V-S2

SUMMARY

A COMPARATIVE STUDY OF THE USEFULNESS AND IMPACT OF FORMAL AND INFORMAL NETWORKS FOR ENTREPRENEURSHIP

Sarah L. Jack, University of Aberdeen
Paul J. A. Robson, University of Aberdeen

Principal Topic

The relationship between networks and entrepreneurship has received increasing attention in recent years. There is consensus that, not only are networks important for entrepreneurship, but that the entrepreneur must engage in networking to ensure the survival of his/her venture. Research since the mid 1980s has shown that the use of external suppliers of business advice by entrepreneurs has increased rapidly in most countries, becoming a major aspect of organisations’ activities. Research indicates that networks provide a resource base that is crucial to starting and developing a business because, by supplementing the entrepreneurs’ own business resources, the network improves the likelihood of success. Whilst the entrepreneurial benefits of networks have been established within the literature, the majority of studies tend to examine formal and informal networks separately.

Method

This study combines and analyses both types of networks—formal and informal. It reports the results from a large scale survey of enterprise carried out in Scotland and Northern England during the summer of 2001. This is a new statistical random survey which has 1347 respondents. It is based on the sampling frame of Dun and Bradstreet Marketing Database. Data analysis is currently taking place.

Results and Implications

A key contribution of the study is that it compares formal and informal networks. It is particularly concerned with the levels of use and the entrepreneurs’ assessment of their importance and impact. The advice assessed in our empirical study focuses on the range of different contacts used and their ‘impact in meeting business objectives’. The informal sources of advice include friends, family members, business associates, social groups, trade/professional associations and chambers of commerce. The formal sources of advice range across the private sector from professional and technical specialists to more generalised consultants, supply chain and customer links. In addition there is a wide range of sector-based trade and professional associations to which most entrepreneurs belong to at least one, and local associations such as chambers of commerce. Additionally there are also a variety of public bodies that endeavour to offer advice services to entrepreneurs. In particular, the differences between the use and impact levels within and between formal and informal networks are assessed.

We believe that the main contribution of this research is that it is an extensive comparison of the use and impact of formal and informal networks across a large number of entrepreneurs.

CONTACT: Sarah L Jack, Centre for Entrepreneurship, University of Aberdeen, Edward Wright Building, Dunbar Street, Aberdeen, UK, AB24 3QY; (T) +1224 273445; (F) +1224 273843; s.l.jack@abdn.ac.uk