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Instruction: Entrepreneurial activity becomes a hot topic around the world. More and more countries pay high attention on the issue. No matter in developing countries or in developed countries, entrepreneurs is not only influenced by labor capital and financial capital, but also be influenced by networks and social capital. Social capital and networks occupy a crucial status for entrepreneurs. They play a key part in entrepreneurial opportunity recognition, trade fees, and personal characters. And all of these variable factors have a directly impact on entrepreneurs’ performance. The essay is intended to analyze the influence of networks and social capital on entrepreneurs and to put forward different ways to build effective networks and social capital. The first part will mainly discuss one function of the networks and social capital is to help entrepreneurs discover entrepreneurial opportunity; the second part will mainly discuss another influence of network and social capital on entrepreneurs is to help them bring in more money and have a enough financial capital. And then the third part will discuss networks and social capital plays an important part in entrepreneurial sources. Last but not least, the essay will also put forward the effective methods to improve the networks and social capital’ functions. Main body 1. The influence of the network and social capital on entrepreneurial opportunity Entrepreneur opportunity is a personal or organization action that collect new resources to create new way and believe the action could bring in much more profit (Eckhardt and Shame, 2003). Eckhardt and Shame content that entrepreneur opportunity derives from five resources: problem, change, invention and creation, competition, new technology and new information. They also declaim that entrepreneurs’ basic character is to discover new opportunity and have an alert on opportunity recognition. The network of entrepreneurs is the main resource of entrepreneurial opportunity. Hills and other economists discover that over 50% catch the entrepreneurial opportunity through network. (Hill, Lumpkin and Sign, 1997) Aldrich and Zimmer hold an opinion that social network is linked with entrepreneurs, entrepreneurial opportunity and entrepreneurial resources. (Aldrich and Zimmer, 1986) Shane and Venkataraman declaim that the level of network support has a direct impact on the level of entrepreneurial opportunity discovery. This is because that network could build up and strengthen entrepreneurs’ confidence. 1.1. Social capital and network stimulate entrepreneurs discover opportunity In terms of entrepreneurs, social capital offers them the network which could help them discover the entrepreneurial opportunity more easily. Entrepreneurs could make full use of their own social networks to get useful information and relative information, so that they could recognize the opportunity firstly and catch the chance immediately. However, entrepreneurial opportunity recognition is influenced by entrepreneurs’ knowledge, vision and the capacity to master relative information. However, the social capital of entrepreneurs has obvious impact on gaining knowledge and information.. Entrepreneurs are not born with knowledge. Knowledge is gained by learning lessons under social network environment, especially for the potential knowledge, which from emotional recognition, being much more directly and much more obviously deriving form social network. (Bowman,.1990) For example, In the 1980s, cell phones started popular in China. A young Chinese man called Li Junfeng, who was only a poor man, using almost all his treasure to buy a cell phone. The reason was that he found that all of his colleagues and friends owned cell phone and almost everyone tried to persuade him to buy one. However, after he got the cell phone, he was very disappointed because he found that his cell phone was not special. Thus he thought of an opinion that made his cell phone uncommon.-Just to have mobile phone stickers on the cell phone and made some decoration on it. It made cell beautiful and special and then almost all of his colleges asked him to help them do the stickers on their own phone. Even some colleges wanted to give money to him for the decoration.. Li Junfeng discovered the opportunity and caught the opportunity by such network and opened a mobile phone decoration company. And now he is well known in China. The more active the entrepreneurs take part in the social network, the more useful information they could get from it. (Cooke, 1996)And the potential knowledge of internal network, is always limit to the core members. Thus, the more developed of the social network is, the more entrepreneurial relationship and more entrepreneurial opportunity entrepreneurs could get. In this way, entrepreneurs could make decisions more correct and more reasonable than others and reduce the degree of entrepreneurial activity risk. For example, more and more overseas returnees are easily inclined to be entrepreneurs not only attributing to bring in advanced technology from different countries, but also resulting from the more effective social network they gain from foreign countries. In contrast to local people, overseas returnees are especially keen to join different kinds of clubs, chambers of commerce, trade organization and schoolmate reunion. Through taking part in these different kinds of activities, the oversea returnees broaden and