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Power of networking and social capital Tips that anyone in business needs to take seriously DR JIM TAGGART OAM HE ability to network and quality of a person’s social capital are valuable assets reflected on the company’s balance sheet. Everybody, directly and indirectly, networks to provide and collect information about people, business and other significant social, economic and political matters. This brief article attempts to provide an overview of a number of paramount issues that stem from, and lead into, the ability to successfully network, especially in what is commonly called formal networks, such as Chambers of Commerce and other business-like associations. Networking is a verb, or doing word, which requires action, and in the context of formal networks is strategic, transparent and tactical. Social network theory (SNT) provides a framework to investigate and analyse the structural and interactional or relational dimensions of networks. Much of SNT owes its origin to the fields of Sociology and Anthropology. The essence of SNT is relationships. Mitchell (1969, p2)1, defines SNT as a “specific set of linkages among a defined set of persons, with the additional property that the characteristics of these linkages as a whole, may be used to interpret the social behaviour of the persons involved”. This operational definition is significant, because it draws reference to the importance of linkages and relationships with people in all social settings and networks. Therefore, business operators are embedded in social relations, which are relational and not atomistic (Gulati et al, 2000)2. Networks become the lenses through which businesses build and enhance relationships (Moore & Manning, 2008)3. While the level and quality of human and financial capital plays a significant role in growing business, it is the level and quality of social capital within and between people that drives and influences the value of relationships in networks, especially formal networks. Social capital in simple terms is the ‘glue’, its strength if you like, that brings people together and holds relationships. Such
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Just showing up isn’t enough IF you think that by simply attending functions you will succeed then you are wrong; networking demands involvement and giving. Positive networking requires several significant features; some of these are listed below: • Be yourself but be your best self – let people feel comfortable with you and your discussion; it builds relationships. • Practice your questions that you bring to your network event – - How many of your questions are about what you want? - How many of your questions are about what you can learn and give? - Is there a difference? If yes, what is this saying to the other party? • Never, let me repeat, never treat a person as insignificant for several reasons. Firstly, it’s not appropriate or professional, and secondly, you don’t know who they are connected to by birth, marriage, business, friends, sport, etc. • When you obtain a business card, how is that handled by you? • See networking as an investment not an expense! • Talk to good networkers and ask them to help you develop your networking skills. Remember, networking is learned. elements as trust, commitment, reciprocity and reputation are important ingredients of a person’s social capital. Furthermore, social capital is real and dynamic throughout entrepreneurial process of entering, staying or leaving networks, and will by its very nature vary not only between various networks but within them as well (Aldrich & Zimmer, 1986)4. Granovetter’s (1973)5 ground breaking research highlights the notion that economic transactions are grounded or embedded in their social settings of the network process, implying that the more the connections in the network(s), the greater the social capital (Barr, 1998)6. As previously stated, trust, commitment, reciprocity and reputation are important relational elements associated with networks and a persons’ level of social capital. While trust, commitment, reciprocity and reputation are viewed as complex constructs, meaning different things to different people, it can be observed from the literature they build strategic partnerships, and reduce risk and transaction costs by providing information exchange (Larsen, 1992)7. Sustainable relationships, especially within and between formal networks, can
only continue if the relational components of trust, commitment, reciprocity and reputation are nurtured and developed in an open and meaningful network environment. For such outcomes to be achieved, such relational elements discussed above must not only operate at the individual level, but also the organisational level as well. The ability to access ‘knowledge’ reduces or insulates uncertainty, and this is built or dismantled through network involvement and support. What does this all mean to me and my business in practical terms? Firstly, you and
your business are not separate; you are your business whether you like it or not. Your involvement, or lack of it with people, especially in formal networks, determines the level of social capital that you bring or take from the network (s). So, in closing, if you want to network more effectively remember all of us are people who share common dreams and desires; the key is to help people achieve those goals both personally and professionally. Good luck networking! Dr Jim Taggart OAM is CEO of the Jim Taggart Consulting. Reach him at jimdtaggart@gmail.com
1 Mitchell, J.C. (1969). Social Networks in Urban Situations: Analyses of Personal Relationships in Central African Towns. Manchester: Manchester U.P 2 Gulati, R., Nohria, N. & Zaheer, A. (2000). Introduction to the special issue: strategic networks. Strategic Management Journal, 21(4), 203-215. 3 Moore, S.B. & Manning, S.L. (2008). Strategy development in small and medium sized enterprises for sustainability and increase value creation. Journal of Cleaner Production, 17, 276-282 4 Aldrich, H. & Zimmer, C. (1986). Entrepreneurship through social networks. In R. Smilor & D. Sexton (eds), The Art of Science of Entrepreneurship. New York: Ballinger. 5 Granovetter, M. (1973). The strength of weak ties. American Journal of Sociology, 78(6), 1360–1380. 6 Barr, R.A. (1998). The gender of social capital. Rationality and Society, 19(1), 5-47. 7 Larson, A. (1992). Network dyads in entrepreneurship settings: a study of the governance of exchange relations. Administrative Science Quarterly, 37, 76-104 WESTERN SYDNEY BUSINESS ACCESS JUNE 2021
