How do social networks contribute to the entrepreneurial success of artists?

Author

Liselotte van der Lugt

11401451

Supervisor

Ileana de Bresser

Second reader

Wietze van der Aa

Submission date

June 19, 2017

How do social networks

contribute to the

entrepreneurial success of

artists?

This document is written by Student Liselotte van der Lugt who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

Acknowledgements

I would like to thank the persons that have been extremely important for this research. First of all, the designers: because of their open and warm attitude, the interviews were really interesting and insightful. Next to that, I would like to thank Anke Akerboom and Stefanie Verhoef from Vakschool

Edelsmeden, who supported me with insights and information about the jewelry industry and encouraged me throughout the whole process. I am very grateful that all these well-regarded people shared their valuable time with me. But, most importantly, I would like to thank dr. Ileana Maris de Bresser. Without her supervision and support this thesis would not have existed. It is thanks to her

very accurate and specific feedback and encouragement that this research is in the best possible outcome.

Abstract

1.Introduction

2. Literature review

2.1. Social capital of an entrepreneur

2.2. Characteristics of entrepreneurial networks

2.2.1. Content of relationships

2.2.2. Governance of relationships

2.2.3. Network structure

2.2.4. Tie strength

2.2.4.1. Strong versus weak ties

2.3. Explained: why social networks contribute to entrepreneurial success

3. Conceptual Model

4. Methods

4.1. Research design - A qualitative case study

4.2. Research method

4.2.1. Semi-structured interviews

4.2.2. Observations

4.3. Operationalization of concepts

4.4. Data analysis

4.5. Quality of the research

5. Empirical findings

5.1. Artists’ perceptions of entrepreneurial success

5.2. Overview of the network

5.3. Benefits of social networks which contribute to success

5.4. Mechanisms in networks that influence the exchange of benefits

5.4.1. Challenges that motivate artists to turn to the network

5.4.2. Trust within the social network

Trust is characterized in three different ways: the assumed capability of the other

person, trust in the own capability, and lack of trust due to competition.

5.4.3. Additionally identified mechanisms

6. Discussion

6.1. The research question answered

6.2. Findings in relation with the literature

6.2.1. Artists’ perceptions of entrepreneurial success

6.2.2. Overview of the network

6.2.3 Benefits of social networks which contribute to success

6.2.5 Additionally identified mechanisms

7. Theoretical and practical contributions

8. Limitations and recommendations for further research

9. Conclusion

References

Appendix 1 - Interviewguide

Appendix 2 - Transcripts

Abstract

This study examines how certain benefits and mechanisms within social networks contribute

to the success of artists. The study builds on entrepreneurship literature in combination with

social network theories. It contributes to our understanding about means by which artists can

survive in the competitive environment of the creative industries. Data was collected through

a sample of ten artists and one expert from the jewelry industry. Building upon the strong and

weak tie hypothesis from Granovetter (1973), the findings indicate that the terms ‘expanding

ties’ and ‘existing ties’ would be more appropriate to characterize the network. Moreover, the

findings indicate important benefits of the network. The network provides emotional support,

cost reduction and most importantly it leads to cheap and time constraint-free brand

recognition, which is essential for the survival of artists. Furthermore, the findings indicate

that a lack of trust retains exchange of resources between actors within the network.

1.Introduction

Entrepreneurship is not for everyone. It is about taking big risks with uncertain outcomes. To

write a success story, entrepreneurs have to exploit all means that are available to them. For

this reason, social capital is perceived as one of the most important resource in the possession

of an entrepreneur (Hoang & Antoncic, 2003). Although risk characterizes entrepreneurship,

this risk seems even more relevant for artists that maneuver as an entrepreneur in the creative

industries. The creative industries are typically characterized with enormous oversupply.

Together with the non-utilitarian nature of creative goods, this increases the risk of surviving

in the creative industries (Caves, 2000). Not only face artists industry-related uncertainty,

they often lack business skills and do not know how to build a sustainable business around

their work. In fact, many artists understand their creativity as an art that should not be mixed

with business (Parrish, 2005). For them, enhancing in business practices would mean

compromising their artistic integrity (Fillis, 2004). Still, in order to survive as an artist, one

should act as an entrepreneur and build a sustainable business around his creativity. Austen

Woodward - Minister for Creative Industries and Tourism - argues that creative

entrepreneurs need to develop business skills and a strong entrepreneurial base in order to

survive (Parrish, 2005). Despite the apparent practical importance of the subject, literature on

the relationship between the success of artists and entrepreneurship remains scarce (Chen,

Chang and Lee, 2015). Still, social capital seems to be important in the creative industries

too. Namely, social networks help to overcome the high failure rates in the creative industry

through mediating effects of information accessibility and resource availability (Chen et al.,

2015). For that reason, the link between social networks and artistic success is plausible.

Within entrepreneurship literature, there have been a number of studies illustrating the

significance of social capital in the creation of new business (for example Burt, 2009; Aldrich

& Zimmer, 1987; Jenssen and Koenig, 2000). The results of those studies emphasize on the

fact that entrepreneurial opportunities are exploited by providing timely, relevant and quality

information (Hoang and Antoncic, 2003) together with other resources to the entrepreneur

(Greve and Salaff, 2003). For example, Bruderl and Preisendorfer (1998) indicate that

entrepreneurs who can refer to a broad and diverse network are more likely to be successful.

In particular, they find that close family members and friends are critical in explaining

survival and financial performance of a venture. Likewise, Davidsson & Honig (2003) find

that first sales and profitability of a venture is influenced by the social capital of the

entrepreneur. Elfring and Hulsink (2003) and Stam et al., (2014) also prove that networks

increase the probability of new ventures.