strengthen their own social network. In this way, oversea returnees hold an ability to recognize entrepreneurial opportunity. The level of knowledge about entrepreneurial opportunity has a positive effect on entrepreneurial recognition. The potential entrepreneurs, who have rich information about entrepreneurial opportunity, will have a stronger sense for opportunity recognition. When entrepreneurs are involved in the specific business network, they could gain information about industry tendency. The industry tendency includes the industry technology and industry knack based on specific knowledge and information dissemination mechanism. In this way, entrepreneurs could get a deeper knowledge and catch the entrepreneurial opportunity. The previous personal relations and work experience are always linked closely to entrepreneurs’ choice. Entrepreneurs are inclined to choose the field in which they have acquaintances and previous working experience. Because only in this way do they have their own social network and social capital, which could help them get adapt to the entrepreneurial field quickly. 1.2. Network and social capital stimulate entrepreneurs to have entrepreneurial assessment and make use of entrepreneurial opportunity. Network and social capital not only could help entrepreneurs discover the entrepreneurial opportunity, but also stimulate entrepreneurs to have entrepreneurial assessment and make use of entrepreneurial opportunity by offering and expanding key information and important resources. Entrepreneurial opportunity recognition is only basis stone for entrepreneurial action, however, how to assess and make critical opinion of entrepreneurial opportunity is the next key step for entrepreneurs. Entrepreneurs need to collect relative information about entrepreneurial opportunity such as marketing information, price and cost information, technology tendency information and government policy information. Entrepreneurs could gain these information from external resources, however, the internal resources plays a key part in getting the significant information through management network and internal network. Especially for the management network is offering more comprehensive information. When entrepreneurs are involved in the business network, they could gain relative information about entrepreneurial assessment. In this way, they will have a correct vision of the entrepreneurial prospect and further reduce the risk of the entrepreneurial action. Furthermore, the members of personal network of entrepreneurs are always being perfect objects of enquiry. The network members’ suggestions help entrepreneurs to have a comprehensive assessment on entrepreneurial opportunity. An entrepreneurial process with a bright future not only has the same value for all the entrepreneurs. However, entrepreneurs with a capacity of making full use of the opportunity are always who have a special ability to take advantage of the entrepreneurial opportunity. And the ability is linked very closely to the social capital of the entrepreneurs. (Christenson & Pelenson, 1990)In general, the ability of making full use of entrepreneurial opportunity is always influenced by the below factors: In the first part, the control and limit resources of entrepreneurial process is the root of the ability. Secondly, the ability is influenced by the external resources during the entrepreneurial activity. In other words, the more entrepreneurial resources the entrepreneurs gain, the stronger the ability of making full use of entrepreneurial opportunity they are. The more external resources they gain, the stronger the ability they have. The level of being involved in the social relationship of entrepreneurs has a positive effect of controlling entrepreneurial resources and gaining help form network members. Therefore, the entrepreneurs who have more resources from social network are inclined to easily make full use of the entrepreneurial opportunity. The theory is obviously expressed on advanced technology industry. For example, In April,1976, Steve Jobs started his venture. In that year, Jobs and his good friend Stephen Gay Wozniak have the same hobby for computers. All of Jobs networks is about computer. So he and his friend sold their treasures and started to open the Apple Company. Jobs took the advantage of the opportunity and made a good story in the entrepreneurial process. Because the technology is difficult to get from external public market, and has a heavily dependent on technology provider. The network including the relationship between technology provider and entrepreneurs becomes more and more important in entrepreneurship.#p#分页标题#e# 2. The influence of network and social capital on financing an Entrepreneurial Venture Financing an entrepreneurial Venture plays a significant part in telling the successful degree of entrepreneurship. Entrepreneurial fiancé decides the entrepreneurial development. (Aldrich and Zimmer, 1986) In order to bring in more money for entrepreneurial action, financing an entrepreneurial venture becomes more and more important. The methods to finance an entrepreneurial venture incorporate bank load, venture investment, private capital, mortgage financing and finance lease. However, in the process of financing an entrepreneurial venture, the main financing resource is from the social networks of entrepreneurs. Yuli Zhang and Ju Yang discover that the financing channels of successful entrepreneurs are inclined to choose to bring finance resources through network. (Zhang and Yang, 2003) According to Global Entrepreneurship Monitor report shows: 49.4% of the external finance resources come from family members, 26.4% of the finance resources come form friends and friendly neighborhoods, 7.9% of the finance resources derive from colleges, and only 6.9% comes form strangers. Shame and Gable make a research about the relationship between investors and entrepreneurs. In their research, it shows that entrepreneurs who have a closely social relationship are more easily to make reasonable on financing decision.