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MG3009 Entrepreneurship and Small Business Ventures

Term 2 Lecture 5 Entrepreneurial networks and small business

Professor Catherine Wang

[email protected]

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In this lecture:

 Entrepreneurial network

 Entrepreneurial eco-system

 Practical tips on entrepreneurial networking

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Entrepreneurial networks and their benefits

 Network: ‘A group or system of interconnected people or things...’ where members ‘interact with others to exchange information and develop professional or social contacts….’ (Oxford English Dictionary).

 Entrepreneurial network: an association of entrepreneurs organized, formally or informally, with the objective of increasing the effectiveness of business activities (Inc.com, 2017).

Entrepreneurial networks

Formal/professional networks

 Regulatory agencies

 Suppliers

 Distributors and retailers

 Customers and end-consumers

 Competitors

 Business/professional associations

 Etc.

Informal/personal networks

 Family and friends

 Alumni

 Former colleagues and business associates

 Etc.

Culture-specific concepts of business relationships

 Japanese keiretsu: a set of companies with interlocking business relationships and shareholdings

 Korean chaebol: a large industrial conglomerate that is run and controlled by an owner or family in South Korea

 Chinese guanxi: personalized, often reciprocal social networks of power

Key features of entrepreneurial networks

 Ranging from very informal mutual support arrangements to formal national and international membership.

 A common purpose of improving entrepreneurial activity

 An open source platform for sharing information

 A shared identify and belonging

Global Entrepreneurial Network

GEN helps celebrate, understand, support and connect entrepreneurs and those who champion them.

 https://www.youtube.com/watch?v=GxKIN2RgFl8

Useful entrepreneurial networks

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Entrepreneurial networks and small business

 Access to private information

 Access to wider/more diverse skill sets

 Access to business/market power

Access to private information

Private information:

 Available only from personal contacts

 May offer something unique - that cannot be found in public domain

 Examples- release date of new product, or unpublished software code by other businesses

Private information can give SMEs an edge

 Provided that source of private information is trustworthy!

 The entrepreneur has the knowledge and skills to verify the private information and act on it in a timely fashion.

Bill Gates and Microsoft

Access to wider/more diverse skill sets

‘The best way to have a good idea is to have a lot of ideas’ - Linus Pauling, double Nobel Prizewinner:

 Help entrepreneurs to see issues more completely, creatively, and with less bias

 Trading information or skills with entrepreneurs from different backgrounds

 Can be useful addition to their own, personal and business resources

Groupon

 From The Point to Groupon

 Diverse ideas from user groups

Access to business/ market power

Entrepreneurial and SME networks ?

 Typically made up of several clusters - few links between them

 Entrepreneurs who are network brokers (like Paul Revere!) may do best ….

What do they actually do?

 Connect separate clusters / networks together

 Collaborate widely to develop promising innovations; bring them to market first

Result

 Use wider networks to turn creative ideas into power

 Both individually and for their SMEs….

Dragons’ Den

 Many who take part are great inventors  But need to helicopter in financial, marketing, operations

management skills- plus range of commercial contacts  That the Dragons have but they do not  To scale promising SMEs into rapidly growing success stories!

Network problems

Proximity principle  Entrepreneurs may prefer to populate networks with the

people they spend the most time with  Such as close neighbours in suburbs where they live, etc

Why might this work against building efficient networks?  Neighbours are likely to resemble one another closely  In thinking, habits, ideas, etc  So proximity based networking again likely to create echo

chambers  Reduce opportunities to enrich entrepreneurial networks with

greater diversity.

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What is an entrepreneurial ecosystem?

Entrepreneurial ecosystems

‘a set of interconnected entrepreneurial actors (both potential and existing), entrepreneurial organisations (e.g. firms, venture capitalists, business angels, banks), institutions (universities, public sector agencies, financial bodies) and entrepreneurial processes (e.g. the business birth rate, numbers of high growth firms, levels of ‘blockbuster entrepreneurship’, number of serial entrepreneurs, degree of sellout mentality within firms and levels of entrepreneurial ambition) which formally and informally coalesce to connect, mediate and govern the performance within the local entrepreneurial environment’ (Mason and Brown, 2014).

Source: http://www.oecd.org/cfe/leed/Entrepreneurial-ecosystems.pdf

Entrepreneurial ecosystem

Entrepreneurial ecosystems

1871 Chicago

 https://www.youtube.com/watch?v=hniC1mmsm1A

Brunel Entrepreneurial Ecosystem

 https://www.youtube.com/watch?v=tda-fVQtCUM

Creating an entrepreneurial network

 https://www.youtube.com/watch?v=i4f4O-XlAKo

Where to start on entrepreneurial networking?

Arianna Huffington – the world’s best networker

 The best way to network is to stop networking – network without networking.

 Networking starts with wanting to give – it is a state of offering.

 Networking is about making personal connections - respect people not titles.

 Openness and trust – encourage people in the network to learn from her own mistakes.

https://www.youtube.com/watch?v=UJ25qEHgcM4&feature=player_embedded

Entrepreneurial networking: practical advice

 What do you want to do for an entrepreneurial career?

 What contacts do you already have, and what can they offer you?

 What new contacts do you need to develop?

 What companies do you want to connect with?

 What is important to you personally?

https://www.youtube.com/watch?v=3FFztNgc7WE

Entrepreneurial networking: practical tips

 Participate in your local small business community

 (Re-)connect with former relationships

 Give before you take – offer help and solutions first

 Become a resource on social media – to generate inbound networking

 Enlist customers as ambassadors of your business

 Involve the media for outreach

Source: https://www.businessnewsdaily.com/6420-entrepreneur-networking-tips.html

Summary

 Successful entrepreneurs build and give back to their networks.

 Entrepreneurial ecosystems are exemplary in value co-creation among multiple stakeholders.

 Entrepreneurial networking involves learning with a clear goal in mind.