Social Capital or Waste of Time ? Social Networks, Social Capital and ‘Unconventional Alliances’ among Danish Rural Entrepreneurs

Abstract

Social networks are often expected to easily transform into social capital in the form of network resources that can be converted into monetary income. Also many private entrepreneurs participate in a multitude of network activities in the hope of increasing their incomes. They should however be aware of the opportunity costs of these activities, which in the long run may turn out to be sheer waste of time. Drawing on interviews with the owners of three small enterprises in rural Denmark 2008-2012 and within the theoretical framework of a Bourdieu’s theory of the convertibility of tangible and intangible forms of capital, we want to question the widespread belief that networking per se leads to economic gains. Our inductive findings suggest that successful entrepreneurs with what Bourdieu has termed a ‘feel for the game’ – including the ability to ‘effectuate’ their networks – draw on a pool of bonding and bridging social capital. From this reservoir, they select and capitalize their networks at the right time and place. Our data shows that one particular variant of bridging social capital – innovative cooperation between entrepreneurs and partners unlike each other and with complementary skills and roles, termed ‘unconventional alliances’ – can be successfully capitalized, not least in rural areas where SME clusters are scarce. Hence, private entrepreneurs, business development planners and politicians should have in mind that ‘networking’ may involve exceedingly high opportunity costs. Only when networking is needs driven and carefully conceived and orchestrated, it may lead to positive economic outcomes.