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Technology breaks barriers, technology makes lives easy and information communication technology connects people more swiftly than ever. Social networking in particular due to the advent of internet technology and web based application connects people from across boundaries and nations who not only connect to make friends but also to develop certain relationships among them. Nowadays almost everyone have an email account and will be connected to their friends and peers through Facebook, Twitter, LinkedIn or Xing. These mediums are known as Social Networking Sites (SNS) and it has grown rapidly during the past couple of years with millions of subscribers and is continuing to grow. The use of various applications within these websites has allowed users to interact and be in touch by other means other than e mail, text messages and computer-mediated communication (CMC) applications.
A common similarity among all the web applications and social networking sites are that they tend to have similar structures and methods of creating and maintaining relationships, however the cultures that arise within these networking sites have certain unique attributes that differentiate one another (Leitner & Grechenig, 2008).
The higher acceptance and increased use of SNSs has necessitated and created a need for researchers to study and identify how these "virtual networks" shape and change users relationships, perceptions and needs (Boyd & Ellison, 2007). Entrepreneurs work through creating and sustaining fruitful networks or relationships. This network they create or belong to shape the way they conduct their business operations and the success of their entrepreneurship depends on the extent to which they manage these networks effectively. The study of how entrepreneurs get different resources such as information, capital, skills, and labor, in order to start and develop their business activities (Greve & Salaff, 2003) has increased over the years. Therefore, the research on social networking sites will include two important aspects. These are the traditional network theory and the social capital theory.
Entrepreneurs create various ties and relationships within the networks and the relationships that are created within networks are identified as social structures which in turn act as social processes (Hansen, 1995) and some of these relationships even turn out to be personal relationships. Using these social structures or networks the entrepreneur will have access to or be able to acquire various resources such as information, labor, and even monetary capital to improve their businesses. The extent to which they can access these resources will largely depend on level of ties they have with others in the networks.
The social network to which the entrepreneur becomes part of will be turned to a business network. This depends on the extent to which the entrepreneur is able to both develop his already existing business or start and develop a new business. The contacts in the network would lead to actual resources that are needed for the entrepreneur's success and this can be described as an entrepreneur's 'social capital'. Lin (1999) describes social capital as "Resources embedded in a social structure which are accessed and/or mobilized in purposive actions". i.e. when the contacts in the in an entrepreneur's social network provide certain resources which are important to achieve entrepreneur's goals then they become social capital. Effective networks consist of trustful relationships (Granovetter, 1985) where the entrepreneur can play a key role by establishing an important position in the network members, hence trust plays a crucial part for the social networks to help and support the entrepreneur, trust must be present in all levels of the network if the entrepreneur is to be accepted by the peers in the network for him to derive the benefit of being in the network.
Statement of the Problem
Social network research traditionally has main focus on 'face-to-face' network development and maintenance, and their relation to social capital theory. Social capital developed through trustful relationships is a key ingredient to an effective network (Nielsen et. al, 2009). Networks have become important allies for entrepreneurs as it provides access to various resources that the entrepreneur needs to develop the business. Hoang and Antoncic (2003) mention that a network's importance is not only related to the start-up phase of the entrepreneurial process, but to the entire life-cycle of the organization. Depending on which stage the entrepreneur is in, the type and size of the networks created by entrepreneurs differ. Many researches on social network agree that creating networks are an important channel through which the entrepreneur can have access to different types of resources.
In recent years technology has changed the way people interact and share information. New forms of communication which gain popularity on a daily basis, in the form of social network sites, have been created over the Internet basing similar structures and this has eliminated geographical constraints with regards to creating networked relationships. Traditionally there have been many CMC applications created on the internet, however since the introduction of 'virtual communities' in the Internet, SNSs have become one of the main web based-applications used in recent times for the purposes of creating relationships. SNSs help individuals in two ways, firstly it allows individuals to maintain their existing off-line (FtoF) networks and secondly to create and engage in new relationships. Further, SNSs have gained growing popularity among all age groups across nations, and have increased the scope of information shared within them which has led many businesses to invest time and money in promoting and advertising SNS.
A key feature of SNSs is that it is mainly organized around people and not interest, therefore the main party in an SNS will be the individual creating the network. Hence SNS may allow entrepreneurs to expand their already existing networks to other countries and maybe even into other business fields as they will be exposed to individuals who may require various products and services which may be profitable to the entrepreneur. A key highlight is the LinkedIn website, which became known for being a professional oriented networking site, where people could get connected both personally and professionally, and create network relationships of collaboration rather than competition (Boyd & Ellison, 2007).
Further, there are many SNS that have been and are being created on an ongoing basis, each one with its own individual characteristics and trying to focus on attracting different types of users. These differences within users lead to a need for a broad scope of research in order to determine
Why individuals use or not use SNSs
How SNSs affect the creation of social capital and development of rapport between the relationships
How SNS usage and information flows can help companies develop
It is in this last section that our research will focus on with regards to the business development of entrepreneurs.
Although some literature exists on the benefits and constraints of using SNSs in an organization (van Zyl, 2009), there is little or no literature that presents how an entrepreneur uses SNSs for company development and resource acquisition. Therefore, there is a research gap in the literature to understand how entrepreneurs use and shape their networks in order to acquire important resources that can help them create, improve and develop their businesses.
As the main purpose of this research, we will focus on creating and managing "effective networks" by entrepreneurs to develop their business. By the term "effective" we mean that those effective networks which provide the entrepreneur with resources that will aid the entrepreneur to improve and develop his business. These resources can take the form tangible as well as intangible resources.
The vast majority of literature found on SNSs belongs to the information technology (IT), psychology and sociology areas, therefore many of the literature found does not directly focus on companies and how they are affected by this new mode of communication; as stated by Beer: "At the moment we can see a direction emerging for the study of SNS in which capitalism becomes this analytic given, present in part in the descriptions, but remaining for the large part absent, especially in the analysis" (Beer, 2008: 524).
Therefore, this research will provide further research into the business context of SNSs, taking into account an element, which has not fully been considered in already existing literature, which is the entrepreneur.
1.3 Research Question & the Purpose
The literature on how SNSs are used by entrepreneurs to enhance their business are still at a no or minor stage though the study of SNSs is still growing. Study on the public use of SNSs can be more easily found and the current literature focuses on how established organizations make use of public or private SNSs. Therefore, with the objective of making a contribution to the literature, our research will focus on finding answers for the following research questions:
How do entrepreneurs shape their social networking sites into effective business-networks?
How can social capital help entrepreneurs to enhance their business through the development of electronic social networking attachments?
The purpose of this research is to identify and understand how entrepreneurs create and manage relationships through the use of SNSs that can enhance their businesses.