The Personal Networks of Small Firm Entrepreneurs in Malaysia : An Exploratory Study

• Main Author: Abu Bakar, Hamed
• Format: Thesis
• Language: English
• Published: 1995
• Subjects: HB615-715 Entrepreneurship. Risk and uncertainty. Property
• Online Access: http://etd.uum.edu.my/107/1/abu_bakar_hamed.pdf; http://etd.uum.edu.my/107/

The development of social networks and networking has emerged as an important issue for the establishment and development of a business in a particular community. The importance of these issues is exploited by this study to discover the knowledge, understanding and the impact of entrepreneurs' personal networks on the development of small firm in Malaysia. This thesis is both a conceptual and an empirical investigation of the management of network members that enables small firm owners to effectively develop their businesses through social networks. The findings of this thesis specifically contribute to the existing literature of small firm entrepreneurs, where personal networks of entrepreneurs can be considered as one of the important variables for the performance and development of small businesses. The study examines the relationships and the many of people with whom entrepreneurs are linked and gained help and support from during the start-up and running of their business. This study describes the personal networks of "Bumiputera" entrepreneurs (indigenous people in Malaysia) who lack a business culture and are also a minority in business even though they are the group who make up almost sixty percent of the Malaysian population. It should be viewed as an exploratory study based on a small group of entrepreneurs in the northern part of Malaysia. Therefore, an understanding of the cultural and economic conditions of this country is crucial and shall be considered throughout the discussion. The study is based on interviews and questionnaires and has exploited the system of Methodological Triangulation when both quantitative and qualitative data are used in explaining these issues. Qualitative data is used to explain the problems and development of the network relationships while quantitative data is used to identify the network characteristics and compositions for the Bumiputera entrepreneurs. Both types of data, however, are interchangeably used in discussing the importance of the entrepreneurs' personal networks for their business development. As a new business community, it is inevitable that Bumiputera entrepreneurs utilise their personal networks in many aspects of their business. A good relationship with their personal contacts can lead entrepreneurs to financial aid, business information, moral support, material aid and service, as well as new social contacts, access to the markets, business knowledge and skills, advice and other help. The study found that family and friends play an important role in networking due to the social culture and relations which are embedded in the Bumiputera people. Entrepreneurs who have more people in their personal networks, and utilised people who are also in business (suppliers and customers) and related to business (bankers and govemment staff), tend to experience a greater impact on their business development. The study demonstrates that Bumiputera entrepreneurs have a huge social resource which can provide them with a variety of help and support in business. A model for networking management has been developed in order to understand the relationship between entrepreneurs and their personal networks. This model includes four stages of development of the relationships i.e. the planning, establishment, development and maintenance stages. The research also suggests that people in the entrepreneurs' personal network can be categorised into three groups, based on the nature of the relationship. Primary networks consisted of family and old friends; Secondary networks included new fi-iends, government staff (of agriculture and its related areas) and people in agriculture, trade and commerce, and other associations; and tertiary networks comprised of suppliers, customers, bankers and government staff (directly involved in the development of Bumiputera entrepreneurs). Since in the Bumiputera culture certain relationships with people of personal networks have existed for some time, it was found that some of the management stages were missing. The qualitative discussion suggests that the stages, especially those of development and maintenance, have a crucial impact on the development of entrepreneurial businesses. It was also found that male entrepreneurs were active in networking while women were more selective in their neworking due to cultural and economic limitations. In addition, women included men in their networks while men tended not to include women. Men therefore found it easier to create a stronger tertiary network than women. Government policy also plays an important role in structuring the personal networks of Bumiputera entrepreneurs. Bumiputera entrepreneurs include staf of govemment agencies as a part of their personal networks. This enables them to seek help and support for their business development. The implication of the study is important for the Bumiputera community to develop businesses through their social networks. As a new business community, they must seek to carve their niche in order to obtain the social resources for the development and survival of the business. The study also shows that success related to active networking by invading other ethnic business (especially Chinese business communities) networks and including more people of the tertiary network as their close network members. In addition, it is necessary to participate in activities organised by the government and keep close links with their staff since the government agencies can provide a wide range of business help and support. Finally, the study proposes a framework for the development of Bumiputera entrepreneurs' personal networks for their business development.