Academic journal article International Journal of Management

Networking and Entrepreneurship in Small High-Tech European Firms: An Empirical Study

Academic journal article International Journal of Management

Networking and Entrepreneurship in Small High-Tech European Firms: An Empirical Study

Article excerpt

Networking is a basic feature of entrepreneurial management in small firms. This paper looks at the creation and dynamics of networks in small high-technology firms and their entrepreneurial conditions. Networking is the active process of one intermediary putting other intermediaries into circulation. Network are shown to involve two major strategic mechanisms: 1) opening to complementary competence and resources in order to gain access to new knowledge and people, by managing in networks, and 2) closing and collaborating as mutual obligation to protect and form alliance, as managing of networks. The paper is based on interviews by the author in 35 case firms in the biotech and ICT industries in Denmark (Copenhagen) and France (Sophia Antipolis), of which four are studied longitudinally. Networking is found to be an active way of creating entrepreneurial opportunities and organisation for high-technology innovation. They do not merely exploit existing opportunities, they use networks to form new relations for creating opportunities, and the article thus shows the impact of networking for small high tech firms.

Networks are important for all small firms, as they all build relations to customers, service and suppliers. Networks however are particularly important for new technology-based firms to organize in networks because they are dependent on access to the new technology of other firms and universities and work under a high level of uncertainty related to both technology and markets. In all research and innovation projects, the legitimacy of technologies, firms and research teams have to be communicated and used to persuade investors and customers. The need to form relationships built on trust to overcome some of the challenges and embedded problems early in innovative projects is a part of management and leadership in small high tech firms.

This article analyses how small high tech firms create and exploit network-relations.

The main purpose of the paper is to answer two questions.

* How and why do entrepreneurs develop networks?

* What are the challenges for managers to develop and manage inter-organisational collaboration?

This has to be analysed in a dynamic way, as networks are not a static registration of network contacts, but networks are fluid and develop every time action and contacts are established. The networking strategy does not reduce simply to forming alliances, but involves many forms of collaboration and exchange. These build on networking mechanisms, and once relations are built the issue is how to manage the network. The management of projects in inter-organisational networks raises a number of questions about the use of management theory based on a position in a hierarchy (Moensted, 2003).

Methodology

Qualitative case studies offer a way to study the dynamics and the processes of innovation in general and use of networking in particular. In the present study the author interviewed the managers inat 35 small ICT and biotechnology firms in Denmark (Copenhagen Science Park) and France (Sophia Antipolis) in 1997 and 1998. Of these, 4 have also been studied longitudinally over a period of between 4 and 7 years. In these cases, more than 6 interviews have been conducted in order to study changes and critical incidents. Biotech and ICT firms were selected because there is a logic embedded in the radical innovation generation process in both sectors, and they are well represented in both science parks. Conditions of an uncertain technology and market are different in the two sectors and differ from most other sectors. Qualitative (semi-structured) interviews were conducted by the author. The focus and units of analysis are the interrelations and intermediaries, and the personal network is the main building stone for relationships and business change.

Networking as strategy

Networking as a strategic concept has been analyzed in the context of entrepreneurs by Johannisson (2000), and in management by Nohria (1992) and Burt (1992), who has also expanded the concept to brokering. …

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