5 Business networking in Oxfordshire
Abstract
The growth of informal networks has been identified as one of the distinctive features of the evolution of high-tech economies (Benner, 2003). Less attention has been paid to the extent of the role of formal networks in regional economic development in establishing informal interactions. This chapter contributes to understanding where and how business networking happens and the value of business networking to participant companies and business professionals. It also indicates the importance of government funding for pump-priming network in contributing to the churn of networks. To do so, the chapter uses evidence from a case study of business networks in Oxfordshire in the UK.
It argues that extent, membership and utilization reflect stages in development of economic activity in particular locations. Moreover, as some aspects of network usage can be quantified through surveys of members, the relative importance of formal networking compared to the firms' other forms of making contact with potential suppliers, customers and collaborator firms, and the limitations of networks, can be gauged. In addition, the speculation that led to this study, that there are too many networks in Oxfordshire, is at least in part borne out by the data.
Introduction
Business networks in the form of membership organizations and regularly scheduled network events are generally increasing both in the number and scope of activities, and are associated with improved business performance. Studies have shown that business networks and networking have been identified as a means of enhancing business success in East Asian economies, in Europe and in the US (Besser and Miller, 2011).
Within countries, business networks are not evenly geographically distributed in respect to when they were established, the number or type of network and the rate of turnover. Differing industrial and demographic contexts (regional worlds, Storper, 1997) influence the characteristics of networking activities, including participation at the firm level, for example by sector, or at the individual level by profession, gender or ethnicity. This chapter focuses on business networking as an activity, and explores both primary and secondary influences that business networks have for the business development of the entrepreneur, the professional, the firm and the region. Empirical evidence to explore these themes is from a case study of formal networks in the high-tech economy of Oxfordshire.
Three research questions are considered:
(1) Where and how does business networking happen?
(2) What is the value of business networking (according to companies)?
(3) Is business networking in Oxfordshire effective and efficient – how could it be improved?
The last question arises because the original study was stimulated by a remark that there were perhaps too many networks in Oxfordshire. This implied that the sheer proliferation meant that there were too many choices between competing networks.
To answer these questions, this chapter draws on two types of evidence. The first is a review of the formation by type, age, profile and function of business and occupationally-based professional (OBP) networks in Oxfordshire. The second is a survey of members of networks in Oxfordshire. It is shown in this county that networks are increasing in number and that the range of organizations, such as universities and law firms, hosting networks and networking events is growing. The networks are generally valued by the participants, particularly with respect to possibilities for increased sales leads and finding other firms to collaborate with. The initial speculation that there are too many networks is at least in part borne out by the evidence. Further research is necessary in order to establish the generalization of these findings to other regions.
Business and occupationally-based professional networks in theory and in practice
In order to put the evidence from Oxfordshire into context, the chapter next reviews what has previously been found in other studies in order to explain the prevalence, function and success of business networks. The structure follows the order of the three research questions proposed.
Where and how does business networking happen?
Business networking is an activity through which firms and professionals make contact directly and indirectly to access information, market opportunities and resources in order to improve their performance (Bennett, 1998). The framework shown in Table 5.1 sets out business networking as an activity, which includes participation in formal networks, the organizations which have a primary influence on networking opportunities and the secondary influence that such organizations have on influencing the business environment in which business networking takes place.
Table 5.1 Business networks, activity, primary and secondary influences
Source: Rob Eyre for OEO.
NB: Many organizations have multiple roles.
The ‘where and how’ of business networking as an activity is shown in column one. This shows that companies make contact with each other through a variety of means. Most are face-to-face but others are on-line communities which are personally initiated, while others still are organized by third parties. The second column shows organizations which directly influence these situations. This is the primary influence. Business networks and organizations which host events are examples of these. The third column identifies secondary influences: other functions that such organizations have in influencing the environment for business local economies. This includes having an impact on the availability of resources by incorporating the interests of business into other professional and public discourses.
As an activity, studies have shown that the propensity to engage in business networks of all kinds varies according to different stages in an entrepreneur's, a firm's, a professional's or a region's development. Rutten and Boekma (2004) explain increasing networking activity as being related to the particular phase of the innovation process as this is significant in the propensity for firms to network, for example it has been found to be significant in pre-firm formation stages. Johannisson (2000) cites Starr and McMillan (1990) who argue that networks provide the means of mobilizing social resources as a way of organizing new business activity. Accordingly, nascent entrepreneurs are also found as members of formal networks.
