Network practices and entrepreneurial growth

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Summary

Networking plays an important and well-studied role in entrepreneurial start-up processes, but its role in subsequent venture growth is less well understood. This paper reports on an in-depth longitudinal study of entrepreneurial networking practices through venture growth. We discover that the entrepreneur's growth-focused networking practices involved specific patterns of activity, i.e. spans. We theorise these practices employing Bourdieu's habitus. Our contribution is to identify and analyze specific networking practices that enact the entrepreneurial growth process.

Introduction

Networks are an essential element in entrepreneurial social processes (Drakopoulou-Dodd et al., 2006, Hoang and Antoncic, 2003, O’Donnell et al., 2001, Szarka, 1990). They operate as a linking device to others; they provide an embedding mechanism and they may be construed as the social platform of entrepreneurship. Networks are a socially constructed “strategic alliance” for operations but importantly also for instituting change, developing growth and thus creating the future. Networking extends the reach and abilities of the individual to capture resources that are held by others and so improve entrepreneurial effectiveness (Davidsson and Honig, 2003, Jack et al., 2004, Hite, 2005, Ozcan and Eisenhardt, 2009, Slotte-Kock and Coviello, 2010). But networking is not limited to physical resources. As Minitti (2005) explains, by observing others, a potential entrepreneur acquires information and skills; she meets other individuals who have similar or complementary expertise; she learns the ropes of how to find competent employees, inputs at affordable prices, financial support and, most important, potential buyers. Moreover, because entrepreneurs are a product of their social environment, they will be conditioned by that environment and perceive opportunities in a manner that is influenced by their social background (Anderson & Miller, 2002). Throughout this process her social environment remains important because her participation in a broadly defined network helps her to enact the contours of her entrepreneurial tasks (Jack & Anderson, 2002). In this way we see entrepreneurship as a significantly social practice where networking acts as an organizing and governing mechanism to provide meaning, identity and resources (Jack, Anderson, & Drakopoulou-Dodd, 2008). Put more forcefully, entrepreneurship “is always already multiple, diverse, and distributed, recursively being constituted within specific settings and milieus” (Styhre, 2008, p. 103).

Although the role of networking in new venture start-up is well established (Hite & Hesterly, 2001), we know much less about how networking operates and changes for entrepreneurial businesses beyond start-up. We have demonstrated elsewhere that “how entrepreneurs network, and with whom they network, varies throughout the various stages of the entrepreneurial process” (Drakopoulou-Dodd et al., 2006, p. 115). And yet, as discussed extensively below, research has focused largely on nascent and start-up entrepreneurial networking. At best, entrepreneurial growth is considered as the final stage in a networking model, rather than as a dynamic and iterative on-going process of interest in its own right (Greve and Salaff, 2003, Larson and Starr, 1993, Lechner and Dowling, 2003). This is particularly surprising, given that growth is an entrepreneurial fundamental (Gartner, 1990). In broad terms, Freel (2002) likened the literature on the dynamics of firm growth to a “black box”, yet Johnston, Melin, and Whittington (2003) argued that networks provide the basis, the structure and the process for entrepreneurial growth. Accordingly our aspiration is to examine networking practices of growing entrepreneurial firms over time, to extend our understanding of what these processes are, how they are deployed and with whom.

The specific interest of this study is thus in exploring the shared, networked creation of entrepreneurial growth. We adopt Pierre Bourdieu's idea of habitus, to help show us the how and the way, the modus operandi, the rules and patterns from which such actions are constructed. Critically, in these perspectives we see an emphasis on connectedness; a connection of people as a shared way of doing and being.

The contribution of our study is in identifying and analyzing the specific spans of networking practices that enact the entrepreneurial growth process. We investigate how entrepreneurs identify growth possibilities via the network and how, through social interaction, they enact these opportunities. We find that networks are much more than an extension of resources; they become a mode of being entrepreneurial, a socially constructed life world that not only mirrors, but (re-) presents the environment and helps create growth. In this way we are able to consider how the process develops over time. Our empirical study identifies five patterns of activity which we call spans of specific practices: liberating; inspiring; visioning; articulating and implementing. These processes enabled substantial growth in our respondents’ companies. It is hoped that this exploratory study will provide useful insights to foster further theorizing.

We begin by arguing for the social nature of entrepreneurial growth and the importance of networking in growth. We then consider how this can best be conceptualised, before discussing our methodology. Next, we tell the stories of two entrepreneurs, and their context, and present our findings. As Ericsson, Henttonen, and Meriläinen (2008) have demonstrated, such stories provide a rich source of insights. From these data, we develop a spanned interpretation of the entrepreneurs’ relational practices. This explains the transitions invoked in distinctive over-lapping and interactive but patterned everyday praxis. Finally we argue that understanding how this operated increases our understanding of entrepreneurial growth and also helps us to appreciate more fully the implications of network practices.

Section snippets

Entrepreneurial growth and networks

Although growth is perceived to be an essential characteristic of entrepreneurial behaviour (Sadler-Smith, Hampson, Chaston, & Badger, 2003), the actual process of growth is recognized to be complex and one which needs further investigation, particularly in theoretical terms (Krueger, 2000, Shepherd and Wiklund, 2009, p. 107). Dutta and Thornhill (2007) argue that most research on growth has been concerned with relationships between firm characteristics and venture growth, with few studies

Methodological approach

Our respondents were from the same operational habitus: supplying advanced products and/or services to the North Sea Oil Industry. The purposive sample was characterized as (1) founding entrepreneurs, (2) with significant growth ambitions, (3) their product/service offerings were knowledge-intensive, and (4) they were individuals who commanded respect in the business community but were willing to discuss sensitive matters with us in an open, detailed and trusting manner. The study was also

The dance of theory and data

Turning to the two entrepreneurial stories; both ventures were founded in Aberdeen, Scotland in the mid-late 1980s and each supplied the oil industry with a distinct type of technology driven safety management solution. In less than 20 years, each venture became a very substantial player providing safety solutions globally to the oil industry and beyond. Both are thriving international concerns, awash with prestigious awards, selling in multiple industrial sectors and continuing to grow

Conclusions

Networking is well-understood to be of vital importance to the nascent and early stage entrepreneur, but the processes, practices, places and players involved in the co-creation of growth in entrepreneurial ventures have been less well explored. Our study set out to tackle this specific research gap, by identifying and analyzing specific networking practices that enact the entrepreneurial growth process. We utilized Bourdieu's habitus as the conceptual frame, which led us to the empirical

Acknowledgements

The authors would like to thank SJM Editor Janne Tienari, and two anonymous reviewers of the journal, for their very substantial help in shaping the article.

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