ROSE OLWAL BBA 206 BUSINESS NETWORKING CAT 1 2014 a. Definition of so ia! a"ita! ant its #e!

ation to $%siness net&o#'in( Social capital, like human capital, is related to human well being, but on a societal rather than an individual level. It consists of the social networks that support an efficient, cohesive society, and facilitate social and intellectual interactions among it members. Social capital refers to those stocks of social trust, norms and networks that people can draw upon to solve common problems and to create social cohesion. Examples of social capital include neighbourhood associations, civic organisations and co-operatives. The political and legal structures, which promote political stability, democracy, governmental efficiency, and social ustice, are also a part of stock of social capital. Social capital is the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionali!ed relationships of mutual ac"uaintance and recognition to membership in a group # which provides each of its members with the backing of the collectively-owned capital, a $credential% which entitles them to credit. The forms of social capital are& 'bligations and expectations Informal potential norms and effective sanctioning (uthority relations (ppropriate social organi!ations Intentional organi!ations T)e #e!ation of so ia! a"ita! to $%siness net&o#'in( an $e e*"!aine+ as fo!!o&s, Social capital is established in policy discourse among companies and public sector organi!ations but its dynamics are still poorly understood, especially in regard of whether social capital is a resource, is a means of developing resources, and is a means of ac"uiring resources. Social capital is organi!ed in networks, implying radically different concentrations of activities across space and time in the accumulation and uses of social capital, from herds, crowds and crowding out, to sparseness, holes and discontinuities. Social capital is that we have come to understand it as essentially in network form. Social capital owes its dynamics to it having a performative capacity in relationships and through exchanges, and being well instituted in an organi!ation and by that organi!ation

)usiness network is a particular case of social network, which represents a union of actors *varying from individuals to organi!ations+ oined by the common purpose. Social network accomplishes certain activities to achieve certain goals and purposes planned. The specificity of business network consists in& ,+ its orientation to economic advantages- .+ its initial structural and relational formality- though, relations could be informal, this informality is always developed on the basis of well-defined functions and sanctions- /+ business processes are mostly regulated by official law, while social network could refer to common sense notions. The evidences of the social capital benefits are& ,. Att#a tin( an+ #etainin( ta!ent. 0espite the proliferation of Internet recruiting services, most employers still find the right people for obs, and most obseekers find the best obs by tapping their informal networks of friends, family, neighbors, colleagues, associates, and ac"uaintances. Social capital embedded in those networks means that the information given about potential candidates is trusted. .. C#eatin( -a!%e an+ #e&a#+in( -a!%e #eato#s. 1eople with rich social capital are paid better, promoted faster, and receive better appraisals. The reason is simple& these are rewards for superior value creation. 1eople with rich social capital are better-informed, more efficient, more creative, and better problem solvers- in short, they create value. $. I+entif.in( t)e t)#ee /01 "i!!a#s of so ia! a"ita! /&it) a +ia(#a21 an+ &)at t)e. 2ean. Social capital is defined as an instantiated informal norm that promotes cooperation between two or more individuals as a tool with which to gain an advantage through social relationships made. Social capital is an asset that can help either a person or a collective& it allows 2 to achieve ends that he would otherwise not be able to. Social capital is regarded as a three-pillared concept *the three pillars+, consisting of social networks, trust, and norms and values. It is difficult to separate these three pillars, because the components are strongly interconnected& if people do not share the same norms and values, it is unlikely that they will trust each other and a social network without trusting relationships is very seldom and. The mafia is often "uoted as an example of social capital as a network without trust. 3ere, 2 can refer to an individual as well as a collective. I consider the network structure to be the most important pillar of social capital, because it is the element $sine "ua non%. (s formulated by 4in, social capital is all about the $resources embedded in the social structure%. The social structure that 2 has at his5its disposal has only surplus value, i.e. 2 can only gain an advantage from others when the other $end% of the social relationship possesses goods or resources, particularly those that 2 does not have him5itself. In other words, there

