Entrepreneurial networking: a blessing and a curse

Brand, Maryse J.; Croonen, Evelien P. M.; Leenders, Roger T. A. J.

SMALL BUSINESS ECONOMICS, 50 (4):783–805; 10.1007/s11187–017–9895–1 APR 2018

Photo by Boris Stefanik on Unsplash

Does networking improve entrepreneurial performance?

This question was addressed in a Dutch franchise system where data was available for analysis. A framework was developed to assess low, medium and high performing franchisees, as well as structural, resource and relational facets of networks. The framework was then applied to the data and trends were analyzed using regression methods (OLS and QR).

Results confirm:

1. High performers benefit more from strong network positioning and from being surrounded by high quality operations people, while they will suffer from having network relationships with peers with high sales quality and frequent communication.
2. For the medium performers, only a strong network position will improve sales performance, and too much communication will come at the cost of decreasing sales.
3. For the low performers, having peer relationships with high sales performers will help to improve sales, while connecting with high operational performers will be counterproductive.

This is a good example for illustrating the importance of having data. The findings provide guidance for franchisors on how to best orchestrate knowledge sharing among the franchisees in their franchise systems.