Academic journal article Academy of Entrepreneurship Journal

Older and Wiser? an Analysis of Advice Networks by Age

Academic journal article Academy of Entrepreneurship Journal

Older and Wiser? an Analysis of Advice Networks by Age

Article excerpt

INTRODUCTION

Networks can provide new business owners valuable information and knowledge that are essential for establishing and growing new firms. Research has shown that personal relationships are vital in providing knowledge and advice for decision-making and problem-solving, as well as more tangible resources such as financing and materials (Anderson, Drakopoulou-Dodd & Jack, 2010; Birley, 1985; Farr-Wharton & Brunetto, 2007; Gulati, Nohria & Zaheer, 2000; Hoang & Antoncic, 2003; Ireland, Hitt, Camp & Sexton, 2001; Kregar, DeNoble & Antoncic, 2012; Loscocco, Monnat, M Hampton, Cooper & McGowan, 2009; Moore & Lauber, 2009; Robinson & Stubberud, 2009, 2010, 2011a, 2011b; Shaw, 2006; Taylor & Thorpe, 2004). Social networks are likely to change over time. As the business grows through different stages, business owners are likely to network with different groups of people (Anderson et al., 2010; Drakopoulou-Dodd, Jack, & Anderson, 2006). On a personal level, business owners enter into new and expanded networks as they work with new colleagues, join industry and social associations, etc. Thus, people can change the sources of advice they use as they go through life. This study seeks to determine whether new business owners in different age groups use similar advice networks. The following section provides a brief overview of networks in business. The method, data and results of this study are then presented.

NETWORKS AND KNOWLEDGE

Granovetter's (1973) classic work on networks classified ties as either weak or strong depending on the frequency of contact and reciprocity within the relationship. Strong ties with frequent contact and high levels of reciprocity were most often found among family and friends, whereas weak ties characterized the connections between people with less frequent and intense contact, such as professional acquaintances. Granovetter saw value in weak ties that provided diverse knowledge, even though they involved less contact and reciprocity. Contacts with relevant knowledge provide a better network in terms of the importance of the information they can provide (Bruderl & Preisendorfer, 1998; Frenzen & Nakamoto, 1993; March, 1991; Nebus, 2006; Zhao & Aram, 1995). Despite the quality of information that weak ties can provide, the time and effort required to access them can limit the net value. Diminishing returns are reaped from repeated contact with the same source as valuable time could be spent on other activities (Gonum, Verreynne & Kastelle, 2012; Haas & Hansen, 2005; Hansen & Haas, 2002; Watson, 2007).

Several studies (e.g. Anderson et al., 2010; Bruderl & Preisendorfer, 1998; Cooper, Woo, Dunkelberg & William, 1989; Kregar et al., 2012; Loscocco et al., 2009; Robinson, & Stubberud, 2011a, 2011b, 2010, 2009; Shaw, 2006; Smeltzer, Fann & Nikolesean, 1988; Watson, 2007) have examined the different sources of advice used by small business owners. Watson (2007) determined that accountants were the most important source of advice for success. Robson and Bennett (2000) also found accountants to be named most frequently, but they were not associated with firm performance. Robinson and Stubberud (2009) found that family/friends and professional acquaintances were the most commonly named sources. These informal sources were also popular in the study by Smeltzer and associates (1988).

The business owner's gender, age and the stage of business establishment have also been related to the source of advice used, with women and small companies using more friends/family (Anderson et al., 2010; Cooper et al., 1989; Hisrich & Brusch, 1986; Klyver & Terjesen, 2007; Renzulli, Aldrich & Moody, 2000; Robinson & Stubberud, 2009; Sandberg, 2003: Smeltzer & Fann, 1989). Women tend to have more females in their networks and rely more on family and friends for advice, while men receive more advice from professional acquaintances (Robinson & Stubberud, 2009). …

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