Nonetheless, a gap in literature exists in terms of methods used. Almost all studies in the area

of networks and entrepreneurship have a quantitative nature and do not more than proving the

existence of the relationship between social networks and success. Yet, social networks are

social phenomena in the social world ‘which can not be understood by experiments’ (Gill and

Johnson, 2010, p. 97). Despite that, very limited studies have used qualitative data to

understand how actors maneuver within networks and how resources are allocated. While

there is a strong request for more qualitative work within entrepreneurship-network research

(see for example Hoang and Antoncic, 2003; Curran et al., 1996; Harland, 1995; in Jack,

2005), so far only Jack (2005) has conducted a qualitative study which aimed to understand

the role of ties in networks and how they are activated for business activity. Therefore, I

argue that a qualitative research is needed to identify how certain mechanisms influence

benefits that social networks provide. Additionally, until now research has focused on only

one aspect of the network, either ties or resources, in relation to success. As a consequence, a

gap in our knowledge about how social networks really function remains. No integrated

model exists of how ties, resources and mechanisms are interrelated. I argue that in order to

understand how social networks benefit entrepreneurs, studying either resources or structural

aspects of networks is not sufficient. To clarify this, the current study provides a model in

which the separate concepts are integrated.

The context of this research covers another gap that remains in literature. So far, only limited

attention has been paid to how information accessibility and resource availability affect

entrepreneurial success in the creative industry (Chen et al., 2014). Still, the restricted results

show that creative entrepreneurs benefit from engaging with network specialists (Konrad,

2013). Next to that, it is acknowledged that strong networks within the art sector are

important for the success of artists (Atlas et al.., 2003) and that trust is important in those

relationships (Klerk and Saayman, 2012). One possible explanation for the fact that social

capital of artists is not examined could be that similarities between artists and entrepreneurs

are often not recognized. Whereas entrepreneurs look for opportunities in the market and find

a product to fill this gap, artists create a product and tend to find a market for this. I argue that

since an artist needs to build a business around creativity, artists should be approached from

an entrepreneurial perspective.

Despite the indicated issues, there exists a consensus that networks provide certain benefits in

business outcomes. The aim of this study is to find out how resources that are provided by

different types of ties, contribute to the entrepreneurial success of artists and by which

mechanisms the resource flows are influenced. The central question is: ‘How do social

networks contribute to the entrepreneurial success of artists?’ The first research objective is

to find out what resources artists need to build a sustainable business. The second objective is

to find out how artists interact with other actors in their network to assemble these resources.

The third objective is to understand how artists use the acquired resources to gain competitive

advantage. To achieve this aim, ten succesfull Dutch jewelry designers will be studied as a

case. ‘Surviving’ businesses are perceived as ‘successful’, like Stam (2007) define success.

This is opposite from most entrepreneurship studies: success is generally defined in terms of

new venture growth (Aldrich, Rosen and Woodward, 1987). But, because artistic value and

prestige play an important role in the success of artists (Giuffre, 1999), defining success in

terms of first sales and profit would not be sufficient (Davidsson & Honig, 2003).

This study is both practically and theoretically relevant. The conceptual model integrates

different concepts of networks which were used to be viewed as separate elements.

Combining resources, ties and relational mechanisms provide insights in how the network

contributes to entrepreneurial success. Next to that the research contributes to the existing

theoretical gap of artist-entrepreneurs. Studying the entrepreneurial process of an artist can

provide an interesting extension on entrepreneurship literature. The study is practical relevant

because there seems to be an increasing need for artists to act entrepreneurially. Insights

about how the networks contribute to success add to our knowledge about how an artist can

survive in the competitive environment of the creative industries.

The research is structured as follows. First, in the literature review social capital theories are

analyzed. Next, the conceptual model is described. After that, the used methods are

explained, followed by a description of the data analysis. Subsequent the quality of the

research is discussed. Thereafter, empirical findings are described. Next the discussion of the

findings in relation to the literature is described. Subsequent theoretical and practical

contributions are discussed followed by limitations and recommendations for further

research. The thesis ends with a short conclusion and a final takeaway message.

2. Literature review

2.1. Social capital of an entrepreneur

All entrepreneurs start with three categories of means: who the entrepreneur is, what he

knows and who he knows (Sarasvathy, 2001). As Morrish & Morrish (2011, p.113) posit:

“The entrepreneur begins by taking their situation as given: who they are (their values,

aspirations, and personality); what they know (their strengths such as knowledge, past

experience and skills); and who they know (their network of contacts); then focusing on the

various outcomes they can create with these means”. Especially the last part has gained a lot

of attention in entrepreneurship literature (Davidsson & Honig, 2003; Greve and Salaff,

2003). Ties to other persons enable access to resources that the entrepreneur himself does not

possess (Stam et al., 2014). Entrepreneurs can supplement their own business resources, with

resources from other actors in their social networks (Brudel and Preisendörfer, 1998; Hoang

& Antoncic, 2003). Thus, social networks are a source of social capital with economic and

intangible resources, which are essential in starting and maintaining a new business (Aldrich

and Zimmer, 1987).

This positive relation between social capital and entrepreneurial success has been confirmed

by several quantitative studies. Birley (1986) finds that entrepreneurs rely on their friends to

receive initial investments and for that reason, the network plays a critical role in starting the

venture. Also by Elfring and Hulsink (2003) indicate that having a strong network of friends

and family increases the probability of new venture success, because it provides the needed

support to engage in entrepreneurial activities. Van de Ven et al. (1984) find that the network

of better-performing entrepreneurs was significantly broader and thus involved more

potential customers and professionals in the market niche. In a large survey of 17.000 new

business ventures, Bruderl and Preisendorfer (1998) found that support from the network

increases the probability of growth and the survival of new enterprises. Although Bruderl and

Preisendorfer (1998) combined surveys and interviews, they asked entrepreneurs about the

past for which their results might suffer from a bias due to memory problems or

rationalization. Moreover, while their results are based upon a large sample, the study only

includes surviving companies. Therefore, the study may suffer from a selection bias. To

overcome this selection bias, Davidsson & Honig (2003) also included failed entrepreneurial

efforts. Still, their results confirm the findings of Bruderl and Preisendorfer (1998). The

hypothesis from Davidsson & Honig (2003) was built upon the assumption that every starting

entrepreneur possesses at least two assets: who he knows and what he knows. Interestingly,

as opposed to Sarasvathy (2001), they did not expect that personal attributes of the

entrepreneur are meaningful.