(Shame and Gable,2003). They also contend that investors are easily inclined to invest entrepreneurs who have a direct and closer relationship with them. If the entrepreneurial organization has already built up good relationship with the third party of investors, it seems to be more easily for entrepreneurs to get the external financing resources. For example, Rose, who was the creator of the Barbie Doll, was an owner of Arts Corporation. However, the money to build up the corporation not just from she and her husband’s own treasure, most of them are from her families and good friends. The reason of her family and friends were willing to offer finance resources for Rose was because they know Rose very deeply and believed her could make money. The case shows that entrepreneurs’ social network is very important for entrepreneurs. And it is shows in below two aspects. 2.1. The influence of social capital and network on financing channel Effective expanding the financing channel is hot topic for government policy and research study. More and more entrepreneurial activity shows that the social capital of entrepreneurs is the most important factor during the entrepreneurial activity. (Hills, Lumpkin and Singh, 2003) In other words, the social capital of entrepreneurs decisively influences the entrepreneurial financing resources. The content of social network decisively influences the entrepreneurs’ direction to seek for help. When entrepreneurs have the strongest relative network, they are inclined to seek for help from relatives. Just like Rose case, she brought in mostly finance resources from her families and good friends. When entrepreneurs have perfect networks including financing organization and other investment organizations, they are more inclined to seek for help from those organizations rather than relatives. Because of the lack of credit brand degree, entrepreneurs are always getting trap in having difficulty in bringing in financing resources from the financing organizations. Even in America, only .0.1% of entrepreneurs could raise capital in the beginning of entrepreneurial process. (Yan and Yang, 2005) Most of the entrepreneurs are more inclined to seek for help from families, friends, and acquaintances after using up all their own money. In other works, the social network of entrepreneurs becomes the main resources to raise capital to start and develop entrepreneurial activity. One search shows that 50% of the finance resource of entrepreneurs come from families, and then 39% of finance resource of entrepreneurs come from social network based on relationships, For entrepreneurs, it is more easily to persuade social network members into investing than to persuade strangers. During the process of raising capital, even if entrepreneurs fail to raise capital from the social network, they could also dig other potential investors from the social network members’ acquaintances. The reason is that the entrepreneur is inclined to be trusted by potential investors through the social network members’ recommendation. 2.2. The influence of Social capital and network on financing timetable Under the sophisticated and complex economic environment, entrepreneurial opportunity is fleeting. Therefore, it is very important for entrepreneurs to make full use of entrepreneurial opportunity, and time is a key factor during the process. With the time going, the entrepreneurial opportunity may become entrepreneurial trap. (Kristiansen，2004 ). For example, when computers were very popular around the world, many entrepreneurs are more likely to take ventures. However, when there are two computer companies, there are too supplying than demanding. And most of companies which followed the trend did not make money. In terms of time, financing organization and venture investors is not the best choice for entrepreneurs attributing to labor-intensive procedure. When they finish assessment of entrepreneurial activity, the opportunity has already flies. Therefore, entrepreneurs are more likely to choose the financing support from relative relationships with simple procedures. Social capital not only includes social network, but also includes mutual trust among network members.