, coevolution to the edge of chaos, andsystem evolution based on recombination,” (Anderson 1999).19 A limitation of this work, if not considered carefully, is the business model on which theoverall networks operate. The fact that we looked at open registration networks supported byadvertising and membership fees models would need to be factor in when the current work is tobe extended.19 Anderson also makes the point that CAS informed models help organization science by “mergingempirical observation with computational agent-based simulation.” As there has been scant empiricalevidence of actual complex adaptive systems, framing virtual social networks in CAS terms shouldencourage more realistic experimentation and simulation. It should also be noted that the author alsoindicates that the “CAS perspective opens up exploration into how ideas, initiatives, andinterpretations form an internal ecology within an organization,” (ibid. p. 221). Page 15 of 19
  16. 16. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fCh BIBLIOGRAPHYAdler, P. S. and S.-W. Kwon (2002). "Social Capital: Prospects for a New Concept." The Academy of Management Review 27(1): 17-40.Anderson, P. (1999). "Complexity Theory and Organization Science." Organization Science 10(3): 216-232.Bourdieu, P. (1986) "The Forms of capital."Boyd, D. M. and N. B. Ellison (2007). Social Network Sites: Definition, History, and Scholarship. Journal of Computer-Mediated Communication, Wiley-Blackwell. 13: 210-230.Burt, R. S. (1992). Structural Holes: The Social Structure of Competition, Harvard University Press.Burt, R. S. (2000). "The network structure of social capital." Research in Organizational Behavior 22: 345-423.Burt, R. S. (2005). Brokerage and Closure, An Introduction to Social Capital. New York, Oxford University Press.Burt, R. S. (2010) "Structural Holes in Virtual Worlds." 83.Coleman, J. S. (1988). "Social capital in the creation of human capital." The American Journal of Sociology v94: pS95(26).Feld, S. L. (1981). "THE FOCUSED ORGANIZATION OF SOCIAL TIES." American Journal of Sociology 86(5): 1015-1035.Giddens, A. (1986). The constitution of society: outline of the theory of structuration, University of California Press.Granovetter, M. (1973). "THE STRENGTH OF WEAK TIES." American Journal of Sociology 78(6): 20.Granovetter, M. (1974). Getting A Job: A Study of Contacts and Careers. Cambridge, Mass, Harvard University.Huang, Y., C. Shen, et al. (2009). Virtually There: Exploring Proximity and Homophily in a Virtual World, NSF & Army Research Institute 6.Kirzner, I. (1973). Competition and Entrepreneurship. Chicago and London, The University of Chicago Press.Lewis, K., J. Kaufman, et al. (2008). "Tastes, ties, and time: A new social network dataset using" Social Networks 30(4): 330-342.Lin, N., K. Cook, et al. (2001). Building a Network Theory of Social Capital. Social capital: Theory and research, Sociology and Economics: Controversy and Integration series.New York:Aldine de Gruyter: 3-29.McPherson, M., L. Smith-Lovin, et al. (2001). BIRDS OF A FEATHER: Homophily in Social Networks. Annual Review of Sociology, Annual Reviews Inc. 27: 415.Nahapiet, J. and S. Ghoshal (1998). "Social Capital, Intellectual Capital, and the Organizational Advantage." The Academy of Management Review 23(2): 242-266.Portes, A. (1998). "Social capital: Its origins and applications in modern sociology " Annual Review of Sociology Vol. 24: pg. 0_12, 25 pgs.Simmel, G. (2008). Sociological Theory. New York, McGraw-Hill.Uzzi, B. (1997). "Social Structure and Competition in Interfirm Networks: The Paradox of Embeddedness." Administrative Science Quarterly 42(1): 35-67. Page 16 of 19
  17. 17. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fCh Annex 1: Definitions and schemes of technological equivalence for Flickr and LinkedIn Definitions Flickr LinkedIn“Flickr - almost certainly the best online photo “Your professional network of trusted contactsmanagement and sharing application in the gives you an advantage in your career, and isworld - has two main goals: one of your most valuable assets. LinkedIn1. We want to help people make their photos exists to help you make better use of youravailable to the people who matter to them. professional network and help the people you2. We want to enable new ways of organizing trust in return. Our mission is to connect thephotos and video.”20 world’s professionals to make them more productive and successful. We believe that in a global connected economy, your success as a professional and your competitiveness as a company depends upon faster access to insight and resources you can trust.