Although it is convincing that networks improve the success rate for entrepreneurs, some

empirical studies have found no or a negative relation between network variables and

entrepreneurial success. For instance, Batjargal (2003) finds no direct relation between

embeddedness in the network and firm performance. Uzzi (1996) indicates that while

embeddedness of an entrepreneur initially increases economic outcomes, over-embeddedness

has a negative effect on economic outcomes because the entrepreneur becomes blind and

obtains a tunnel vision. On the contrary, Jones, Hesterly & Borgatti (1997) argue that the

degree of embeddedness of a network supports the exchange of resources because dens

networks reinforce of trust building between partners. Furthermore, while Aldrich & Zimmer

(1987) emphasize the importance of entrepreneurial social networks, their longitudinal study

did not find significant effects of social networks on the business profitability. Interestingly,

this was confirmed by a study of entrepreneurial networks in the wine industry carried out by

Brown and Butler (1995). They found that strong stakeholder-networks were not associated

with higher growth or profitability. Another finding from Brown and Butler (1995) indicates

a negative relation between investment in Public Relations and growth for small wineries.

Their guess is that the valuable time of these entrepreneurs was better spent on the technical

aspects of winery than on large-scale promotion actions. The above-described studies

consider networks as the independent variable that influence success. However, this was

criticized by Bates (1994) who finds that extensive use of networks is typical for less

profitable and more failure-prone enterprises. Contrary, although this is what Bruderl and

Preisendorfer (1998) expect in the ‘compensation hypothesis’, they did not find empirical

support to prove this.

Altogether, social networks seem to contribute to entrepreneurial success. However, the way

in which social networks bring this contribution to success as well as they are operationalized

and measured vary. Hoang & Antoncic (2003) argue that three key elements in models

explain the impact of networks on entrepreneurial outcomes: the content of relationships, the

governance mechanisms in relationships and the network structure. By means of these

elements, the following section will discuss the characteristics of social networks.

2.2. Characteristics of entrepreneurial networks

2.2.1. Content of relationships

The first element that explains the impact of networks on entrepreneurial outcomes is the

content of relationships. In this regard, relationships are viewed as a medium through which

actors gain access to a variety of resources that are held by other actors. The most important

benefit for entrepreneurial processes is the access to information and advice (Hoang and

Antoncic, 2003). Indeed, several studies indicate that entrepreneurs consistently use networks

to gather information, recognize entrepreneurial opportunities and to get ideas (Birley, 1986;

Singh and Mitchell., 1996; Hoang and Young, 2003). Moreover, the results of the survey

from Konrad (2013) provide evidence that engaging with network specialists increases the

prominence of the enterprise which in turn improves the chance of success. However, it

should be noted that this relation was only significant in an environment of low competition.

Therefore it is questionable whether the results, conducted in a low competitive German

environment, are transferable towards the Dutch art sector, which is characterized by high

competition (Caves, 2000). Relationships also provide access to emotional support, which is

needed to remain in business and face entrepreneurial risk-taking threats (Bruderl and

Preisendorfer, 1998). In line with this, Greve and Salaff (2003) indicate that emotional

support is the most important benefit of the network because entrepreneurs seek for

justification for certain choices that they make.

Next to information and emotional support, several studies have emphasized on the

availability of capital as benefit of the network (Bates, 1994). Birley (1986) also indicates

that entrepreneurs often seek for equipment and money in the network. Also, research from

Jenssen & Koenig (2002) indicates that for this reason, having a lot of friends and

acquaintances increases potential investments for a startup.

Additionally, relationships can have a reputational content (Hoang and Antoncic, 2003). To

decrease the perceived risks, entrepreneurs seek legitimacy by associating with well-regarded

individuals. By associating with experienced and successful organizations and persons,

positive perceptions may lead to more beneficial resource exchanges. This is confirmed by

Stuart, Hoang & Hybels (1999), who found that young biotechnology firms with strong

alliances, were able to go public faster and with a higher value. To sum up, the most

important resources within networks are emotional support, financial support,

information/advice and reputational content of relationships.

2.2.2. Governance of relationships

Next to the content of relationships, the governance of relationships is an important

characteristic of networks. These governances are underlying mechanisms in the network that

influence the transfer of certain resources and benefits. The most important mechanism in

networks is trust that coordinates network exchanges (Hoang and Antoncic, 2003). Mutual

trust is based on the belief that the other actor will fulfill the obligation of an exchange

(Pruitt, 2013) and it allows both parties to assume that the other person will take actions that

are both predictable and acceptable (Uzzi, 1996; Powell, 1996). If there is such form trust

between two parties, the quality of resource flows improves because transaction costs like

monitoring and renegotiating are reduced (Jones et al., 1997). For that reason, trust is

particularly important when a complex task within strong time constraint is faced (Jones et

al., 1997). This is in line with arguments from Elfring and Hulsink (2003) who argue that

when an entrepreneur embarks on something innovative, he has to secure legitimacy.

According to their framework, this legitimacy is gained by social networks and therefore

networks contribute to the success of startups. The importance of trust and strong

relationships in social networks was also illustrated by Cross, Parker, Prusak & Borgatti

(2001). Their results indicate that the absence of trust in relationships result in ineffective

knowledge sharing. Klerk and Saayman (2012) findings confirm the importance of trust in

relationships for information sharing and networking among festival entrepreneurs. Their

survey was based on a questionnaire study among 137 creative entrepreneurs, which makes

this results interesting for this thesis.

2.2.3. Network structure

The third characteristic of social networks is the network structure. It is believed that the

position within a network influences resource flows and thus entrepreneurial outcomes.

Therefore, within entrepreneurship network literature the structure is the most common

characteristic to measure the relation between social networks and entrepreneurial success.

The network structure is defined as "the pattern of direct and indirect ties between actors”.