( Bruderl and Presidorfer ,1998) Trust is an encouragement and power for entrepreneurs, and is also a favorable resources that worthy to be treated as treasures. Trust among social network could help entrepreneurs easier to get the finance support form network members. On the one hand, it could help entrepreneurs to raise capital which is difficult to get from big finance organization; on the other hand, it helps entrepreneurs to make the financing process simpler and easier. It actually helps entrepreneurs save a lot of time to collect enough money to develop company soon in a limit time. 3. The influence of social network and social capital on entrepreneurial resources. Entrepreneurial resources are involved in labor resources, technique resources, financing resources, information resources, relationship resources, and network resources and so on. When entrepreneurs consider starting venture, they should take entrepreneurial resources into consideration. . Besides, entrepreneurs should also have the capacity of gaining those resources in right way. Relationship network resource is the most important resources of the entrepreneurial resources. Relationship network is not only a kind of entrepreneurial resources; it is also a kind of catalyst for other entrepreneurial resources. It is obvious that entrepreneur’s with a rich relationship network owns more entrepreneurial resources and make better use of those resources For example, in the 1970s, technology developed very quickly. It was more obvious in micro electronic technique. Renewal cycle of products is highly reduced. Computer market became the hottest market in the age. More and more companies around the world would like to join the field in which have high risks but high profit. IBM, as a multinational computer organization was facing an embarrassing situation attributing to appearing many competitors. So how to allocate the entrepreneurial resources became the core for IBM to solve the problem. IBM had to take ventures and started to change the company system. It divided its share to almost every staff in the company. And it really made a good result. IBM brought in many entrepreneurial resources and put this money into technology research and development. At that time, most of companies face the risk of broking down, but IBM was take full use of its own resources and still made profit. 3.1. The resources of social capital on gaining entrepreneurial resources Some resources and capacity are born with entrepreneurs, but others are from markets.(Coase,1988). In other words, entrepreneurs are not able to own all the resources, so they have to gain resources they lack from different channels. . For example, in China, Network is an important method of social resources allocation. Nan Lin contends that the social resources, which are inserted in network, like treasure, privileges, reputations, could gain from others through social network. Furthermore, In a reasonable social-level structural system, if the weak ties play the leading role in networks, the entrepreneurs will be more benefit from the benefit.(Nan Lin,1981).Social net work plays a significant part for entrepreneurs gaining social resources. Different social network could offer different entrepreneurial resources. An entrepreneurial ship is made up of labor resources, technique resources, finance resources and information resources. (Birley and Norburn, 1985) All of the above resources are not only gaining from the individuals, they have to be brought in by social networks. An entrepreneur is not enough for a company; it also includes finance management department, sales department, market development department and other necessary department. Only in this way could the enterprise move smoothly. The social network of entrepreneurs could help him or her discover the people with same interest. In other words, network brings in the right human resources for entrepreneurs. In China, technology limit is a key obstacle for the small businesses. However, entrepreneurs of China could gain the technology or technique support through network. All of the resources including finance resources are important to entrepreneurs; however, the social network is the most key resources. Social network is not only the basis stone of the entrepreneurs, but also the stimulation of bringing in other resources. Personal social relationships are a push to social network resources. However, social network for entrepreneurs is an important resource with a wide application range and development value. It includes special information, emotions, trust and other spirit in the whole life of entrepreneurs.#p#分页标题#e# The network for entrepreneurs is not only for discovering entrepreneurial opportunity and testing entrepreneurships, but also important for gaining resource of new venture capital. The theory is obviously proved in China where marketing economy is not developed very well. Social resource, which is inserted in social network, like treasure, personal right and reputations, all of these resources are not born with entrepreneurs, however, they could be gained from other people of social network. 3.2. How the social capital influence the Utilization rate of entrepreneurial resources. The capacity of gaining entrepreneurial resources decide the potential development of entrepreneurs, however, the capacity of improving the utilization rate of entrepreneurial resources decides the resources allocation effects of entrepreneurs. The utilization of entrepreneurial resources divide into two parts: one is taking the different entrepreneurship orientations, and the other is using the entrepreneurial resources into different vocations. In terms of entrepreneurships orientation, if the entrepreneur is in the network with more international resources, he or she would be inclined to build international enterprise. And if the entrepreneur could get more local resource from the network, he or she is more likely to build a local company instead of international company. (Burt, 2000) In terms of entrepreneurial resources utilization, entrepreneurs owing different social network might be inline to different fields. Generally speaking, entrepreneurs with weak relationship are inclined to competitive field, and entrepreneurs with strong relationships are inclined to build monopoly enterprise. 