The geography of new network activity therefore appears to be associated with emerging forms of industrial activity. Regions are either network thin or network thick, with economic advantages to the latter. This is because, as Saxenian (1994) has pointed out, if a regional environment is full of information ties, it will be easier to diffuse new knowledge there than in places without dense ties (Waters and Lawton Smith, 2008). Patterns of propensity to network affect what kinds of networks emerge, how long they last and to what extent they become institutionalized by support from external public and private organizations.
At the local or regional scale, a secondary effect of organizations providing networking situations is where such organizations influence the environment for doing business. This is not an influence by itself, but is an outcome of growing concentrations of certain types of economic activities. Spatial concentrations of ‘potential co-actors’ implies a better matching of potential resource acquisition (Rutten et al., 2010: 867). In some cases organizations, which themselves may either be or not be providers of business networks, become catalysts for new formal membership or other forms of business networks. These might include local policy bodies which identify a gap in the provision of networks, such as where women or ethnic groups are under-represented. If certain groups are excluded, then this might create a demand for new networks. For example, Benner (2003) drew attention to the lack of the ‘good ol’ boys' networks that women in Silicon Valley faced, which led to the formation of Silicon Valley Webgrrls in 1997.
Others organizations might provide venues, such as universities, or financial support for business networks, such as local authorities. Some have a strategy or economic development remit which might initiate networks as part of that function. Or it might be that networks themselves become involved in economic development, thus representing the interests of members or participants in broader spheres of influence. Activities could include lobbying for successful government rules and regulations.
A secondary influence might also be on account of members' perceptions of the network's long-term contribution to the economic climate of a region (Besser and Miller, 2011). An increasing demand for networks may, therefore, reflect business confidence in the possibility of new opportunities and enhanced competitive performance. In Silicon Valley, for example, Benner (2003) identifies the crucial role of ‘learning communities’ of individuals supported by professional associations as providing an important component of a regional economy's ability to learn.
The value of networks
Networks are important to business and professional business people because exposure to a range of new contacts in these networks results ‘in an increased capacity to access new resources’ (Huggins, 2009: 343), services (Bennett, 1998) and markets. Formal business networks provide value by putting in place opportunities for both the development of informal functional relationships as well as those of a contractual nature. Organizations that influence these situations include formal membership networks, event organizers and online networks. There are also formal networks that do not have formal membership, such as breakfast and lunch clubs, which also fulfil particular non-specialist functions. A further distinction is that some have restrictions on membership, such as alumni associations in particular professions or positions. An example is the Institute of Directors in the UK, a national organization which has regional branches. Some networks are open while others have restrictions on membership but not on attendance.
Formal membership networks are essentially economic relationships, albeit oiled by social interaction, often around a social event tied to formal activities. They take at least two forms. The first is business networks run by organizations such as Business Links, Chambers of Commerce or sector specific organizations. The cost of running the network is borne by members but is frequently subsidized by public authorities as a public good. Some have specific functions such as business angel-type networks. Participants can also include representatives of firms in related professions such as lawyers, patent agents and policy makers. An increasing trend is that of women-only networks (Miller et al., 2007).
The second form is OBP networks, which are organizations that hold meetings where professionals meet each other. They are formal in the sense that the place/event is organized by an organization for individuals, and again the cost is borne by the members or is subsidized by a host organization. Benner (2003: 1810) argues that the formal activities of such OBP associations contribute to the establishment of open communities of practice which provide a ‘soft infrastructure to facilitate learning’ with members on an equal footing. In some cases membership is limited to specific criteria, such as in the case of university-based networks open only to current members and alumni of the university. In the case of academic entrepreneurs, the value to individuals may be as a way of gaining legitimacy in the business community while maintaining legitimacy in the academic community. Professional networks are also useful to such founders of companies as a way of keeping in touch with their educational origin (Johannisson, 1998).
Event organizers and network hosts include a wide variety of organizations, such as firms of solicitors, business and science parks. They provide value to their participants through their interest in being involved in delivering networking activity – for reasons to do with their commercial activities or societal mission. An example of the last is universities' professional networking activities, which in the UK reflect current political agenda for their greater involvement in local and regional economies (Kitson et al., 2009).
