Networks are social relationships which individual entrepreneurs engage in during the entrepreneurial process. Networks are important during creation of enterprises as well as during their management where the owners obtain mutual support or assistance. This helps them overcome challenges within the micro and macro environment.
Networks can facilitate problem solving and reduction of costs as well as access to information.
Types of networks Business networks
These exist primarily for business related issues and are mainly for those in business. E.g. Kenya association of manufacturers, their main objectives may include:
- To advise the Government and lobby for support of the members on policy matters;
- To provide and make available relevant business information services to the members;
- To provide for and encourage discussions between the private and public sectors on issues which affect their businesses
- To promote participation in trade fairs, trade exhibitions and trade missions in order to identify new markets and expand existing ones;
- To enhance members‘ understanding of the implications of global trade and regional trade agreements;
- To promote fair trade and business practices, environmentally friendly manufacturing and socially responsible employment;
- To promote value addition to local raw materials and encourage the transfer of appropriate technology;
- To advise and encourage cooperation with other trade and micro- enterprise associations;
Professional networks
These ones attract people who possess certain skills or profession. They usually have a code of conduct to regulate the members of the profession
EG KNUT, ICPAK. ISACA UASU (university academic staff union). The mission of ICPAK for example is To develop and regulate the accountancy profession in
Kenya through supporting the CPA(K) to be recognized globally as Competent Professionals who Add Value whilst Serving and Protecting the public interest, building sustainable institutional capacity to provide that support
Social networks
These exists between persons.ie its person to person, usually people you know or integrate with. They lead to development of social capital and individuals also share experiences and or resources. They may be based on gender, age, ethnicity or location. They are an important asset to the entrepreneur as they facilitate the way things are done and also the acquisition of customers.
Benefits of networks
- They facilitate in the provision of market information
- Introduction to business associates who might be in your line and would otherwise be inaccessible
- They give support and encouragement to entrepreneurs
- Referrals to other people in the network
- Understanding customer needs i.e. entrepreneurs may learn the behaviors of customers and exchange views
- Competitive advantage. at times you don‘t have a name in business until you belong to a certain networks
- Success in management. A lot of in-house training occurs in networks
- Customer acquisition i.e. you have capacity to attract new customers
Hindrances of network growth and development
- Time … some people have no time to engage in the networks
- Family responsibilities
- Negative perceptions and attitudes
- Social barriers eg sex , age , class differences
- Cost ie its expensive to join certain networks
- Past bad experiences