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Good start-ups have great NETWORKS

For past decades, researchers have continually looked into how networks may give advantages to businesses, why they receive this advantage, and how they can make the most of their network connections. Most of these studies were conducted in the US or Europe where creating start-ups are ideal. However, in this article, Alina Dizik explores the different relationships and networks of people created in the process of developing a start-up in China. By surveying and observing the growth of the company, they tracked changes in social ties as the business grew and how significant events changed the relationship between networks of people.

 

In China, it is believed that family is seen as a prioritized value and a vital network needed to create businesses or to help with job functions. Furthermore, traditional Chinese concept refers to a term called Guanxi, which refers to longtime acquaintances who have a relationship defined by intimacy, obligation, and a high level of trust. These people are family-like individuals who help sprout starting businesses. These people were seen as those who helped the businesses overcome obstacles at crucial moments and having more Guanxis meant more support legs for the company. These relationships blossomed other bridges to other networks and allowed the company to acquire valuable knowledge. Researchers concluded that entrepreneurs who had 2 connected people rather than just one had a higher probability to succeed. Just as in this company’s case where they were able to access information from one person and receive funding for expansion from another. Start-ups often need a good supporting background in order to widen their support system and by doing that, this Chinese start-up was able to expand and persevere.

 

Lastly, despite Chinese people having strong rapports and connections with their families, in this start-up’s case, people that they knew the longest were the most helpful in developing and growing their business. The study concluded that disparate-yet-trusted individuals allowed company founders to create weak ties and the weaker ties they created, the higher the chances of success of the company was when it was during times of difficulty.

 

 

http://review.chicagobooth.edu/entrepreneurship/2017/article/good-start-ups-have-great-networks

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