Title: Small Worlds, Infinite Possibilities? How Social Networks Affect Entrepreneurial Team Formation and Search
Authors: Howard E. Aldrich and Phillip H. Kim
Source: http://onlinelibrary.wiley.com/doi/10.1002/sej.8/abstract

In this article social networks are explored in depth as a useful tool in the creation of entrepreneurial teams. Starting off with the explanation of the simple formation of a team, using first a rational process of member selection based on the skills of individuals and their capabilities to grow and change with the business. The second step is the social psychological model that emphasizes the need for team member to function properly. This leads to three network model structures that are employed by entrepreneurs in order to maneuver for opportunities and resources. These three models are random, small world, and scale free network.

Social networking is considered highly important to either the success or failure of many entrepreneurs. A random network is what is used by many researchers use in order to conduct test of statistical significance and allow for patterns to arise. The structure of these are characterized by an average path between nodes (nascent entrepreneurs) in random graphs is short because of indirect ties and the sense that people's location nor wealth effects their access to others. In a random network everyone has full access and entrepreneurs are able to go about things and succeed as easily as possible.

Small world networks are exactly what they sound like, connections formed in smaller clusters like neighborhoods, friendship circles, or workplaces. These restrict a network because of their smaller nature. There are less people to interact with therefore less connection to make which is what sets this networking apart from random networking. This type of social network creates something called homophily which is the principle that a contract with similar people occurs at a higher rate than among dissimilar people. Since a small world network creates such a close knit community outsiders have a very difficult time getting in which only disrupts more connections from being made.

Scale free networks work off of a power law in the distribution of nodes and their ties. In this type of social network nodes can have a large amount of connections, most of which are higher up more influential connections. These networks are formed by nodes joining together and in a way feeding off of each others networks in order to grow their own. A rather ingenious sort of idea really. These connections are always well thought out and calculated precisely, never randomly. Of the three networks discussed in this paper the scale free network is the least vulnerable to random failures due to such a large and diverse network.

The paper also explains the further importance of social networking in business. They also explain the disadvantages that many people are in if they are not chosen to be in a higher up circle. When you are not properly connected often times your profession can suffer since you have less access to various opportunities.