has to be a network with embedded resources before any actor can benefit at all from what the others possess. I do acknowledge that for 2 to actually exploit social relationships and their resources, it is necessary that these relationships have a basis of trust and that the same norms and values are being supported. If two actors do not trust each other, they will never allow the other to have access to their resources. 6oreover, disagreement about social norms and values can cause problems, for example I would not lend my computer to someone I know does not care about other people%s belongings. I will, therefore, focus primarily on the network component of social capital, but always with an eye on the other two elements. Three pillars thereof& trust, norms, and networks, the cultural aspects of social capital *trust and norms and values+ and the structural elements *the network+. These three pillars of social capital have in common is that they are comprised of aspects of social structures and they facilitate the actions of actors therein. Trusting relationships facilitate access to the resources in the network. These resources refer to the *im+ material support that the actors in the network have to offer. 7elationships of trust with ac"uaintances who can provide these resources increase the opportunity of access thereto and the use thereof. The diagram below shows the inter-relationship of various element of the social capital pillar&

8igure& Social 9apital 1illars, re"uirements and service attributes. . 3i-e #easons &). fi#2s o# ent#e"#ene%#s s)o%!+ $%i!+ o# 4oin net&o#'s

:etworking is an essential skill for most business people, but especially for entrepreneurs. The strong association between the entrepreneur as a person and his or her business demands that entrepreneurs get out into the world and create and maintain business relationships. :etworking takes many forms, from 8riday afternoon happy hours to formali!ed groups that help finance new businesses to traditional 9hambers of 9ommerce. 6oreover, these networks serve many purposes, from access to capital, to providing venues for political action, or supporting mentoring and educational opportunities. Entrepreneurs% needs also evolve over time. ;hen first considering a new start-up, entrepreneurs often need basic coaching and hands on tips about leasing space, finding staff, and the like. They also need companionship, and the opportunity to learn and share with others facing similar challenges in starting a new business. (s a firm matures, these needs become more focused, with special emphasis on growing the business through access to new finance or strategic partnerships with related companies. 7egardless of their stated purposes, networks provide entrepreneurs with critical opportunities for peer learning. These learning opportunities matter as communities with more extensive peer networks in place tend to en oy higher levels of both entrepreneurial activity and economic growth. Therefore there a#e -a#io%s #easons t)at 2a'e it ne essa#. fo# t)e fi#2s o# ent#e"#ene%#s to 4oin o# $%i!+ net&o#'s. T)ese in !%+e, ,. Ent#e"#ene%#s 2%st (ene#ate #e-en%e - :o matter how much you love what you do, sales remains at the top of every entrepreneur%s list of things to do. )ringing in business is the task that never ends thus networking to generate leads is absolutely a must. :o one starts a business without the intent to generate sales to& initially sustain the business reinvest to grow the business and ultimately turn a profit, increasing sales every year thereafter. To make it from sustaining your business to being profitable and thriving, networking is going to have to be a part of your overall plan. :o need to avoid networking. .. Ent#e"#ene%#s nee+ a s%""o#tin( ast - 6ore than the average person, entrepreneurs need plenty of assistance. )eing good at what you do is simply not enough. (s an entrepreneur, aside from networking to gain perspective clients, you%re going to need a team of professionals to help with the various operational aspects of your business you%ll want plenty of options. This is why networking intentionally has to be a part of your marketing strategy. It will give you a neutral playing field to ask the necessary "uestions to gauge whether the prospective attorney, social media expert, accountant, insurance agent, 17 specialist, marketer or whatever key person you are networking to connect with is right for you and your business. /. Ent#e"#ene%#s nee+ &o#+ of 2o%t) a+-e#tisin( # Everyone loves positive word of mouth advertising because it%s free and often times unsolicited. ;ord of mouth is free in

