Networking+between+Businesses

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toc = Networking between businesses =

Introduction to business networking
Business networking is defined as ‘the conscious problem-driven attempts of one or more business actors to change or develop some aspect(s) of the substance of interaction in relationships in which they and others are involved’ (Ford and Mouzas, 2013: 433). Essentially, it is about finding advice and information through the right contacts when you need it. In such a network, a collection of members are in periodic contact and ideally able to answer to a request within 24 hours. The broader the array of experience and knowledge, the better the overall outcome of a business case (Byham, 2010: 65).

The main benefits of having a well-working network within or/and around one’s business are obvious: they reach from repeated transactions and job creation to easier access to information and a wide and balanced relationship network overall (Baker, 2000 cited Klerk and Kroon, 2008: 25). The overall aim is to provide a competitive advantage for the business, and positive contributions towards it can e.g. be measured through additional revenue which has been received or by time that has been saved (De Man, 2004 cited Klerk and Kroon, 2008: 25).

IT networks, e-commerce and career and social networks aside, business networking has to be seen as an interwoven network of all of these and more. This holistic concept can ideally lead to collective results that are greater than any individual connections would have been (Klerk and Kroon, 2008: 25).



1. The importance of networking to the business world
Business relationships are much more than a series of isolated transactions. Whether negotiating, delivering or paying, the aim of the participants is to combine, adapt and develop resources and activities. By establishing networks, business actors get to gain short and long-term benefits, but also disadvantages: the way of how interactions are being carried out is crucial to the usefulness and value of a network. Therefore good relationships become the prime asset of the actors.

Further, a network can never be owned, controlled or managed by any single participant. Networking always has intended and unintended effects on multiple levels, and this is based on reactions and responses of multiple actors (Ford and Mouzas, 2013: 433-442). [See also: Knowledge Management]

1.1 Motives for Business Networking
In a survey carried out on 41 business owners, Klerk and Kroon (2008: 30) have identified the following as being the main motivation factors for business networking:



Although the picture resolution is not very good, it can be seen that ‘The project is too big or complex to do alone’ is an important motivator for businesses. This is in line with Byham’s findings (2010), who states: //‘as organisations become larger, adopt complicated structures, become increasingly international (…), knowledge needs increase’//. In our age of globalisation, this becomes increasingly important.

2. Strategic Business Networking
Strategic Business Networking describes how the rules and standards set by one business influence another business’ decision whether to agree or disagree to an offer (Österle //et al.//, 2001 cited Klerk and Kroon, 2008: 26). The links between customers, suppliers, regulation authorities etc. need to be handled like an organisational structure: the way it is managed can be responsible for success or failure (of an operation). Links to other businesses are also found, including alliances to firms from other industries. This can go as far as the creation of a ‘family of businesses’ (called ‘keiretsu’ in Japanese), where the involved companies utilize and support each other wherever possible. Such constellations can have both advantages and drawbacks for the involved businesses:


 * Share of risks, profit, control, resources and processes
 * Mutual dependence on each other’s performance
 * Businesses can choose to be part of different alliances, between non-competing companies as well as between competing businesses

Overall, being part of a stable and comfortable alliance can be beneficial, but it can also lead to missing out on new opportunities. Changing such an alliance may be more complicated than pursuing a new business opportunity by oneself. In particular when trying to enter foreign markets, through networking companies hope to be able to handle culture and language barriers, international tariffs, transport costs and political risks better (Klerk and Kroon, 2008: 26-27). As being so important to our current business world, networking on a global scale will now be explained in more detail.

2.1 Global Networking
A business might be faced with shortage of internal resources, aggressive international rivals, or simply enormous costs for the research and development of a new product that exceeds the corporate budget. Such and other reasons drive companies to cooperate with other firms from different countries. These strategic alliances can occur in many different forms, including the sharing production facilities, marketing expertise or distribution networks. The advantages and disadvantages of international co-operations are the same as alliances on a national level (Griffin and Pustay, 2013: 372-373).

Selecting the right partners in the global world becomes the key to success of international co-operations. When skills and resources of the partners are complementary, strategic alliances are more likely to be successful. ‘Resources’ does not only apply to physical material but also to information and knowledge transfer (Griffin and Pustay, 2013: 379-381). This, however, can lead to pitfalls, if one partner (or both) doesn’t want to provide the other with information that is supposed to be kept secret. It is difficult to foresee such limited access to information when strategic alliances are being established (Griffin and Pustay, 2013: 386).