Some networks are place-based and are run as part of the service provided by the providers of infrastructure, such as science parks and incubators. These include, for example, an incubator centre which runs events for its tenants as a service. Other examples of networks are on-line communities, such as the Cambridge Network whose mission ‘is to link like-minded people from business and academia to each other and to the global high technology community for the benefit of the Cambridge region’,1 and on-line newspapers which have the possibility of exchange of information and views. Others are more infrequent events where business people get together to explore a particular issue., This would include, for example, a visit by a politician to address a business community.
The stock of business and other formal networks is not constant and not all are equally successful in what they deliver. Explanatory factors to why some networks are successful relate to social as well as more practical issues. The emphasis on the prevalence of innovation and information ties in favourable locations suggests that locally-organized business and OBP networks can be understood as the conceptual prioritization of social relations of economic activity in particular places. Social relationships in the business context have been described as occurring in cross-firm ‘networks of practice’ comprising membership of common occupations and professions as the basis for network formation (Brown and Duguid, 2000), thus allowing knowledge accumulation and sharing and entry to communities of practice (Wenger, 1998; Benner, 2003).
Conceptually, this describes the development and deployment of social capital as being the primary direct influence of networking organizations on the situations in which companies and business professionals make useful contacts with each other. Social capital is defined as the norms and networks that enable people to act collectively (Woolcock and Narayan, 2000). Smangs (2006) argues that social capital makes resource exchanges possible. This is because the effective mobilization of ‘weak’ social capital bridges for collective purposes means that there is a need first to create ‘strong’ social capital bonds to form a cohesive social unit that will be able to effectively integrate knowledge that is acquired through members' bridging activity, such as in formal networking events (see Newell et al., 2004; see Besser and Miller, 2011).
Once established, such networks can be seen as reflecting the strength of ‘weak ties’ indicated in the amount of time devoted to the relationship as well as the reciprocal arrangements that characterize the tie (Granovetter, 1983). Studies have argued that informal networks that are valued are those based on trust, tacit understandings and reciprocity, all of which allow companies to innovate more quickly and to develop innovations that are beyond their individual capabilities (Storper and Venables, 2004; Rutten and Boekma, 2004). Key social characteristics of networks judged to be successful by members are honesty and reliability of members, relationships and trust between members and willingness to share resources (Sherer, 2003; Inkpen and Tsang, 2005; and Smangs (2006) in Besser and Miller, 2011). Weak ties are, therefore, one of a wide range network of information ties that help an individual's contact with others contribute to improved business performance – in this case raise market opportunities and access resources and services. Both soft, i.e. affective and relational, as well as hard trust, e.g. reliability, are needed (Bennett and Ramsden, 2007).
Strong ties are also important. They take the form of contractual joint ventures and supply chain networks (Besser and Miller, 2011). The value of business networks can, therefore, be judged by the opportunities they provide for commercial activity between members. Hence, the importance of business networks' primary influence in organizing the situations in which contact occurs is gauged by the value of networks and the relative importance of formal networking compared to the firms' other forms of making contact with potential suppliers, customers and collaborators' firms. As Besser and Miller (2011) point out, the most important stakeholders of business networks are the members who will remain actively involved and recruit additional members using their own personal criteria for success. Otherwise, networks will lose members and eventually cease to exist.
How effective are business networks?
Criteria for effectiveness of a business network identified by Besser and Miller (2011) include the network's contribution directly to the short term success of members' business interests through knowledge transfer and resource exchanges, as well as personal and social support for the business owner. More utilitarian explanations include support from member CEOs (Scherer, 2003), i.e. they are supported by people who have positions of importance within the member firms, or are seen as ‘worth knowing’ in professional terms; network leadership in creating structures features which facilitate trust and resource exchanges; networks being of optimal size (Phillipson et al., 2006); diversity of business age, size, location and industry and the demographics of individual owners and managers (Besser and Miller, 2011).
A further factor in the success of networks is the optimal size and diversity of the business network (Phillipson et al., 2006). Networks must be sufficiently large to maintain activity and to make pooling of resources advantageous or sufficiently diverse as to enhance business opportunities. However, larger networks increase the chance of free-riders and opportunism (Bennett, 1996), hence attendees might be seeking rather than trading access to markets and resources. In these situations, the benefits to attending for the entrepreneur are diluted.