the sense that it doesn%t cost you a dime of your advertising budget. It will however re"uire you to invest time to intentional networking so that you reap the benefits of others speaking highly of you as they network. It%s your ob to create word of mouth opportunities. :etworking with intent allows you to share how you exist to serve through your expertise. <ou will get to convey to your audience your uni"ue specialties and examples of how you%ve helped solve a problem for clients, associations you belong to and colleagues within your network. =. 5o%# net&o#' &i!! $e o2e .o%# "a#tne#s6 %sto2e#s an+ $#ain t#%st. There are various "uestions which provide a basis of why one can be an entrepreneur& ;here did that motivation come from> 3ow are you learning about your market> 'ne of my angel investors is one of my first customers. (nother is my former boss. 'ne is a friend and colleague from my banking days and another is a former professor. <ou find that it is from this network that entrepreneurs grow. The inspiration and catalyst to move past a napkin idea will likely come from your network. ;hen we put those segments of vertical knowledge into one room, we see powerful forces align, partnerships formed and deals done. This is why networks are important. :urture your network- maintain your relationships. It is the innate power of a good founder?s network that will turn napkins into products and products into successful businesses. @. T)e. finan e .o% an+ o!!a$o#ations a#e i2"o#tant :etworks do not only consist of entrepreneurs. If you are starting a business it is likely based on a past ob, personal passion or domain expertise. <our network consists of people who believe in you on a personal or professional level. The inspiration and catalyst to move past a napkin idea will likely come from your network. 9ollaboration can be as simple as sharing resources& the best-value-for-the-dollar accountant or a great graphic designer, all this can be found on the network. +. 7#o$!e2s e*"e#ien e+ &)en $%i!+in( net&o#'s. :etwork is defined as a set of social entities connected by a set of social relationships- such as friendship, co-working or information exchange, and characteri!ed by the parameters, which facilitate or hamper social capital, including knowledge sharing. :etworks are a central component of an entrepreneurial climate. Entrepreneurs experience many problems when building networks. Some of these problems include& 1. Raisin( 8one. an+ De-e!o"in( 7a#tne#s)i"s 'ur biggest challenge in today%s economy is to develop partnerships and raise money for promotion, forming a touring band as well as making connections to the personal

empowerment industry. 6ost entrepreneurs are small scale and therefore have no ability to raise funds to engage with other players in forums like oining the chamber of commerce or attending many business forums. 2. W)at 2e+ia to %se. Experts and entrepreneurs alike will tell you that social media is all about the Aconversation.B That means the key to leveraging 8acebook, Twitter and Instagram to your advantage is controlling what peopleCcustomers, usually Care saying about you in virtual-but-public forums. It becomes a challenge for the entrepreneurs to decide on the best way to develop their network.
3. De i+in( W)et)e# to E2$#a e 8o$i!e

In the world of mobile technology, "uality trumps "uantityCevery time. 7egardless of whether mobile technology companies speciali!e in software or hardware, businesses that excel in the field usually experience overwhelmingly positive word-ofmouth chatter, while those that handle mobile poorly usually suffer from negative bu!!. It
is not always possible for entrepreneurs to be able to use this to their advantage.

4. Constant C)an(e The other challenge relates to the fact that any large scale service infrastructure undergoes constant change. 6aintenance and customer provisioning activities in a large global network are ongoing, spanning multiple time !ones. 'n a typical workday, new customers are being provisioned, service for departing customers is being turned down, and change orders to change some service characteristic are being processed for existing customers. Some entrepreneurs can not match this kind of faced paced business environment. 9. 8eas%#e2ent an+ Data C)a!!en(es The other challenge associated with building reliable networks is associated with measurement and data. Dendor products deployed by service providers often suffer from an inade"uate implementation of basic telemetry functions that are necessary to monitor and manage the e"uipment. 6ost of the entrepreneurs do not have well developed management information systems which they can use to collect data and keep in their database for future use. Their networks fail to grow as their systems do not have the ability to manage the large volumes of data.
6. La ' of S%""o#t

Some entrepreneurs have been blessed to have supportive husbands, family, children, and friends. Some of this support group have the ability to help make the entrepreneur?s business grow but some could only offer moral support which, hey, it?s more than you

could ask for. ;hile some are blessed like that, others lack both moral and business support. This affects their ability to improve on their networks and client base.
7. Ne(ati-e 8in+set

The battle always starts in the mind. 'ur own fears, excuses, and ust basically any thing that paraly!es us from moving forward to our destiny is cultivated in our mind. 8eelings of inade"uacy such as EI don?t know if I can do thisE or EI am not "ualified enough to start this happenE # these are often thoughts that entrepreneurs deal with. This can often come from our own low self-esteem, lack of support, or our upbringing. This affects the ability to expand the networks since they believe they can not. :. D.na2is2 of t)e $%siness en-i#on2ent In the current business environment, change is fast and not always constant. 6ost entrepreneurs are not able to keep with the changes. 4ack of exposure and training on how to build networks in this kind of environment affects their ability to keep with the changing business environment. It therefore is important for the entrepreneur to know their abilities and challenges they face and try and mitigate them.

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