 3.1 Traditional networking methods
Different networking methods have different strengths – although online social networks are famously convenient nowadays, the more traditional, ‘face-to-face’ methods of building relationships can be highly useful and straightforward: per type of business. Examples include groups for women entrepreneurs.
 * Professional associations: sometimes sponsored by an organisation, group meetings are held regularly and e.g. allow only one person
 * Roundtables: usually including the CEOs of a company, they also have mentors that keep conversations running. Example: SCORE (Service Corps of Retired Executives).

(Kruse, 2013: 13)



As shown in the graphic above, in-person networking and online networking are seen to be as important as each other. Consequently, it is advisable to make good use of both.

The 30-second ‘elevator speech’ is a suitable exercise to prepare for a meeting with other businesspersons or potential customers. Further, good listening skills makes a successful networker: being patient in conversations, asking questions and remembering each person’s name is better than bluntly trying to sell one’s own business. Expectations should never be too high as networking is about understanding the needs of others and not about instantly gaining favours in return (Kruse, 2013: 13). Being prepared for face-to-face networking at any opportunity any time is even better, and always having a business card to hand is a useful practice. Additional opportunities can also arise from putting one’s name (and contact details) online so they pop up in association with a particular query on a search engine. It can help to establish new connections quicker and more direct (Clark, 2009: 344-347).

A business network needs to consist of both internal and external contacts. Vendors, technology experts, contacts in governmental organisations and even competitors are increasingly important to modern business management. The wider the reach of a network, the better is the access to knowledge and information when needed (Byham, 2010: 66-67).

// 3.1.1 Team-working through networking? //
As organisational complexity is widely increasing, performance relies heavily on bringing together the right mixture of brain power and commitment from individuals. Key for assembling successful teams is to collect people with the relevant expertise, experience and essential contribution; it is not about choosing someone because of his/her role, status or representation (Hastings, 1993: 107-108). When working on a global scale, it obviously becomes more difficult for teams to actually come together as a group. Besides, cultural and language problems occur almost naturally at the beginning of every project. Cross-cultural workshops and cultural awareness trainings can help to overcome these issues (Hastings, 1993: 112-113, 118). Nevertheless, it is argued that currently only very few businesses are able to run global networks effectively and efficiently. As decent coordination across locations and harmonised processes are lacking, not much is being reaped from the promising concept of globalisation yet. In order to facilitate creativity, product design and development, functioning networks and social capital need to be in place to enable knowledge transfer (McDonough et al., 2007: 71).

// 3.2.1 Sharing know-how through mass collaboration //
Computer-mediated communications (CMC) is a powerful instrument that helps to overcome time and distance barriers. As mentioned before, networking globally comprises the challenge of different languages, experiences, working cultures and routines. Nevertheless, virtual teamwork has the potential to be a highly efficient and flexible method for collecting knowledge (Ratcheva, 2008: 54-56).

Creating open online platforms is a way for connecting and collecting pieces of information. In doing so, companies provide a large foundation for various partners to build new businesses on or simply add more value to the platform. The company can then benefit from a quicker, wide-sourced and more successful innovation. Platforms for participation encourage mass collaboration and facilitate openness, peering, sharing and acting globally (Tapscott and Williams, 2007: 183-185, 212).

However, with today’s constantly growing numbers of professional and amateur contributors, value creation and cumulative innovation is going into overdrive. The internet is full of freely scattered knowledge fragments; further, other problems for a business can arise from the fact that data published on the platform cannot automatically owned by the business (Tapscott and Williams, 2007: 189-190).