Explanations for network decline are that the effectiveness of business networks diminishes over time, often resulting from mistakes in the original structure or social processes (Miles and Snow (1992) in Besser and Miller, 2011). Other factors found to be important are that the markets which they serve have disappeared or that the source of funding which subsidized the networks dries up, for example those funded by national, regional or local policy bodies (see Bennett and McCoshan, 1993). A further explanation is that the motivation for organizations hosting networks becomes less important over time. As was mentioned above, networks also need to be able to continuously recruit new members in order for the pool of available contacts and resources to be refreshed.
So far, this chapter has outlined business and occupationally-based business networks from the perspective of what kinds of inter-company activity these are part of, the value of networks and their limitations. It has also highlighted some of the spatial dimensions of business networking – why it might be expected that there would be a dense concentration of networks in Oxfordshire. The chapter now turns to the Oxfordshire case study to answer the three research questions.
The case study: Oxfordshire
Oxfordshire is one of Europe's leading centres of innovation-led economic development. This is because of a combination of factors including an increasingly entrepreneurial science base, growing numbers of enterprises, a high quality labour market and numerous business networks. Estimates of total high-tech activities for 2004 include about 3,500 businesses and 45,000 employees. These account for about 12 per cent of businesses and 14 per cent of employment in Oxfordshire (Lawton Smith et al., 2007). This, combined with the high-level skills in the economy generally, produced Gross Value Added (GVA) per capita in 2003 14 per cent above the regional average, and that increased at a faster rate than both the region and the UK as a whole (Waters and Lawton Smith, 2010).
Oxfordshire's high-tech history is also in part related to the development and changes in the focal points of its networks. Specialist business and professional networks can be dated to the mid-1980s. The Oxford Trust, formed in 1985 by the founders of Oxfordshire's leading high-tech firm, Oxford Instruments, became established as a key host network for the high-tech economy. Subsequently, Oxford Innovation, its spin-off company formed in 1987, was responsible for establishing the Oxfordshire BiotechNet (1997), and the oldest of Oxfordshire's four investment networks is the Oxfordshire Investment Opportunity Network (1995), a technology business angel network that links investors with entrepreneurs seeking early stage funding. The Oxfordshire Bioscience Network (OBN) was launched in 1999 and has been managed since 2006 by Oxford Brookes University. It is supported by membership fees and sponsorship from the private sector. The OBN provides a ‘wide range of services to facilitate networking and communication, providing a gateway service that partners industry, academia, research and service providers to ensure continued sector growth and sustainability’. Since the demise of the Oxfordshire BiotechNet, following the withdrawal of regional development agency funding in 2006, it is the major bioscience network based in the county.
A study in the early 2000s (Lawton Smith, 2003) showed that the Oxford Trust was identified as the central network player by local public and private sector organizations with an interest in promoting the Oxfordshire high-tech economy. The Heart of England Training and Enterprise Council (abolished in 2001) was second, Isis Innovation, Oxford University's technology transfer company, was third, followed by the County Council's Economic Development Advisor, who had played an important role in many of the initiatives in the 1980s.
For many years, Oxford's two universities did not formally participate in initiatives designed to support the Oxfordshire high-tech economy (Lawton Smith, 2003), and played a secondary rather than a primary role in influencing where and how networking happened in the county. More recently, the universities have played a larger role in bridging the business and academic communities, and have played an active role influencing networking situations. For example, since 1999, Oxford University's Saïd Business School Science Enterprise Centre, later Entrepreneurship Said, has acted as a host for networking events such as Venturefest (an annual two, later one, day fair for bringing entrepreneurs and funders together), and for other high-profile seminars with a networking function. The aim of Oxford University's Innovation Society (Isis Innovation) is to ‘allow companies to have a “window” on Oxford science and to foster links between business and the academic community’.2 Its Isis Angels Network runs as ‘a vehicle for the introduction of private individuals and companies with potential interest in investing in spin-out companies from the University of Oxford’.3 It is against this changing context that the extent and effectiveness of recent business network activity is discussed.
Methodology
The evidence reported here is drawn from two types of data. The first is about the networks and their composition, with information of how often they meet and what they set out to do. The second is the results of an on-line survey of members of networks. The data were collected in two phases. The first was a study of business networks in Oxfordshire conducted in 2006 for the OEO. The second was a study funded by the Oxford to Cambridge Arc (O2C Arc) as follow-up to that study, with coverage of the rest of the Arc. A central remit of the O2C Arc programme was to increase collaboration between organizations in or near to Oxford and Cambridge and link the two city-regions with the innovation community of the central area; its universities, high technology companies, entrepreneurs and skilled labour force. The Arc was jointly funded by the three regional development agencies which have counties that help comprise the Arc ‘region’: South East England Regional Development Agency (SEEDA), East of England Development Agency (EEDA) and the East Midlands Development Agency (EMDA). This chapter draws on some of the material from the second phase of the study for comparisons.