(Hoang & Antoncic, 2003, p166). Authors have operationalized network structure in different

ways. Whereas some have used network size to measure the network structure (Aldrich and

Reese, 1994; Bruderl and Preisendorfer, 1998; Raz and Gloor, 2007), others operationalized

the construct by assessing network density, embeddedness or centrality of ties (Burt and

Raider, 2000; Baum, Calabrese and Silverman., 2000).

Network size, defined as the extent to which resources can be accessed by the entrepreneur

(Aldrich and Reese, 1994), positively influences entrepreneurial success (Aldrich, Rosen and

Woodward, 1987, Aldrich and Reese, 1994, Bruderl and Preisendorfer, 1998). More recent

research indicates that the size of a manager’s network positively correlates with the survival

of startups, especially in the case of an uncertain environment (Raz and Gloor, 2007).

Douloureux (2004) argues that broadening the size of a social network is essential for

entrepreneurial ventures because it facilitates businesses to become part of a larger

knowledge network. Finally, several researchers have found that network size influences the

financial performance (Hansen, 1995) and sales growth of a company (Lechner, Dowling and

Welpe., 2006). Another way to indicate network structure is density. Network density is also

referred to as the heterogeneity of the network contacts (Baum et al., 2000). The denser an

entrepreneur’s network is, the less likely it is that new resources will enter the network (Burt

and Raider, 2000).

2.2.4. Tie strength

Although centrality, density and embeddedness are solid operationalizations to measure the

network structure in quantitative methods, the concept of tie strength seems more relevant to

characterize a social network in a qualitative study. Tie strength provides information about

the nature of the relation. Strong ties are characterized by high trust and long-term

relationships between the attached actors, who are often close friends and family (Elfring &

Hulsink, 2003). Weak ties are loose relations characterized with irregular contact, frequently

represented by ‘friends of friends’ (Boissevain, 1974). According to Marsden and Campbell

(1984), tie strength has gained the most research attention in understanding the

entrepreneurial network. Not only in entrepreneurial networks, but also in social network

theories, the strength of ties is often used to understand and characterize a social network (see

for example, Aldrich and Zimmer, 1987; Marsden and Campbell, 1984 in Jack). Granovetter

(1973, p.1361) defines the strength of a tie as a combination of: ‘1) the amount of time 2)

emotional intensity 3) the intimacy (mutual confiding) and 3) reciprocal services which

characterize the tie’. What results is a linear scale of tie strength, variating in strong, weak or

absent ties, in the form of a continuum. Krackhardt (1990) argues that the definition of tie

strength as given by Granovetter is problematic because of the subjectivity of the criteria.

Namely, only the aspect ‘amount of time’ is truly objective, while emotional intensity and

intimacy are subjective criteria. Furthermore, Krackhardt (1990) asked: how do we know

where we are on the continuum of strength? On what point on the continuum can a tie be

defined as strong or weak? Although the ideas of Granovetter have been widely drawn on to

explain the structure of networks, there seems to be a disagreement on real value and

significance of these different ties (Jack, 2005).

Despite the limitations, the weak tie hypothesis of Granovetter (1973) forms the basis of

many social network theories. Based on mathematics and probability, Granovetter argues that

if one person has two friends (strong ties), it is likely that this two friends are also linked to

each other, either through a weak or strong tie. The stronger the initial tie between the a

person and his friends, the more likely it is that the two newly connected friends are also

friends with each other (strong ties). According to Granovetter (1973) the absence of this tie

is not possible. Based upon this an interesting debate has emerged on the benefits of weak

and strong ties and hence their impact on entrepreneurial success. The next section will

elaborate on this discussion and thereafter it will be discussed how this characteristics can

contribute to entrepreneurial success.

2.2.4.1. Strong versus weak ties

Both Granovetter (1973) and Elfring & Hulsink (2003) argue that a social network should

consist of both weak and strong ties as a condition to function well. At the same time

tie-specific benefits are discussed in literature. Bruderl and Preisendorfer (1998) found in a

large-scale survey that strong ties were more important in explaining the success of a firm, as

measured by firm survival. Davidsson & Honig (2003) also found that encouragement by

friends and family was highly important for the success within the first 18 months. In line

with this, Aldrich & Zimmer (1987) prove with a survey of 580 respondents that a strong

network of family and friends are highly important for the business success and turnovers.

However, in their analysis and conceptual model, no attention was paid to the potential role

of weak ties and the interaction of weak and strong ties.

One important benefit of strong ties is that they provide access to motivational resources and

thus provide emotional support (Jenssen and Koenig, 2002). Lesser (2000) confirms this by

mentioning that justification of entrepreneurial choices is rather sought by close friends than

by strangers. Another benefit of strong ties is indicated by Granovetter (1973). He finds that

strong ties have a ‘greater motivation to be of assistance and are typically more easily

available’ (Granovetter, 1973, p.113). Besides, Granovetter (1973) argues that strong ties are

beneficial for the speed and credibility of information flow. Cross, Parker, Prusak & Borgatti

(2001) confirm this by proving that critical information is only obtained when the other

person is willing to engage in solving the problem, rather than dumping the information.

Birley (1986) and Aldrich & Zimmer (1987) also find that entrepreneurs mainly turn to

friends and family to gather advice and information. In particular Chen et al., (2015) argue

that the amount of family ties has a positive effect on information and resource availability

because the amount of family members increases trustworthy information in the network.

These arguments are opposed to findings of Jenssen & Koenig (2002) that indicate that

information is primarily provided by weak ties. They studied the relation between social ties

and different resources. However, their arguments should be interpreted carefully because of

the small number of respondents. Also, the methodology consists of two drawbacks: next to

the fact that it is not defined what is perceived as successful, the unit of analysis in the survey

concern successful and unsuccessful entrepreneurs while they analyse ‘startup success’. In

this, they neglect the fact that this is not necessarily the same unit of analysis. Still, Brown &

Butler (1995), who studied networks in the creative sector, provide support for the

importance of weak ties in the provision of information. They argue that rather than turning

to friends, entrepreneurs approach suppliers, competitors or customer organizations to gather

information and know-how. However, Konrad (2013) shows that in cultural organizations

contacts with cultural politics, opinion makers and media play a bigger role in the success

than contacts to suppliers and competitors. Altogether, this indicates that information is

provided by both strong and weak ties, but the information from strong ties is more relevant

and helpful for entrepreneurs.