// 3.2.2 The Wiki workplace //
Where organisational bureaucracy used to hinder innovation, agility and success, networking through business webs makes a big difference. Unprecedented power lies in the hands of individual workers to communicate and team up more productively. Employees can engage with more people, with less hassle and more enjoyment, and across the world. They can connect with partners, suppliers, customers and other participants that add value to the firm’s knowledge capital. Wikis adapt naturally to how people think and work, and are flexible enough to adjust to new needs and capabilities as an organisation changes. The flexibility stems from the completely unstructured nature of wikis: users are in control of organising and creating their own structure as required. Knowledge, workplaces and processes are collaboratively created and constantly open to change (Tapscott and Williams, 2007: 245-247, 255-257). A statement about Wikipedia outlines these advantages: ‘The best thing you could say about it today is that it’s better than it was yesterday, and tomorrow it’s going to be even better’ (Mayfield cited Tapscott and Williams, 2007: 257). [See also: Communities of Practice ]

// 3.2.3 Networking or not working? //
A clear distinction needs to be made between //corporate social networking// and //social networking//. Although the latter is mainly assumed to be for personal use, Facebook, MySpace etc. are also nowadays also valuable means of connecting business contacts and employees with each other, and even used for recruiting. Being able to hold online meetings and network with useful contacts on industry-focused blogs are examples for other advantages that social platforms offer to businesses. However, companies run the risk of their employees spending more time than necessary on social networking tools. [See also: Social Media at Work ]

Furthermore, two other major risks can arise from these sites. Firstly, it has been found that online forums are used by employees for gossiping and complaining about their jobs. An American survey has found that nearly 20% of companies have had to use disciplinary action against member of staff who were misusing the internet (i.e. (violating blogs or message board)company policies). Secondly, and even more worryingly, inappropriate internet use has proven to be the second biggest reason of security incidents for businesses. Therefore it is essential for companies to extend their current policies for using email and internet to corporate social networking and personal use of social networking sites; it needs to be made clear that employees are representatives of the business when doing social networking, and the kind of information that can be communicated on the web has to be clarified (Warnock, 2007: 20-21).

// 3.2.4 The role of LinkedIn to organisations //
LinkedIn is an online professional networking site which allows its users to exchange ideas, knowledge and opportunities within a wider network of professionals. Only 9 years after its launch, it already counted for 100 million registered users by 2011. Just as other social media, LinkedIn is used to attract and retain customers through ‘inbound marketing’ (i.e. the customers’ interaction with the organisation) (Witzig et al., 2012: 113-114). The strategic uses of LinkedIn have been identified as follows:


 * Building relationships;
 * Understanding prospects;
 * Handpicking specific prospects;
 * Attracting prospects to a particular brand; and
 * Listening to clients

(Corner, 2010 cited Witzig et al., 2012: 114)

The aims of individuals and businesses when using social media are different and shown in the following table:

(Witzig et al., 2012: 115)
 * Use for individuals: || Use for businesses: ||
 * Networking opportunities || Exposure/awareness ||
 * Business research || Client contacts ||
 * Contacts || Access to potential employees ||
 * Product knowledge || Public relations ||



// 3.2.5 LinkedIn users and uses //
The following table shows to what extent LinkedIn has been used by US businesses in order to publish a company page, use the LinkedIn logo on their website, and how many CEOs have their own page on the platform (divided into small- and medium-sized businesses, large firms and non-profits):



(Witzig et al., 2012: 117)

Originally it has been found that non-profit organisations make a bigger use of the site (and other social media in general) than business organisations (Barnes et al., 2010 cited Witzig et al., 2012: 113). Yet newer research has discovered a high participation amongst all types of businesses in creating an organisational page on the platform. Despite being a less expensive channel for reaching targeted customers - and therefore very attractive to organisations with rather limited resources – richer firms seem to be able to exploit the method even more. Though, implementing the LinkedIn logo seems to be a far more common practice amongst smaller/non-profit companies. This suggests a better understanding of the use of LinkedIn as a networking source as well as for marketing strategies. The same applies for the participation of CEOs (Witzig et al., 2012: 118-119).



// 3.2.6 Other online networking examples //

 * The Guardian Small Business Network: a community-oriented website that pools advice, best-practice and insight from other professionals (Guardian, 2014)
 * Spoke (www.spoke.com): a professional networking site for building business network connections online. It helps to build a private and secure network and uses e-mail details and other information provided by its members
 * Ecademy (www.ecademy.com): built up of a network of trusted business connections, it is for people to share contacts and opportunities. It is free to join, and members are offered to take part in various Ecademy clubs as well as meetings. Further, it contains a list of networking regions globally for arranging meetings and events offline

(O’Murchu et al., 2004: 4-6)

4. Organisational barriers to networking
Despite all usefulness of business networks, people sometimes come across barriers when moving within the system: firstly, taciturnity might be experienced when approaching another department and asking for information. Another phenomenon is the ‘exclusive club syndrome’, which describes the danger when networks regress into in-groups which also refuse or hinder information flow. Lastly, pleaded ‘busyness’ can become an invisible barrier, which sometimes stems from deep-rooted hierarchy and functionalism habits (Hastings, 1993: 68-69).