Information on the number of networks, their function and their membership was gathered from an extensive range of sources. Locally known networks from previous studies and local organizations, such as The Oxford Trust and the Oxfordshire Economic Partnership, were contacted. This was followed by a snowballing technique of asking networks for further information on other networks. Information on membership (numbers and cost of membership), activities and frequency of meetings on each network's website was collated and network organizers were contacted for additional information.
An on-line survey was conducted on the OEO website. Each network was asked to send out an email to their members asking them to participate in the survey. In each case, follow-up requests were made for the networks to send out reminders by phone calls and emails. The survey was designed to address questions 2 and 3. The survey asked respondents for information on the value of networks, the kinds of networks they participated in, which they used most, what networks delivered and what initiatives could be traced back to the network(s). It also asked about the limitations/gaps of networks in Oxfordshire and opportunities to improve practical operational efficiency. A total of 114 questionnaires were completed by members of 28 networks including five breakfast and lunch clubs. The vast majority were based in Oxford.
Sectors represented included general business (retail, service, construction and consultancy), law and finance associated businesses, engineering and electronics, biotechnology, pharmaceuticals and medical, education and research, media and publishing, information and communications technology, and non-governmental organizations (NGOs). Only two replies were received from women-only networks, hence women are under-represented in this study, which also reflects the much higher incidence of women-only networks in Cambridge (Lawton Smith, 2010). Respondents were overwhelmingly senior people in the companies, for example directors (42 per cent), managers (13 per cent), business owners and traders (12 per cent) and CEOs and Chairmen (9 per cent). There is some evidence, therefore, that the networking process was largely supported by the top people in the companies (cf. Scherer, 2003) as it was they that answered the survey questionnaire on the basis of their experience, rather than delegating the task to a junior colleague.
Not all respondents were members of networks, only around half were members. Exceptions to this pattern were events and meetings organized by the Institute of Directors which were primarily attended by members (13 out of 17), whereas of respondents who attended Oxford Innovation-run family of business angel networks (OION) events only eight out of 25 were members. Many business networks therefore provide services over and above those gained by members (Bennett, 1998).
Three indicators of the value of the networks are:
(1) The value of networks compared to other forms of activity for making contact with other firms.
(2) Limitations of existing networks.
(3) Ways in which networks can be improved – these are discussed next.
Findings
Question 1: where and how does business networking happen
Business networking as an activity takes place in a high number of business networks in the O2C Arc. Table 5.2 shows that Oxfordshire, like Cambridgeshire and perhaps more surprisingly also Milton Keynes, can be described as being ‘network thick’ having both higher numbers of networks than other counties in the Arc and a lower head of population per network. Some networks are geographically specific to particular locations, others are locationbased but the network's participants are from a wider regional scale, while yet another category is that of local branches of national/regional networks.
Oxfordshire has most of the sub-regions by number and proportionally by head of population per network. At the time of the study, the county had 63 business and two OBP networks (Institute of Directors Oxfordshire branch and the Oxford Business Alumni). These 65 networks represented around 30 per cent of networks identified across the O2C Arc. It has, however, far fewer women-only networks than in Cambridgeshire.
On this evidence it appears that formal networks are associated with innovation-led high-tech economies, as there is similarity to network development in Silicon Valley where communities of practice develop to learn and maintain competences that they need to be successful Benner (2003). This possibly reflects, therefore, particular phases in the innovation process (Rutten and Boekma, 2004).
| County | Number of networks | Population | Head of population per network | |
| Oxfordshire | 65 | 605,492 | 9,315 | |
| Cambridgeshire | 59 | 552,655 | 9,367 | |
| Milton Keynes | 38 | 207,063 | 5,449 | |
| Bedfordshire | 23 | 381,571 | 16,590 | |
| Northamptonshire | 20 | 629,676 | 31,483 | |
| Buckinghamshire | 16 | 479,028 | 29,939 | |
| Total | 221 | 2,855,485 | 12,920 |
The ‘how’ of networking covers a wide range of activities in networks of varying size, sector and status, and hence in diversity and resource availability within them. One of the largest is the Oxford Trust (now Science Oxford) which has some 400 members. The largest of all is the Oxfordshire Chambers of Commerce which has some 1,400 members in the county, and includes a wide range of membership but generally does not cater for high-tech firms. The OION, Oxford Early Investments and Thames Valley Investment Network collectively have 150+ members. Others are much smaller, and are more specialized. For example, the Oxford Construction Training Network had 50 members at the time of the study.
