The vast majority of business start-ups never progress beyond sole-trader status. Clearly one key reason may be that many people who work for themselves choose not to have employees. Equally, many businesses do not grow because nascent entrepreneurs lack the knowledge of how to fully exploit the potential of their business ideas. The process of ‘bridging and bonding’ could help those looking to broaden their scope.
Entrepreneurs with limited experience or educational qualifications often concentrate on selling their products and services to very restricted markets. To establish businesses with real potential for growth new entrepreneurs need to develop the skill and confidence to extend their personal networks beyond family, friends and acquaintances to those with whom they have no direct contact. More formally, this refers to the distinction between strong and weak ties.
Over recent years, the importance of entrepreneurial networks has been widely acknowledged in academic literature related to business start-ups. This has shifted the focus from individual psychological attributes to the importance of business start-up being the result of teamwork. It is generally argued that new entrepreneurs rely on strong ties in the early stages of business start-up but gradually extend their networks as the need for resources increases.
The process of developing a more extensive network is generally referred to as ‘bridging and bonding’. Bridging refers to the process of establishing new network contacts and bonding is the means by which those contacts are developed into closer ties (relationships).
By comparing nascent entrepreneurs from two very different university-based training programmes we examined their approaches to network development. One group who had high levels of human capital (undergraduate and masters degree) were extremely effective in using both face-to-face and electronic communications to accrue diverse resources and achieve quickly establish effective networks.
Conversely, the second group of ‘socially deprived’ entrepreneurs were very effective in utilising their face-to-face ties but they tended to be concentrated on people they already new well. In addition, they were much less effective in using email and other forms of electronic communication to extend their networks.
In other words, those with lower levels of human capital were much less able to engage in bridging and bonding activities. This was partly a result of being less familiar with using electronic communications but it was also a function of their lack of confidence in establishing new contacts (which was also evident in their face-to-face communications).
Many new businesses fail to reach their full potential because new entrepreneurs lack the appropriate skills and knowledge to build effective networks which can provide access to more extensive resources as well as opening-up new markets with more potential. The concepts of bridging and bonding help illustrate the mechanisms by which such entrepreneurs can substantially extend the potential of their businesses.
Oswald Jones is Professor of Innovation and Entrepreneurship and director of Centre for Enterprise at Manchester Metropolitan University Business School. The study discussed was co-researched by the school's PhD student Robert Lee.
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