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The key ingredients of schemes fostering entrepreneurs' networks

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The aim of this High-Level Capacity Building Seminar is have an international exchange of information on inclusive entrepreneurship actions across the European Union and on how the European Union Structural Funds can be used to support actions that combine entrepreneurship promotion and social inclusion.

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The key ingredients of schemes fostering entrepreneurs' networks

  1. 1. THE KEY INGREDIENTS OF SCHEMES FOSTERING ENTREPRENEURS' NETWORKS David Halabisky Economist, Centre for Entrepreneurship, SMEs and Local Development, OECD david.halabisky@oecd.org
  2. 2. Table of contents 1. What is the role of entrepreneurial networks? 2. What do entrepreneurial networks look like? 3. What are the key issues in building entrepreneurial networks? 4. Why are networks important for youth? 5. What are the main policy approaches?
  3. 3. What is the role of entrepreneurial networks? 1. Acquiring motivation – Shape entrepreneurial motivations through the norms of the local environment. – Develop perceived desirability and feasibility through network interactions. 2. Opportunity perception – Acquire personalised information to generate business ideas through personal, educational and professional experience. 3. Idea validation – Test ideas through discussions with network contacts. 4. Resource identification – Identify and access resources prior to business launch (e.g. partners, financing). 5. Negotiating to get into business – Build relationships to secure resources, customers, employees, suppliers and distributors. 6. Business survival and growth – Increase pool of resources to grow a businesses (e.g. advice, ideas, new markets).
  4. 4. What do entrepreneurial networks look like? Entrepreneur Private Network Professional Network International Network Work Network Market Network Spouse Parents Other family Friends Suppliers Customers CompetitorsCollaborators Business mentors PartnersColleagues Contacts abroad Contacts from abroad Business advisors ResearchersInvestorsBanksAccountantsLawyers Identity-based network GenderSolidarity Cultural and linguistic commonalities Ethnic affiliation Source: Adapted from Schott and Cheraghi (2012).
  5. 5. What are the key characteristics of entrepreneurial networks? 1. The strength of the ties between actors – Strong ties: at least twice per week and considered to be “close”. – Weak ties: less than twice per week, but more than once a year. 2. The degree of formality in the relationships – Informal (“soft”) networks: family, friends and acquaintances. – Formal (“hard”) networks: mediated through established institutions and organisations, (e.g. chambers of commerce, trade associations, social clubs, religious organisations). 3. The purpose and objectives of the network – e.g. support for growth.
  6. 6. Why do youth have difficulties building entrepreneurial networks? 1. Youth lack experience in the labour market. 2. Youth have lower levels of entrepreneurship skills. 3. Youth typically have little to offer to networks.
  7. 7. What are the key issues in building entrepreneurial networks? 1. Ensure that networks are well-linked with the wider business community. 2. Balance the provision of targeted networking initiatives against the creation of an overabundance of competing networks. 3. Transfer ownership of the network to members.
  8. 8. What are the main policy approaches? 1. Generic approach: • Bring together entrepreneurs with a common background to build linkages among them, and with the business community. • Use events to facilitate in-person contact, complementing with newsletters, online forums. • Strength: entrepreneurs easily identify with each other, which quickly builds trust among members. • Weakness: given a similar background, members likely have similar challenges in start-ups and cannot help each other.
  9. 9. Example: Be-Win (Italy) • Target group: Women entrepreneurs. • Description: – Network that provides training, coaching, and conferences. – Includes public and private organisations, including 16 Italian regions and firms belonging to the Enterprise Europe Network. – Annual budget: EUR 172 000. • Results achieved: – Created a network of entrepreneurship mentors, linked into EU network. • Lessons for other initiatives: – Built upon an existing structure. – Leverages European dimension (the Enterprise Europe Network Italia and the European Network of Mentors).
  10. 10. What are the main policy approaches? 2. Build networks around interventions • Use a support offering as the anchor that brings a network together (e.g. training). • These networks often reinforce targeted business development. • Strength: easy to set up since it is build around an existing grouping mechanism and there is often access to professional supports. • Weakness: these networks are not always sustainable when the binding factor is a short-term training course, for example.
  11. 11. Example: Mature Entrepreneur (Poland) • Target group: Potential entrepreneurs over the age of 50 • Description: – Training and networking in Gdansk (January 2009-December 2010) – In 2009-10, 60 candidates were selected and divided into 3 groups. – Staged training and financing, with networking. – ESF supported; total budget was EUR 500 000. • Results achieved: – 33 new companies established; all active in 2012, – In 2010, this project received the “European Enterprise Award” (EEA) for “The Best Human Investment” and in 2011, it was awarded first place at the 2011 European Enterprise Awards for “Promoting the Entrepreneurial Spirit”. • Lessons for other initiatives: – Structured support programme that is delivered in stages.
  12. 12. What are the main policy approaches? 3. Create specialised networks • Build networks to support a specific objective (e.g. business growth). • Meetings and events include workshops and other offerings to support network objectives. • Strength: very valuable for network members as there is a close tie with targeted business development support. • Weakness: can be resource intensive given the integration of business development support and a selective entry process.
  13. 13. Specialised networks: Going for Growth (Ireland) • Target group: Women entrepreneurs. • Description: – Group support, led by experienced women entrepreneurs (Leads). – Group mentoring provides support and “good” peer pressure. – National Forum brings together all of the Leads and participants. – Supported by Enterprise Ireland; ESF and the Department of Justice and Equality. • Results achieved: – Cohort from 2012 (60 participants) increased sales by an average of 13%, created 50 new jobs and 7 started exporting. • Lessons for other initiatives: – Championed by the private sector and supported by the public sector. – Leverages voluntary contribution of entrepreneurs.
  14. 14. What are the main policy approaches? 4. Develop virtual networks • Online networks eliminate physical distances between entrepreneurs. • As with traditional networks, online networks built on trust and reciprocal relationships. • Strength: flexible, low-cost structures that can potentially deliver many of the benefits of traditional networks. • Weakness: members may not be committed, effectiveness of online networks is unknown.
  15. 15. Virtual networks: Biiugi (Poland, Denmark and Germany) • Target group: Entrepreneurs and potential entrepreneurs over the age of 50. • Description: – Virtual networking and mentoring tool. – Started out of EU Best Agers Project. – Each member has an online profile that is available for others to see. – 2 levels of membership: basic membership and premium membership. • Results achieved: – Developed an online virtual network. • Lessons for other initiatives: – Developed in phases to ensure take-up.
  16. 16. Discussion questions 1. Do you have networking initiatives for youth in your country? How do they work? 2. What are the key considerations when designing networking initiatives for youth?

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