Sector specific networks include those orientated towards high-tech sectors such as biotechnology, medical, engineering and information technology, and investment networks such as OION. An example of a sector specific network is DiagnOx. This is a private network in the medical sector, which supports, ‘all stages of technology transfer, from proof of principle through to market and help to successfully commercialise diagnostics research from the medical, veterinary, environmental and food industries’.4
Networks can also be categorized by funding status: non-profit networks, private networks, and joint public-private partnerships. Excluding the breakfast/lunch clubs, out of the 31 formal business networks in Oxfordshire, 21 are private, and the rest are either joint private-public partnerships or nonprofit networks/consortiums/forums. Private networks appear to be mainly funded by membership fees and sustained by donations and sponsors. For example, investment networks are funded through members, sponsors, success fees and their activities. They charge fees both from investors and companies that use the network. Some private networks are also sponsored by Oxfordshire's network host, and sponsors such as accountant firms and investment banks.
Question 2: what is the value of business networking?
The survey showed that the value of business networks and events is that they are the most important in a portfolio of activities by which firms make contact with other businesses and professionals, ahead of events and informal networks (see Figure 5.1). Other means include companies' contacts lists and internet searches as well as business referrals, targeted research and advertising. Email and web-based interactions were the least important of the main forms of activity, suggesting that they had a less direct influence on inter-company/inter-firm interaction than social resources mobilized in face-to-face contact. Therefore, social relations or social capital present in these activities and situations can be deduced as being important in delivering value to their members (Starr and McMillan, 1990; Woolcock and Narayan, 2000; Besser and Miller, 2011).
The survey investigated the value of networks as indicated by their ability to meet the expected objectives of their members (see Figure 5.2). This demonstrates (measured on a scale of 1–5, a lower number indicating higher importance) that expectation of gaining access to new customers was the prime motivation of
Figure 5.1 Relative importance of business networks.
Source: OEO.
Note: Scale of Importance is, 1: Most Important to 5: Least Important.
membership, while gaining access to new investors was the least important. Hence potential contractual, structural and commercial relationships which provide entry into new markets that will involve ‘hard trust’ (Bennett and Ramsden, 2007), were the primary target for making contact with other companies. Information sharing was of secondary value as an objective of participation. There is some evidence that diversity in membership (Phillipson et al., 2006) was a factor in participation
as the value it provides is that companies are able to make contacts outside of their own networks (bridging social capital (Rutten et al., 2010).
The survey also investigated the ability of the networks to meet the expected objectives of their members (see Figure 5.3). Responses were overwhelming positive: only four respondents replied that their networking activity in these formal contexts had not delivered significant outcomes for their company. While the expectation of new customers was satisfied – the second most important value that the networks delivered – the main outcome was in fact that of collaboration with other organizations, meaning that firms sought to work with other firms on developing new products and services or on technical issues. Over two-thirds rated this as most important and in practice over a third used networks for this purpose.
Information sharing, while scoring high on expected outcomes – in contrast with what might be expected from the learning region literature (see Lawson and Lorenz, 1999; Benner, 2003) – was of rather less importance in practice, at least in Oxfordshire. These formal networks did not seem to be particularly useful local resources for finding finance, new employees or improving brand reputation and awareness. Encountering diverse people from different industries to access complementary competences and abilities across sectoral boundaries was significant for over half, but was not ranked by many as being the prime benefit.
The survey also revealed sectoral differences in the value of formal networks. Business networks were identified as being very important for all 11 respondents within the biotechnology, pharmaceuticals and medical sector. Services provided included facilitating international collaboration, mentoring, fundraising, and help with finding new investors, collaborators and customers. For example, one company secured ‘one major international collaboration and five new and currently active leads though business networks’. All other respondents also gave concrete examples of successful contacts/projects. In particular, OBN and The Oxford Trust were highlighted as key organizations, the latter being the most popular individual network as indicated by the number of respondents who participated in their activities. The evidence on the importance of representation of interests to outside organizations was mixed. It scored low on being most important but was similarly ranked with other advantages of networks.