Another benefit of strong ties is proven by Jack (2005). Drawing upon the theoretical

framework from Granovetter (1973), he observed that all the ties that entrepreneurs used,

were strong ties. However, the strong ties did not only provide resources, they were also used

to activate other networks to gather information other resources from a wider context. This is

an interesting observation, given the fact that this bridging function, was a function that

originally was only devoted to weak ties (Jack, 2005).

Also Krackhardt (1990) builds upon the theme of strength of strong ties. His findings indicate

that strong ties are particularly important in situations of change and uncertainty. This finding

is confirmed by Granovetter (1973) who indicates that people are more likely to rely on

strong ties in unsafe situations. Also Krackhardt and Stern (1988) confirm this in their

research.

Besides the benefits of strong ties, advantages of weak ties are also discussed in the literature.

According to Granovetter (1973), an important benefit of weak ties is that they function as

bridges between different social systems that otherwise would be disconnected. Another

benefit of weak ties is the feature of allowing new information to enter into the network

(Elfring & Hulsink, 2003). Namely, weak ties “provide people with access to information

and resources beyond those available in their own circles” (Granovetter, 1973, p.113). For

this reason, information from weak ties is perceived as more diverse and useful than

information from friends and family, that tends to overlap with what the person already

knows. These findings are confirmed by Burt (2009) and Elfring & Hulsink (2003). Also,

Stam et al. (2014) found that particularly weak ties are positively related to the success of

small businesses because they provide new information and people.

Altogether, tie strength seems to have important implications for the resource mobilization

and resource accessibility. The next section will explain how the networks actually support

entrepreneurial success.

2.3.

Explained:

why

social

networks

contribute

to

entrepreneurial success

In this section resources and ties will be brought together and their influence on

entrepreneurial success will be described. Bruderl and Preisendorfer (1998) argue that there

are three mechanisms active in networks that explain why social networks contribute to

entrepreneurial success. These ‘mechanisms’ they refer to, can be perceived as benefits of the

network that support entrepreneurial success. The first benefit is that social relations are

important channels for gaining access to information. Bruderl and Preisendorfer (1998) argue

that information that is accessed through informal networks is more useful, exclusive and

reliable compared to information from formal sources. This is in line with the theory of

Granovetter (1973) that was previously described. Also Jenssen and Koenig (2002) found

that the higher the number of accessible sources of information, motivation and finance that

are available within an entrepreneurs’ network, the higher the chances of an startup's success.

The second benefit of networks according to Bruderl and Preisendorfer (1998), is the access

to customers and suppliers. They argue that a diverse network, is helpful for acquiring these.

Likewise, Uzzi (1996) argues that a balanced network is the key to success. The third way

how social networks enhance success is via the possibility for financial support. Bruderl and

Preisendorfer (1998) state that both relatives and acquaintances are helpful for collecting

money in the startup phase. Indeed, several authors state that most tangible resources like

capital, can be acquired through social networks (Light, 1984; Zimmer and Aldrich and

Zimmer 1987; Bates, 1994 in Hoang and Antoncic, 2003). Furthermore, it is suggested that

entrepreneurs can cut in costs by turning to the personal network, because friends might help

them for a lower price (Dubini and Aldrich, 1991).

3. Conceptual Model

In this thesis a social network perspective is taken, drawing on the strong and weak tie

hypothesis from Granovetter (1973). Although the objectivity of these criteria has been

criticized (Krackhardt, 1990), this perspective is better suitable to address dynamics of

networks, compared to perspectives that look at structural matters of social networks. I build

upon the belief that strong and weak ties provide access to certain resources that can be used

to supplement an artist-entrepreneur's own resources to become more successful.

In studying artist-entrepreneurs, I draw on the work of Bruderl and Preisendorfer (1998) who

identified three benefits of social networks: 1) access to information 2) access to customers &

suppliers and 3) financial support. Especially the benefit access to customers, is expected to

be important for artist-entrepreneurs since they have a low budgets and interest regarding

advertising and PR. In the conceptual model the benefit access to customers is incorporated

as a broader term: brand awareness. It is expected that networks not only provides access to

customers directly, but it is also likely that networks serve as free PR function (Brown and

Butler, 1995). Namely, by providing access to important persons within the creative industry,

that otherwise would not be approachable. For example, if an artist can deploy her network to

arrange that a famous model is present at her launch party, this could increase recognition of

the brand. Brand awareness also incorporates the benefit of the reputational content of

relationships (Hoang and Antoncic, 2003) by networking with well-regarded other artists to

improve the appearance of the artist. Moreover, the benefit of emotional support is added to

the model of Bruderl and Preisendorfer (1998). I expect that being an artist-entrepreneur is

characterized by high risks and uncertainty. For that reason, emotional support from the

network is important to maintain in business at the first place.

Like most quantitative studies, the model of Bruderl and Preisendorfer (1998) is limited in

terms of neglecting the mechanisms in social networks that make a network work. As a

result, the authors jump into the conclusion that the availability of resources is directly related

to entrepreneurial success. However, while I build upon this premise, I expect that

mechanisms in networks affect how and to what extend the benefits access to information,

brand recognition, financial support and emotional support, in fact contribute to the success

of artists. To clarify the misconception in literature, I integrate the benefits and the

mechanisms of the network into one model that explains how social networks contribute to

the success of artists. As described in the literature review, trust is an important mechanism

within networks that facilitates the exchange of resources and thus the benefits that the

network provides. I expect that a relationship that is characterized with trust, facilitates the

exploitation of resources. To illustrate, a trustworthy person is likely to be more willing to

share important information that is sensitive by nature. Vice versa, if the artist trusts the other

person, it is more likely that he or she is planning on using the provided resource. Another

mechanism in networks that is expected to facilitate the resource exchange is the motivation

to turn to the network. Artists might have different reasons to tap into the network, for

example because of their different identity and prior knowledge (Sarasvathy, 2001). To

illustrate, an artist seeking for initial investment, is better served by a network with access to

many financial resources but does not necessarily benefit a network full of information.

