Article S8.10 Social Capital and Entrepreneurship: A Study of Social Networks in the Handloom Industry in Andhra Pradesh, India Seminar Leader: Suresh Bhagavatula Nadathur S. Raghavan Center for Entrepreneurial Learning (NSRCEL), Indian Institute of Management, Bangalore, India suresh.bhagavatula[@]iimb.ernet.in In the literature of entrepreneurship, researchers have tried to identify why some individuals succeed as entrepreneurs while others do not. Access to social capital has been identified as one of the factors contributing to entrepreneurial success. One way to understand social capital is through a study of social networks (Bhagavatula, Elfring, van Tilburg, & van de Bunt, 2010). Social networks have been categorised variously: (a) strong and weak networks, based on the strength of network relationships and (b) sparse and dense networks, based on network structure. In the vocabulary of social network analysis, well-developed social relationships would be represented as strong ties whereas mere acquaintances would be represented as weak ties. People within a sparse network hardly know each other, while people in the dense network are familiar with each other. Some researchers say that weak ties provide bridging opportunities that enable entrepreneurs to go beyond their immediate networks while others argue that dense networks play a crucial role because of the prevalence of trust in such networks. Another school of thought suggests that it is important to have the right mix of strong and weak ties, as well as dense and sparse network elements. Bhagavatula argues that the key to entrepreneurial success is not only being part of an effective social network, but also making use of that network. In order to benefit from a network, one has to scan the information that is coming in and identify opportunities. It is here that the interaction between human and social capitals come into play. His research problem is to clarify how human and social capitals work together for entrepreneurs enabling them to recognise opportunities and mobilise resources. Bhagavatula selected the handloom industry because this industry has survived over centuries even after significant changes in technology. Entrepreneurs in this industry have been able to bring out market-oriented products. It has also survived in the open market environment, competing with the mechanised textile industry. Handloom production takes place in the rural areas. Unlike many other rural industries, the handloom markets are distributed across the country and some handloom products are exported as well. Technological superiority does not appear to be a factor differentiating one entrepreneur from another. The overall context appears to provide a setting that is suitable for the study of social capital and entrepreneurship. Bhagavatula selected the Indian state of Andhra Pradesh for his study as it was one of the top four handloom producing states in the country. Since he also belonged to Andhra Pradesh, he had the advantage of knowing the local language. Knowing the local language helps in understanding the social dynamics involved while interacting with research participants. Bhagavatula adopted the snowball sampling technique to collect data. Under this method, contacts are established through extended associations. The success of this technique depends greatly on the initial contacts made. Both qualitative and quantitative data were gathered. Quantitative data were collected through a survey focusing on various aspects of a master weaver’s operations and details of his social network. A master weaver is the entrepreneur and one of the prime movers of the handloom industry. He organises the production, based on market demand. The master weaver arranges the various resources, such as credit and raw materials. He then provides the raw materials and designs to a group of weavers who produce the textiles. The master weaver then delivers the product to clients who finally sell it to consumers. Qualitative data collected through semi-structured interviews provided a rich picture of the handloom industry. It was a time-consuming process as multiple visits were required to be made to particular respondents. A tool used to gather network data was “name generator.” This helped in mapping the respondents’ social network. Respondents were asked to name the persons with whom they had discussed any important personal matter in the last 6 months. The network variables used in the study included network size, network density, tie strength, and network constraint. The human capital variables were the number of languages a master weaver speaks, experience in number of years in any handloom-related activity, and the level of weaving and designing skills. A major finding of the study is that sparse networks have a positive effect on opportunity, but a negative effect on an entrepreneur’s ability to acquire resources. The study also opened up many new questions which could not be answered within the framework of the study. Some of these questions may be answered through longitudinal studies, by analysing time series data from the same respondents. Drawing on his research experience, the seminar leader shared the following tips with the seminar participants, who were mostly research students: (a) A researcher should look for a topic that really interests her/him. (b) A researcher should remain open to any new dimensions arising in the course of one’s research. (c) A researcher should be very familiar with all the literature relevant to the research topic selected. (d) A researcher should not hesitate to talk to the people associated with the relevant field/sector. (e) A researcher should keep on updating oneself on the recent developments in the area of research, the major issues/challenges, and how one’s research is going to contribute. (f) In sector-specific studies, it is better to use both qualitative and quantitative data. While qualitative data can lead to a richer understanding of the sector, quantitative data can help in validating arguments, leading to publishable results. Reference Bhagavatula, S., Elfring, T., van Tilburg, A., & van de Bunt, G. G. (2010). How social and human capital influence opportunity recognition and resource mobilization in India’s handloom industry. Journal of Business Venturing, 25(3), 245-260. Reported by Srilata Patnaik, with inputs from Shridhar Kumar Dash; edited by D. P. Dash. [January 30, 2011]
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