Within the engineering and electronic sector, participants viewed networks positively, as providing good business and professional opportunities. Amongst others, The Oxford Trust, Connect4Success, Institute of Business Advisors, MNT network (national network of UK Micro and Nanotechnology Sector) and TVIN (Thames Valley Investment Network) were among those highlighted as key facilitators. Within sectors such as information and communications technology, media and publishing and research and education, business networks provided general opportunities with finding collaborators, customers, suppliers and client referrals. For example, one company from the publishing sector pointed out that ‘approximately 98% of our current business is achieved through networking and referrals’.
Tips with business referrals were one of the most important uses made of being a member of networks for the general business sector, which included service and retail, constructional and consultancy industry. For example, one construction company secured ‘contracts, totalling over £340k in three years, traceable back to referrals from members of networking groups’. As with other sectors, business networks provided opportunities with recruitment, training, advertising, finding collaborators, customers and suppliers.
Advertising and profile-raising were among the most significant outcomes within the law and finance sector. One bank noted that ‘they [networks] are good for raising our profile within the technology sector, which improves our knowledge and credibility, which in turns results in more companies choosing our bank as their banking partner’. All four NGO/charity organizations replied that business networks had provided their organization with the possibility of fundraising.
Contacts therefore appear to be established with other companies particularly for material advantages and, to a lesser extent, as communities of practice and conduits of information. This is because the functional objective in, and value of, participating in networks of practice appears to extend beyond information. In Oxfordshire's high-tech economy, formal networks are therefore more a mode of material than of informational regional embeddedness (cf. Huggins and Johnston, 2009).
Question 3: is business networking in Oxfordshire effective and how could it be improved?
The evidence above suggests a number of successful outcomes from participating in business networks in Oxfordshire and that most networks were meeting expectations. The study also found that there were limitations to the effectiveness of some of the county's formal networks.
The survey asked for assessments of the limitations of existing networks. Responses are shown in Table 5.3. This study highlights issues to do with competition between networks, gaps in network provision and with optimal size of networks. Consistent with the original assertion underlying the study nearly a third said there were too many networks and a fifth found gaps in network coverage. Some of the smaller firms reported that network membership was too expensive, perhaps unsurprisingly. This suggests that the level of networks is not optimal, as there is competition for resource provision for some firms. It was also the case that some networking opportunities are being missed and that some existing ones are not of optimal size and/or diversity (cf. Phillipson et al., 2006).
The questionnaire included an open question regarding suggestions for improving the business networks in Oxford; 68 companies responded this question. Text coding technique has been used to analyse the answers (see Figure 5.4). The question of how networks could be improved was considered as a problem of coordination. This includes better coordination to reduce overlap, improved publicity of events and more information on the content and objectives of events to increase awareness. The analysis highlights seven suggestions. Figure 5.4 shows these suggestions and their frequency.
| Responses | Percentage of 114 survey replies | |
| Too many networks | 32 | 28 |
| Some sectors not covered | 24 | 21 |
| Not enough members | 19 | 17 |
| Do not provide adequate business opportunities | 19 | 17 |
| Too expensive | 15 | 13 |
| Current members are too narrowly focused | 10 | 9 |
| Meet too often | 7 | 6 |
| Too few networks | 1 | 1 |
| Other limitations | Inconvenient locations, accessibility, biotech sector very specialized, too many suppliers, not enough customers |
Source: OEO.
Further, a number of networks have disappeared, which in principle can be judged as being unsuccessful. However, as was suggested earlier, a lack of success is not the only reason for networks to cease operating; for example, the Oxfordshire BiotechNet, which had been very successful up to the mid-2000s. The Chamber of Commerce high-tech network, RESBIG (REsearch and Science Based Industry Group, Oxfordshire Chamber of Commerce) organized network meetings in conjunction with the Oxford Science Park. At the last meetingthat used the RESBIG name, in January 2008, some 60 people attended. Other networks that did not attract membershavealsodisappeared.AnexampleistheOxmedia.net.Itsdemisepossibly leaves a gap in the market for networking in that field.
Conclusions
The focus of this chapter is the importance of locally-based formal networks such as business and OBP networks as ways in which firms make contact with each other. It uses Oxfordshire as a case study. Drawing on other studies, it examines how formal networks form geographically focused and distinctive business practices, combining the professional and personal ambitions of individuals and competitive objectives of firms (Parilli and Sacchetti, 2008). It is proposed that these have a primary influence on the situations by which contact is made and hence on resources and services available from other participants.