To resume, it is expected that social networks of artists benefit to their success because it

offers certain benefits. The exchanges of these benefits are made possible by trust that people

have in each other and are influenced by their motivations. These assumptions are illustrated

in figure 1.

Figure 1: Illustration of the conceptual model

4. Methods

The aim of this study is to understand the dynamics of social networks of artists and how this

contributes to their success. The research question of the thesis is: ‘How do social networks

contribute to the success of jewelry designers?’ This chapter describes the methodology used

to find an answer to this question.

4.1. Research design - A qualitative case study

Until now, theoretical knowledge about the role of networks in supporting business activity

stays limited to broad and descriptive accounts (Jack, 2005). However, to address the

dynamics of a social network, qualitative research is preferable (Lechner et al., 2003). One

must see through the eyes of people that are being studied instead of getting generalized

results from a sample. Because a quantitative approach can not take into account the context

and processes of networks, a qualitative approach is taken. In this study a single case study

with embedded units is used. The case of social networks of jewelry designers in Amsterdam

is representative for artists that succeeded in building a surviving business around their

creativity. In this case, the embedded units are individual designers and their social networks.

Multiple units add significant opportunities for extensive analysis, increasing the insights of

the single cases (Yin, 2009). Moreover, it increases the generalisability of the data collection

process (Yin, 2009). The network activities of ten jewelry designers are studied, with the

dynamics of social ties as unit of analysis. It will be studied how the mechanisms trust and

motivation influence the exchange of benefits.

The cases were selected using purposive sampling. This is based on the assumption that the

investigator wants to discover, understand and gain in-depth insights. Therefore she must

select a sample from which the most can be learned (Merriam, 2002). According to Patton

(1990), this kind of sampling has logic and provides rich information. After approaching

designers that were listed in the Vogue Magazine, only one person agreed to participate.

Therefore, the personal network of the researcher was allocated to select the units based on

the following criteria. The participant is a 1) successful 2) jewelry designer 3) making her

own designs and runs the business 4) and is self-employed. Because definitions of the success

of artists in the literature vary, this study defines success in terms of survival. According to

Stam (2007), survival shows that an enterprise is able to continue in business despite the

competition of others. Also Cowling (2006) argues that survival can be associated with the

first signs of success. Eventually, out of the twenty-four qualified designers that were

contacted by e-mail, ten designers agreed to participate to the research.

4.2. Research method

4.2.1. Semi-structured interviews

Interviews are perceived as best suitable to obtain specific and in-depth information due to

the real life setting of it (Yin, 2009). It allows the researcher to ask about the designers’

perspective, how they experience their network and how they derive benefits from it. The

semi-structured interview method was used to take into account new ideas that were brought

up by participants. In that way, the data contributes to theory building of the dynamics of the

artists’ social networks in an inductive way. To encourage systematic and comprehensive

data collection, an interview guide was used (attached in Appendix 1). The main topics

covered were the success of artists, benefits of the network and mechanisms that facilitate the

exchange of the benefits. More detailed information about the operationalisation of these

topics is provided below. The interview questions were truly open ended, singular and clear

to ensure the quality of the obtained information. Also suggestions for probing questions

were included to improve the conversation and enrich the collected data.

Altogether, ten interviews were held with the designers, each forty-five minutes. Eight

interviews took place in the workplace of the designers and the remaining two were held over

the phone, due to the preference of the designers. The confidentiality of the research was

made clear at the beginning of the interview and permission for recording and transcribing

was asked. Only one artist preferred to remain anonymous because of her competition,

wherefore she is referred to as X. To prevent data from getting lost and to ensure the

neutrality of the researcher, directly after the interview the recordings were transcribed.

During the whole process, ideas were written down in memos to facilitate later analysis of the

data. The transcripts are displayed in Appendix 2.

Additionally, one extended interview with an industry expert (Stefanie Verhoef) was held to

guarantee the reliability of the research. Stefanie has been in the jewelry industry for twenty

years and educates young designers at Vakschool Edelsmeden. In the semi-structured

interview with the industry expert, the same topics were covered but questions were adjusted

to gather a broader understanding about her perception of the network activities of jewelry

designers.

4.2.2. Observations

Unstructured observations were performed to understand and confirm the data that was

obtained through interviews. It involved observations of spontaneous behaviour of jewelry

designers. Unstructured observations allow the researcher the opportunity to study the

complete situation and might offer additional data, that was is not considered of before. Only

data related to the topics of the interviews (success, benefits of networks and mechanisms

that influence the resource exchange) was taken into account; other data was ignored.

Important remarks and observations regarding these topics were written down in field notes.

The first observations were those of two goldsmith-courses (both 2,5 hours) at Vakschool

Edelsmeden. This context was chosen because several interviewees referred to this particular

course as an important network place. In particular, during these observations it was observed

how resources and benefits were exchanges amongst participants of the course. To achieve

this, the researcher watched how the the designers interacted with each other, who talked to

who and about what topics. Moreover the researcher observed how different types of trust

and motivations that were described in the interviews, came forward in the interaction among

the designers. Informal conversations allowed the researcher to understand certain actions,

for example by asking why an artist turned to a particular person when she asked for help.

Additionally, the researcher had the opportunity engage in participant observation, working

six days for one of the designers: Fleur Caroline. During the observations, the same topics

described above, were covered. More specifically, the researcher wrote down all the notable

remarks that Fleur Caroline made about persons from her social network. Among others, to

achieve this, phone calls to suppliers, customers and important shops were observed.

Moreover, during the participant observation, lots of informal conversations took place in

which relevant data about benefits and mechanisms of networks and success of artists was

written down in the notebook.

