The role of networks in establishing an entrepreneurial venture

Abstract

M.Comm.In South Africa, a disappointingly high number of start-up ventures fail. The success of global entrepreneurs in the South African marketplace is largely attributable to their reliance on sound network relationships prior to entering this market. The purpose of this study was thus to explore the role of networks in establishing an entrepreneurial venture. A literature study, and interviews with respondents who met the criteria of the study, were the chosen means of collecting the data. The study examined, through the literature review, the subjects underpinning the objectives of the research, namely entrepreneurship and networks. Each subject was investigated individually, after which the research literature was evaluated to determine the extent of a relationship between entrepreneurship and networks. In the literature component, a synergy between networks and entrepreneurship was identified. A significant contribution to this relationship was shown to be grounded in the way networks assist entrepreneurs in gaining access to scarce resources, particularly in the start-up phase of new venture development. Through the use of a research methodology which encompassed a qualitative research technique, primary data was gathered through personal in-depth interviews. The questions were aligned with the objectives and propositions set out in the study. The analysis of the data revealed that, although networks were relied upon to overcome resource constraint challenges at the businesses’ inception, networks were as important, if not more important, throughout the other stages of the entrepreneurial process. It was further determined that there are no feasible replacements for the use of networks in any of the stages of the entrepreneurial process. Thus it can be concluded with limitations that networks play a critical role in the establishment of an entrepreneurial venture