As an activity, the ‘where and how’ business networking happens in Oxfordshire is in a high number of networks, predominantly business networks, and in meetings held by event organizers. These organizations exert a primary influence in Oxfordshire's development as a network thick location: the county has a very varied set of networks, with respect to the sectors they cover, in size, membership criteria and funding, and outcomes. Their usage is likely to reflect phases in the innovation processes in the county's high-tech economy, innovation being found to be significant in the propensity of firms to network (Rutten and Boekma, 2004).
Overall, the networks are shown to be successful and are valued by their members. Expectations have largely been met and provide important practical benefits to their members, particularly those of new sales leads and collaborators. To a lesser extent, they provided useful information and new sources of finance, but generally not new employees.
The evidence on balance suggests that networks in Oxfordshire are effective but there is also evidence of inefficiencies. In particular, it does appear that there are too many networks, but at the same time there are gaps in network coverage. In the 1990s, the UK's Department of Trade and Industry pump-primed a number of business networks in many parts of the country. It later passed this role to the regional development agencies. With their demise, there is a gap in the public provision of funding for new networks where a demand can be identified. Identifying demand, however, is not necessarily easy as the evidence from the survey suggests that some of the existing networks do not have enough members, do not provide adequate business opportunities and are too expensive. Some of these networks are likely to fail because of these factors. However, the fact that there so many networks suggests there is an opportunity benefit to participating. That itself is an indicator of the importance of business networks to a regional economy.
The evidence supports the notion that these networks also have a secondary effect, that of enhancing the local environment for business networking. In Oxfordshire, as some networks have a strategy or economic development remit for the county – the Oxford Trust being an example of the former and the Chambers of Commerce of the latter – they can be argued to influence the business environment by addressing important policy issues, such as limitations to the local availability of finance and of sector support.
The implications of the study are fourfold. The first is that the high number of networks is consistent with general patterns that high-tech economies tend to be the most networked (Benner, 2003; and evidence in this study on the number of networks in Cambridgeshire), there being spatial concentrations of ‘potential co-actors’ (Rutten et al., 2010). The second is that the evidence suggests that business networks are more effective than other types of organization, such as on-line communities and informal networks, in providing market opportunities. These benefits may arise efficiently because of high levels of hard and soft trust between participants (Bennett and Ramsden, 2007). This leads to a third implication: that an important secondary influence of networks is that they are part of the way that the environment for doing business changes because they influence expectations that there will be ‘an increased capacity to access new resources’ (Huggins, 2009: 343) through participation. Finally, it is suggested that spatial proximity matters, both for being able to go to a local networking event as well as for the choice of kind of event. It is also significant if, as suggested above, the local business environment is improved by the combination of demand for and supply of networks.
The evidence from this study raises a number of questions regarding what has been proposed in the literature about the extent, nature and change in networking activity. However, the limitations of this study should be borne in mind. Because of the nature of the survey these results rely on descriptive statistics only, and are only indicative of patterns of formal networking behaviour. Its limitations suggest that further research would provide more detailed evidence on the outcomes of business networking activity. In particular, it might be contrary to much of the literature which prioritizes informal networks as self-organized activity; that the growth in formalized networking activity for production and innovation is an indication that informal networking by itself does not necessarily give entrepreneurs and firms sufficient access to information resources, markets and contacts. Future studies might examine the outcomes compared to effort put into informal and formal networking, and compare the effectiveness of business with OBP networks. They might also examine the processes by which nascent or new entrepreneurs are attracted (or not) into existing networks, or whether new networks emerge to meet their needs. At regional level, the relationship between membership and utilization and stages in development of economic activity in particular locations could also be investigated with a focus on whether there is an oversupply of networks and redundancy of networks.
Acknowledgements
The Oxfordshire Economic Observatory and the O2C Arc are thanked for sponsoring the studies as are participants in the studies. The authors are indebted to Professor Bob Bennett for observations on the paper at the 2008 RGS-IBG sessions on networks, and to Daniele Archibugi and John Slater for their helpful comments.
Notes
1 http://www.cambridgenetwork.co.uk/aboutus/.
2 http://www.isis-innovation.com/about/index.html (accessed 3 February 2013).
3 http://www.isis-innovation.com/about/ian.html (accessed 3 February 2013).
4 http://www.diagnox.co.uk/about.
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