Another organisational barrier may stem from the fact that managers often focus strictly on running the company efficiently rather than effectively. Both terms are central in assessing and measuring the performance of a business: efficiency is a measure of operational excellence and concentrates on minimizing costs and maximising profitability, whereas effectiveness is linked to creating sustainable growth of a firm through its exchange relationships, i.e. networks. It has been found that currently (particularly in international companies) managers are neglecting effectiveness and therefore the development of new sources within business networks, as a result of the emphasis on cost-reductions (Mouzas, 2006: 1124-1130).

 5. Further Reading
[|Business Networking] [|Roundtable]

 6. References
Ford, D. and Mouzas, S. (2013). The theory and practice of business networking. Industrial Marketing Management (online), 42(3). Available from: [] (Accessed: 20th March 2014).

Mouzas, S. (2006). Efficiency versus effectiveness in business networks. Journal of Business Research (online), 59 (10-11). Available from: [] (Accessed: 21st March 2014).

Kruse, J. (2013). Networking tips for success. Corridor Business Journal (online), 10 (6). Available from: [|http://eds.a.ebscohost.com.ezproxy.bathspa.ac.uk:2048/eds/detail?sid=c2c20a6a-8fd2-4930-8753-7274d2ab0de9%40sessionmgr4002&vid=1&hid=4208&bdata=JkF1dGhUeXBlPWlwLHNoaWImc2l0ZT1lZHMtbGl2ZQ%3d%3d#db=bwh&AN=90250123] (Accessed: 20th March 2014).

Byham, W. C. (2010). Business networking can be taught. T+D (online), 64 (5). Available from: @http://ezproxy.bathspa.ac.uk:2048/login?url=http://search.ebscohost.com/login.aspx?direct=true&AuthType=ip&db=buh&AN=50256396&site=eds-live (Accessed: 20th March 2014).

O’Murchu, I., Breslin, J. G. and Decker, S. (2004). Online Social and Business Networking Communities. DERI Technical Report 2004-08-11 (online). Available from: [] (Accessed: 20th March 2014).

McDonough, E., Athanassiou, N. and Barczak, G. (2007). Networking for Global New Product Innovation. Research Technology Management (online), 50 (2). Available from: [] (Accessed: 20th March 2014).

Clark, T. (2009). Networking: A Key to Career Communication and Management Consulting Success. Business Communication Quaterly (online), 72 (3). Available from: [|http://eds.a.ebscohost.com.ezproxy.bathspa.ac.uk:2048/eds/detail?vid=2&sid=5c732c04-2d6d-4a6d-8d8f-23f6d0dc8378%40sessionmgr4002&hid=4208&bdata=JkF1dGhUeXBlPWlwLHNoaWImc2l0ZT1lZHMtbGl2ZQ%3d%3d#db=eric&AN=EJ851118] (Accessed: 21st March 2014).

Ratcheva, V. (2008). The knowledge advantage of virtual teams – processes supporting knowledge synergy. Journal of General Management (online), 33 (3). Available from: [|http://eds.a.ebscohost.com.ezproxy.bathspa.ac.uk:2048/eds/detail?vid=4&sid=5c732c04-2d6d-4a6d-8d8f-23f6d0dc8378%40sessionmgr4002&hid=4208&bdata=JkF1dGhUeXBlPWlwLHNoaWImc2l0ZT1lZHMtbGl2ZQ%3d%3d#db=buh&AN=32695344] (Accessed: 21st March 2014).

Hastings, C. (1993). //The New Organization – Growing the Culture of Organizational Networking.// Maidenhead: McGraw-Hill.

Tapscott, D. and Williams, A. D. (2007). //Wikinomics – How mass collaboration changes everything.// Atlantic Books.

Griffin, R. W. and Pustay, M. W. (2013). //International Business//. Seventh Edition. Essex: Pearson Education Limited.