4.3. Operationalization of concepts

The conceptual model has described three main topics: 1) the benefits of social networks 2)

mechanisms within networks and 3) the success of artists. Accordingly, these themes were

covered in the interviews. To provide a starting point and at the same time identify which ties

are important in the network, the artists were asked to first draw their social network. In this,

strong ties are defined as friends and family, with long-term relationships (Elfring & Hulsink,

2003). Weak ties are defined friends of friends with loose relationships and irregular contact

(Boissevain, 1974). Relating to this topic, also questions about network activities were

posted, like for example: “where do you go to to meet people?”.

The topic benefits of the network is operationalized in terms of: what kind of benefits does the

network provide for the artist. This was translated into questions about available resources

within the network, like information, brand recognition, financial support and emotional

support. These questions were for example:

● Information and knowledge: “To whom do you turn to if you need information about

how you have to run a business?”

● Brand recognition: “How do you use your network to gain new customers?”

● Financial support: “How did you gather your first finance?”

● Emotional support: “Do you experience pressure of running a business?” and “With

whom do you talk about that?”

To supplement the benefits from the conceptual model, more general questions were asked

about how the artists perceive benefits of their network, like for example: “How do you think

your network as contributed to your current situation?”.

Another topic covered in the interview was the mechanisms of network, the underlying

factors that influence the flow of available resources. Following the conceptual model this

exists of 1) motivation to turn to the network and 2) trust. Motivation is operationalized in

terms of what the artist expects to get out of her network. To discuss this topic, artists were

for example asked what kind of things (resources) they felt they missed and where they

looked to supplement it. The topic of trust is operationalized as reliance on the character,

ability, strength or truth of someone or something

. For example, the following question was

posted: “To whom would you actually listen if they would advise you something?”. To

identify additional mechanisms in the network, questions were posted about how artists

interact with people from their network: “how do corporations arise?” and “how are you

maintaining relationships?”. To end with, the designer’s perception about success was

discussed in the interviews. From literature becomes clear that defining success for artists is

rather difficult because artists do not perceive their success in terms of revenue or growth.

Therefore, the interviewees were asked what they believe makes a designer successful.

4.4. Data analysis

The data was obtained through interviews and observations. During the analysis, the data was

continuously compared with other data. The first step in the analyzing it, was reading the

transcripts and fieldnotes from the observations thoroughly (Maxwell, 2004). During this

activity, memos were taken to collect ideas. To analyze the data systematically, open, axial

and selective coding was applied. The researcher used a qualitative data analyzing-program

for constant comparing: Atlas Ti. The transcripts were uploaded in this program and read

again. This time, relevant parts of the text were selected and coded by open coding. During

the open coding, all thoughts were captured in memos that were added in Atlas Ti. Open

coding is the process of breaking down the huge amount of raw data by applying codes to

fragments of the interview and observation notes. After the first two interviews were

transcribed, these were coded. When the following two interviews were transcribed, all

interviews were coded again. This process was repeated until all the data was coded and

compared. As a consequence of constant comparison, the codes continuously changed based

on the new input. For example the following codes were applied: cost reduction, expand the

entrepreneurial network, by chance meeting a new valuable person and creative

conformation. After coding the interviews, the notes of the observation were coded with the

same codes as the interview codes. The observations only confirmed the existing codes but

did not lead to new codes. One code that was confirmed during the observations was for

example, creative confirmation.

After open coding, the codes were clustered and integrated into broader categories. This

process is called axial coding (Maxwell, 2004). Axial coding was done by searching for

commonalities and differences between the open codes. Some examples of the axial codes

are: motivation to turn to network and barriers to interact with network. After the axial coding

process, selective coding was applied. In this last step, relationships were made between the

axial codes to develop a theory. In this process, one core category was selected and all other

categories were related to this category. In this study the central category is entrepreneurial

success. All the other categories, like benefits of the network and expansion activities, were

examined in how they explain, relate and contribute to entrepreneurial success. The

researcher questioned for example: What does this category have to do with entrepreneurial

success? How does this explain entrepreneurial success? The outcomes of this part of the

analysis, resulted in graphs and drawings which formed the basis of the storyline for the

finding-section. To keep the coding process transparent and clear, the book with the applied

codes is displayed in Appendix 3.

4.5. Quality of the research

Unlike quantitative research, in qualitative research it is not the aim nor is it possible to

control the situation. Therefore, the validity, generalizability and reliability of the research is

discussed below.

Validity

An important threat to the validity of the research, is the fact that the perception of the

researcher can influence the data collection and analysis. While eliminating the influence of

the researcher is impossible, this research enhances several strategies to reduce this interview

bias (Maxwell, 2004). A case study with embedded units was conducted to increase the

validity of the research. By means of this design, data was gathered from a diverse range of

individuals. This reduces the risk of associations and systematic biases due to a specific

method. Moreover, it allows a better assessment of the generality and explanations that one

develops (Maxwell, 2004, p. 245). Also, the data was captured in recordings and

transcriptions directly after the interviews. Because of this, the need for triangulation which

corroborates the evidence ‘will be less, if any’ (Yin, 2009, p. 82). Another way to guarantee

the validity of the research is by enhancing respondent validation. This means that during the

interview feedback was constantly asked about the interpretation of the data. Next to the

prevention of misinterpretation, this guarantees that other researchers will arrive at the same

insights if they would conduct the study along the same steps.

Reliability

The reliability of this research lies in the consistency of the approach. A structured way of

interviewing was used to gather the data. A interview guide (see Appendix 1) was used to

ensure that the same data was gathered by different respondents. Moreover, the interviews

were transcribed and recorded to ensure reliability (Yin, 2009). The raw data was not

translated into English to reduce interpretation biases and subjectivity. Quotes used in the

thesis were only translated to provide an illustration. Taken into account the reliability, the

codebook is included to be transparent about how the data has been analyzed. Another way to

increase the reliability of the research is by means of using Atlas TI to analyze the data

consistently.

