Different Process In Entrepreneurial Networks Commerce Essay


Since the 1990s, with the rapid development of entrepreneurial research, as well as the degree of raising attention to network, entrepreneurial network has become an important role in the field of business. However,the researchers also admitted that theory of entrepreneurial network is still researching in this domain because it is lack of the core of the definition. Based on the existing research, follow this part with discussing different scholars from the different definition of entrepreneurial network, and then there will be a relatively systematic explanation about entrepreneurial network.

Szarka (1990) divided entrepreneurial networks into three components: transaction networks, communication networks and social networks. The transaction network is defined as commercial exchange trade between other company and other organizations, and it's formed by the trading partners of the firm. The transaction network is interacts with the communication network and the social networks. The communication network (Szarka 1990) describe that is the the small firm need collection of those organizations and individuals to fill up the non-trading links which inform its business activities such as consultants and banks, the local and central government and its agents or distributor. Communication content (Aldrich and Whetten 1981) describe that can be formal or informal is the passing of information one person to another.Szarka (1990) intention the social network is formed by family, friends and acquaintances. Such contacts are important because they have an impact upon the development of their firm.

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However, the different identification was done by Birley (1985). He divides entrepreneurial networks into two form: formal and informal. Formal networks include relations to, for example, banks, accountants, etc. Informal network is relations with family members, friends, colleagues or employers and acquaintances or customers.

Bryson et al. (1993) divided entrepreneurial networks into three categories: demand-related networks, supply-related networks, and support network. Bryson et al. (1993) have emphasized informal support networks, but not social networks. According to Bryson et al. (1993), the demand-related network comprises ties closely with clients, which aim to obtaining new business with the maintenance or establishment of contacts with clients. The second type that is the supply-related network covers network ties associated with the cooperative supply of service or product. The third considers of support networks, their function such like banks, business advisers, family and friends.

Butler and Hansen (1991) identify three types of networks: social network, business focused network and inter-organizational strategic network. They suggest that at the entrepreneurial process of a business, the social network provide ideas for the entrepreneur. The business focused networks then develops gradually and is influenced by the nature of the entrepreneur's social network. The final stage, that is the ongoing phase, inter-organizational strategic networks not only reduce the firm's risk of failure but also provide advantages which are not obtainable as an isolated entity.

In this study, entrepreneurial networks are defined as personal relationships between an entrepreneur and his 'external actors' (Aldrich and Zimmer 1985, Birley 1985, Johannisson 1986).The external actors (outsiders) would conclude two parts, such as individuals or organizations. If entrepreneurs want to obtain necessary resources, they should build up such network relationships (contacts).

Above the scholars describe the analysis of the entrepreneurial network .We can concept that is affiliate of the multiple actors and connections superposed to become the integrity of the network in the development process of entrepreneurs or new innovation enterprise.

2.2 Different process in entrepreneurial networks

The role of entrepreneurial networks in relation to new business development is a dynamic process. Importantly, networks are not static: they are dynamic (Birley and Cromie 1988, Butler and Hansen 1991). That means the phases of a business venture needs enrich their network. So the network have to be developed in different types of process, which the firm needs expanding function support and strategic change. For example, social networks are very important in the beginning of the entrepreneurial process (Birley 1985, Butler and Hansen 1991), while business networks are important in the start-up phase of a firm (Chu 1996, Greve 1995). For an on-going business firm, links with other organizations, particularly links with other firms become important because inter-organizational networks that include supporting agencies (government institutions, banks ) and other firms(large or small firms) are a way to protect information and ensure resource about exploring markets and channels for entrepreneurs. This enhances their position and allows them to compete more effectively (Aldrich, Reese, and Dubini 1989, Aldrich and Zimmer 1986).

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To understand networks requires an understanding of the dynamic pattern of networks.

Figure 2.1 illustrates the dynamic nature of the entrepreneurial networks.

However, Birley and Cromie (1988) analyze only social and professional networks during the early stages of a firm. Chu (1996) also found that by maintaining the existing networks and seeking new members, members appropriate for different phases join the network, improving the chances for the business to progress. Those three entrepreneurs in our three cases would not just only depend on themselves alone to achieve their goals. To do a successful entrepreneur, they need supports and resources from external network which could keep their companies produce the creative and attractive products, such as other similar functions' firms, supporting institutions, and relatives and friends or colleagues.

As mentioned above, (Ostgaard and Birley1996) recently studied the effectiveness of personal networks in terms of firm performance and growth. The findings confirmed the importance of networks for firm performance and development. However, the supporting network is the most important for on-going firms. According to Curran et al. (1993) article, support networks provide advice, information, and capital to firms. However, these variables are important for researching entrepreneurial networks. Studies on Entrepreneurial network mainly based on connecting theory in network.

In 1991, Butler and Hansen also evaluate a model of entrepreneurial network. They make a use of their entrepreneurial network model to research the influence of entrepreneurial opportunities, to test and use of networks in the development of establishing businesses, and to explore the process in the role of inter-organizational network, especially the process of start-up firms and on-going firms. However, entrepreneurial networking is a dynamic process. The members in networks and their roles change over time.