4. The suggestions to improve entrepreneurial action In contrast to economic capital, social economic is existed among human relationships. It is an invisible public production. Entrepreneurs could improve their entrepreneurial result through optimizing the social capital. (Chell and Baines ,1998 ) The reason is that the social capital helps to drive entrepreneurs’ optimal resource allocation. In the first part, building up a favorable environment for social capital is the basis stone to improve entrepreneurial action. Government policy and government system have a strongly effect on social capital with two sides. On one side, the policy and system may make the corporation between individuals more easily; on the other hand, it may make the situation more difficult. Therefore, building up a suitable entrepreneurial environment is an important part of optimizing the social capital. Furthermore, governments should improve the public voice environment to help entrepreneurs to create the external environment. Therefore, trust mechanism has been build and the social trust level has been improved. So that entrepreneurs could have a favorable external environment. In the second part, paying high attention on social capital investment plays a significant part in improving successful degree of entrepreneurs. Entrepreneurs should alert to focus on social capital investment. On the one hand, entrepreneurs should pay high attention on building up all kind of relationships through network. Strengthening the network technique and network base installation plays a significant part in building up a bridge between organizations and external environment. Besides, Entrepreneurs should also enhance the construction level of social network to stimulate supplier relationship, customer relationship and government relationships for entrepreneurs. Besides, entrepreneurs should also pay attention to accumulating social capital. In this way, entrepreneurs could promote trust and corporation among organization members based on mutual communication and mutual trust. Thus social capital could help to encourage entrepreneurs to innovate and improve the entrepreneurial result through improving social capital supervisory. In the process of improving social capital investment, the last but not least for entrepreneurs to note is that choosing the right social capital investment. The reason is that social capital is in the whole social network where individuals owning much more social resources than entrepreneurs. Thus, choosing the right social network with right and suitable resources could help entrepreneurs to improve their entrepreneurial performance. In the third part, fostering a enterprise culture of safety and trusting do good to entrepreneurs. In this way, through the integration of the human capital by the social capital, the firm can form the endogenous idiosyncrasy and keep the permanence competitive ability. Endogenous social capital’ s cost is much less than social capital from social network and could help broaden the effect of social network.( Christensen,1990 ) Last but not least, reinforcing the ability of resource acquisition and environment adaption could help entrepreneurs take advantage of social network. Entrepreneurs, who own the two above ability, bring in the necessary and useful resources from the social network. Therefore, entrepreneurs could make the most reasonable decision according to correct judgment, quick responsiveness and high innovation ability. The function of social capital is to shown for the entrepreneurs through bringing in more external resources and owning better environment adaption. Conclusion: Social capital and network plays a key part in entrepreneurial ship. Firstly, Network and social capital not only could help entrepreneurs discover the entrepreneurial opportunity, but also stimulate entrepreneurs to have entrepreneurial assessment and make use of entrepreneurial opportunity through offering and expanding key information and important resources. Secondly, the social capital of entrepreneurs decisively influences the entrepreneurial financing resources. The content of social network decisively influences the entrepreneurs’ direction to seek for help. When entrepreneurs have the strongest relative network, they are inclined to seek for help from relatives. When entrepreneurs have a perfect network including financing organization and other investment organizations, they are more inclined to seek for help from those organizations rather than relatives. Last but not least, social net work and social capital plays an important part in bringing entrepreneurial resources and making full use of entrepreneurial resources. Because of the important function of network and social capital, we should improve the performance of them. In the first part, building up a favorable environment for social capital is the basis stone to improve entrepreneurial action. In the second part, paying high attention on social capital investment plays a significant part in improving successful degree of entrepreneurs. In the third part, fostering a enterprise culture of safety and trusting do good to entrepreneurs. Last but not least, reinforcing the ability of resource acquisition and environment adaption could help entrepreneurs take advantage of social network. 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