Sources of Advice in Entrepreneurship: Gender Differences in Business Owners' Social Networks

Abstract

INTRODUCTION Entrepreneurs are, to some extent, dependent on their networks of personal relationships when making decisions and solving problems (Taylor & Thorpe, 2004). Networks provide business owners with direct access to necessary to establish and grow a business, in addition to indirect access to third parties and their resources. In certain industries, such as creative and professional business services, networks and contacts have been found to provide an indication of an entrepreneur's standing and (Silversides, 2001). Men have traditionally had different networks from women, with men's contacts being more likely to produce information important to business success (Aldrich, 1989). This study examines data from European Union regarding business owners' reported sources of advice, comparing answers of men and women. The following sections provide a brief literature review on networks, followed by results of study, and analysis of data. SOCIAL NETWORKS AND KNOWLEDGE ACQUISITION Social networks are becoming increasingly important as they provide firms with access to markets, ideas, information, advice, business opportunities, and other (Birley, 1985; Farr-Wharton & Brunetto, 2007; Gulati, Nohria & Zaheer, 2000; Hoang & Antoncic, 2003). One result of networking is development of social capital, which essentially consists of resources obtain from knowing others, being part of a network with them, or merely being known to them and having a good reputation (Nahapiet & Ghoshal, 1998, p. 107). The end result is that networks are related to survival and growth of new firms (Bruderl & Preisendorfer, 1998). Granovetter (1973) classified network as either weak or strong based on frequency of contact, which was itself associated with reciprocity. Relationships with and family were categorized as strong because of frequent contact and emotional closeness. In contrast, between business associates, consultants, and other such contacts were classified as weak because of less frequent contact. However, Granovetter also argued that the strength of weak ties was related to diversity in sources of knowledge and advice in that individuals with few weak will be deprived of information from distant parts of social system and will be confined to provincial news and views of their close friends (1973, p. 106). Frequency of contact is not sufficient as sole measure of network quality, however, because exchange of useful information is not guaranteed--there is only opportunity for exchange (Frenzen & Nakamoto, 1993, p. 369; Zhao & Aram, 1995). For example, a strong tie with a friend with whom one interacts frequently is not necessarily useful in a business setting, whereas a weak tie with a business consultant would be expected to yield more useful information. The degree of diversity in a network can be referred to as network's range (Burt, 1982; Zhao & Aram, 1995). A network with a large range would likely include both informal and formal sources. Informal sources include family, friends, professional acquaintances, and business contacts, whereas formal sources include banks, business consultants, accountants, lawyers, chambers of commerce, small business development centers, etc. (Birley, 1985; Cooper, et al., 1989; Littunen, 2000; Watson, 2007). Although concepts are not exactly same, people often have stronger with informal sources, and weaker with formal sources because frequency of contact is usually lower with formal sources. Nebus (2006) contends that most favorable situation is one in which social contacts also happen to be experts because social contacts are more likely to willingly communicate and are easy to access. In contrast, experts are more likely to have valuable information, but are more difficult to access. …

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