“21 Technological equivalence Flickr LinkedIn Join the overall network at no- Join the overall network at no-charge or charge or premium level premium levelSocial Join a group Join a group Create a group (open or with Create a group (open or with rules) rules) Connect with a member Connect with a member Mark a member as a friend Mark a member as a colleague Post a comment/mark as favorite Post a question/reply Add a member to your network Add a member to your network Write/accept a reference Write/accept/request a reference about/from a about/from a connection connection Communicate with a member Communicate with a connection Undo any of the above Undo any of the above Recommend a photo to a Introduce a connection to a job connectionControl Manage presence levels Manage presence levels Report abuse/flag inappropriate Report abuse/flag inappropriateThematic Browse/search photos Browse/search job postings Browse/search members Browse/search members Post a photo Post a resume/job Download a photo Apply for a job20 Page 17 of 19
  18. 18. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fChAnnex 2: Map of the locations photos in the Flickr group DOLPHINS were taken.The red dots are the actual locations, the distances in between suggestingstructural holes of space and time zone. Page 18 of 19
  19. 19. Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closurevia fCh Annex 3: Membership rules and norms, and stats of two Flickr groups DOLPHINS (since 2006) HCSP, Hardcore Street Photography (Since 2006) Default norms and rules Norms and rules with closure Additional Information POSTING LIMIT NOW 2 PHOTOGRAPHS PER This is a public group. WEEK Accepted media types: Photos A group dedicated to candid situations that Video momentarily reveal themselves amidst the mundane Accepted content types: hustle and bustle of everyday life. An ode to all great Photos / Videos street photographers such as Winogrand, Arbus, Screenshots / Screencasts Levitt, Koudelka and many, many more. Respect the Illustration/Art / Animation/CGI past but avoid being beholden to it. Accepted safety levels: Safe BE AWARE: This group is heavily curated. Photographs will be removed without explanation. To repeat: the admins simply dont have the time to explain why a given photo was removed. Dont take it personally. What goes and what stays? Read the group description. Give us a reason to remember the photograph. Ask yourself, what makes it so special, why is it worth remembering for more than a split second? The reason why its so hard for us to tell you why we keep or delete a photo from the pool is because we dont have a quantified set of rules. Its just a feeling that we have. Look through some of the Magnum images for starters. Check out In-public. Read Michael David Murphys Ways of Working and Phyla of Street Photography and Nick Turpins Undefining Street Photography 709 members 42671 members 2975 items (photos and videos) 2713 photos 6 discussion topics with 16 total replies 2250 discussion topics 1 administrator, no moderator(s) The most discussed topic was posted on July 2008 and The administrator is not among the top 5 contributors has 14864 replies. to the group 12 administrators, 5 moderators (none of whom have made most photo contributions to the group) Page 19 of 19

Entrepreneuring in Online Social Networks: From Brokerage vs. Closure to Brokerage and Closure Abstract This paper takes a structuration view of entrepreneuring in online social networks. Social capital theory informs the idea that network entrepreneurship is a function of brokerage and closure qua agency and structure, respectively. The purpose of this undertaking is to extend existing theory to the emerging phenomenon of network entrepreneuring as it applies to a little understood, yet rich in potential, area of social action, online networking. The importance of this contribution is to extend existing theory to, and indicate the empirical potential of, online social networks, while revealing the entrepreneurship dynamics that are essential to the networks’ formation.


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