By Ruba Qaqish
Entrepreneurs are involved in a wide range of social relationships, ranging from formal professional and business networks to informal social networks such as friendships and family ties.
This network system generates knowledge and collective learning, stimulates problem-solving, and creates business opportunities through interdependence and mutual exchange between individuals and firms.
These networks have two main characteristics:
- They are rooted in the local community.
- They diffuse information on local products, techniques, services, and markets and thus create and enforce an atmosphere of local mutual benefit and trust.
In their pursuit of adventure and growth, entrepreneurs by nature take maximum advantage of all available facilitations and opportunities. The depth of their networks allows them to exchange ideas with the people closest to them.
The fact that their networks are local enables entrepreneurs to engage in a continual process of innovation driven by the specific needs and characteristics of their local environment (the community). As a result, their products and services respond to and meet the needs of their communities.
Furthermore, the ability of entrepreneurs to be adaptable and flexible contributes to their capacity to absorb and respond to external shocks. Their inherent connection to their community makes them the first to understand the type of response needed to these shocks – and the first to respond.
Because they lack these local networks, large firms targeting large markets and economies have often been slow in making the adjustments necessary to meet the socioeconomic needs of their markets. This shortcoming makes large institutions ill-prepared to cope and contribute in times of unexpected change.
Through their close-knit networks, entrepreneurs play a vital role in their local economies. In periods of change, they satisfy the needs of the local market, stimulate business activities, and create a climate favourable to responsiveness, innovation, and recovery.
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First published in the June 2020 edition of The Business Advisor.