Generalizability

The restriction of the qualitative research method inhibits the generalizability of the research

in terms of representing a larger population. A critical note to this study is the limited

generalizability due to the small sample size. To gather an in-depth understanding of the

social network dynamics of artists, a specific group within artists is selected for this study:

jewelry designers. By making this choice, the generalizability to different types of artists

might be harmed. However, the reason for this choice is that studying multiple cases of one

type of artist offers more valid results than studying a variety of artists, ranging from writers

to DJ’s. Still, jewelry designers represent artists that have to build a business around their

creativity. By that extend, the results could be transferred to other types of artists which face

the same dilemma.

5. Empirical findings

This chapter describes the findings of the study in the same order as the conceptual model.

First, this chapter describes how artists perceive success, followed by an overview of the

network. Thereafter the benefits of the network are described, followed with mechanisms that

influence the exchange of these benefits.

5.1. Artists’ perceptions of entrepreneurial success

The industry expert Stefani Verhoef divides the jewelry industry in the commercial side and

the artistic side. According to her, the current trend is the increased focus on the commercial

side. Still, the interviews with the artists indicate that success for them is not related to

financial success. They unanimously believe that being successful means that you are able to

financially support yourself. In particular, Cat Priem adds that if you are able to make what

you like, you can be considered successful. Atelier de Kater contributes by saying that you

are successful if you are “happy with what you are doing”. Fleur Caroline mentions that if

you pretend to be successful, people will believe you are successful and hence you will be

successful indeed. However, although the artists explicitly say that success is not related to

money, all artists talk about increasing their sales. In particular, six refer to ‘acquiring new

customers’ as one of the most important things to survive. Therefore, it can be concluded that

although sales are not the only measurements of success, it is perceived as important to

survive.

5.2. Overview of the network

The artists describe their network exclusively in terms of close ties. When drawing their

network, they only mention friends and family. In particular, one or two friends or family

members with whom the artist has regular contact, are described as important. To illustrate,

Kjirsti Kat explains about a friend that she sees frequently: “I see Fleur a lot, and that is

something that often comes up, how can I help you, make the next move. That is something I

do not talk about daily but it is very important”. The most significant reason for the

importance of one particular close tie, mentioned by all artists, is because of the

supportiveness in difficult times. For example, Iris mentions that Anke is a very important

person in her network because she “gave me faith that I could do it. It is important that you

information. Fleur Caroline notes: “For example my brother, who has his own business as

well, he explained about taxes and subscribing at the KVK”. Apart from these two

exceptions, no artists mention close ties that provide information. Although the artists talk to

strong ties frequently, this contact “has nothing to do with designing or so”. Cat Priem

indicates, that her partner is the most important person in her network, she does not rely on

him regarding her brand: “Well, I search a lot, I do a lot myself. I find it difficult to rely on

others for that because, in the end, you do it better yourself”.

These findings illustrate that

strong ties, except for emotional support, are not perceived as important for the business. At

the same time, the interviews show that strong ties provide important benefits for the artists,

which will be discussed below.

Contrary to strong ties, weak ties are not considered as part of the social network, nor do

artists believe that acquaintances can provide benefits. Still, later in the interviews, the artists

describe examples of situations in which interactions with weak ties took place. Interactions

with weak ties are shaped by long term collaborations with benefits for both parties. A useful

example is provided by Kjirsti Cat: “ I knew her friend is a friend of me and she said, can you

make a necklace for her? That is three years ago and we still have contact and I made

another necklace for her just now”. As opposed to strong ties, relationships with weak ties

are being built up when a particular resource is needed during the establishment of the brand.

Interestingly, seven artists describe that interactions with weak ties have been initiated by a

strong tie. An interesting example is provided by Iris who mentions that her friend said: “and

now I am going to contact him whether you can call him!” Eighteen out of the twenty two

times that a new connection was made, this weak tie relationship eventually turned into a

strong tie relationship. To illustrate, Fleur from Ivy & Liv mentions: Well, then you send such

a person an e-mail and then we met to drink coffee. Things started rolling and now we

produce a part of the collection with her. And eventually, she became a really good friend of

me”.

All in all, the artists exclusively perceive their network in terms of existing strong ties,

although weak ties are established in the search of needed resources. Thus, the existing

network exists of strong ties while the newly build, expanded network exists of weak ties.

5.3. Benefits of social networks which contribute to success

The artists have a positive attitude towards their social network. Eight of the ten artists

believe that their network provides important benefits for their business. For example, Kjirsti

Kat argues: “Because you have always somebody in your environment which has knowledge

of it or knows someone with knowledge of it”. Only two artists (Fleur Caroline and Cat

Priem) indicate not to rely on their network for their business. These artists have a general

independent attitude, which can explain the outliers. To illustrate, out of the seventeen

remarks that pointed at independability, eight were expressed by Fleur Caroline and four by

Cat Priem. Nonetheless, the results show that the networks provide four benefits: emotional

support from close ties, financial support in terms of cost reduction, weak ties’ bridges and

the expansion of existing networks which will be described in this chapter..

Strong ties that provide emotional support - The first benefit of social networks is that strong

ties provide emotional support. Emotional support is described as “being able to talk about

stress”, “providing stability”, “supporting me”, and “having faith in what the artist is doing”.

For example Kjirsti Cat argues that: “The people that are close to me, believe in me and say

you should try it no matter what happens”. As described previously, all networks contain at

least one strong tie that provides emotional support. Four artists indicate that this emotional

support has been crucial in their success. To illustrate, Josse says about her close friends’

support: “I would not know what to do without them”. Emotional support is important

because the artists are insecure about their brand, as indicated by five artists. Iris mentioned:

“In the beginning I was very modest and I found it really hard to show my work to other

people. It was a process through which I had to go through to be sure of my work. Happily I

have an environment that really pushes me”. At the same time, according to Stefani,

flaunting with creative work is crucial to become a successful artist. X confirms this by

saying: “At one point, my friends must have become crazy of my spam. But I think it all starts

there. For me it really helped”. So, emotional support from the network helps artists to

become confident in flaunting with their product, which is essential for their success.

Emotional support is also described in terms of creative confirmation about product designs.

For example, Juul contributes by mentioning that she experienced confirmation from the

network as a great benefit when she studied at a photoschool:“I realized that when I was in