This document summarizes research on the role of networking for small and medium-sized enterprises (SMEs). The research studied how SMEs use online and offline networking to maximize their marketing effectiveness. It identified three groups of SMEs: 1) those with local, tightly-knit networks, 2) those aiming to scale up traditionally, and 3) "gifted amateurs" who stay small but use online tools to network globally. The research found that strategic networkers use both online and offline networking, and those aiming to expand their reach do so either by scaling up their business or using online tools while keeping the business small.

1. Punching above their weight: the role of networking in SMEs Presented at AUMEC 2009 by Lisa Harris, Alan Rae and Ivan Misner

2. Who we are Dr Lisa Harris is a Senior Lecturer in Marketing at Southampton University School of Management. She is a Chartered Marketer and a Director of the Chartered Institute of Marketing. Before joining the education sector she worked for 10 years in marketing roles within the international banking industry. Dr Alan Rae is Managing Partner of AI Consultants which researches how small companies use IT and develops training programmes for small companies themselves or those who need to work with or sell to them. He is a Fellow of the CIM and sits on its membership and research advisory groups. Ivan Misner is a New York Times best selling author. He is also the Founder and Chairman of BNI ( www.bni.com ), the world’s largest referral organisation with thousands of chapters in dozens of countries around the world. Ivan is also the Founder and Visionary behind the Referral Institute, a referral training company ( www.referralintstitute.com ).

3. The ‘Punch Above Your Weight’ Research Project We studied how small firms are maximising their marketing effectiveness with Web 2.0 tools Funded by West Focus Built upon the 2006 ‘Abandoned Heroes’ project involving 400 SMEs in London and South East 30 follow up F2F interviews took place in 2007 and 12 in 2008 Project output to date is 3 academic papers, a CPD training course and e-book Our latest research as summarised here today examined online and offline networking styles in SMEs

4. Business Growth Traditional models assume a staged business growth process We identified a sub-group of ‘gifted amateurs’ who deliberately stayed small, compensating with a collaborative approach to business using Web 2.0 technologies

6. Our Networking Project Objectives: to analyse how widespread the networking activities of the 'gifted amateurs' group were amongst the wider community of business networkers to develop a taxonomy of networking based on size, business model and attitudes of the owner/ manager to growth and online/offline networking balance Our findings come from analysis of an online survey completed by 645 firms based in both the USA and Europe.

7. Peak at 2-4 hours for face to face networking - 16% do lots more

8. People do a lot or a little online

9. Marketing Activity Technique Use regularly Depend on it Total One to One selling 43.4 30.8 74.2 Social Networks 50.1 21.6 71.7 Workshops 23.6 6.6 30.2 PR 21.8 7.5 29.3 Online advertising 22.6 4.9 27.5 Email Shots 23.5 3.2 26.7 Newsletters 22.2 2.2 24.4 Direct Mail 18.6 3 21.6 Blogs 14.1 3.7 17.8 Print advertising 13.4 1.4 14.8 Telesales 12 2.7 14.7 Exhibitions 8.9 0.9 9.8 E-zines 5 1.4 6.4 Leaflet Drops 4.4 1.5 5.9

10. Preferred networking environments

11. Scalability v geographic orientation

12. Contribution Group 1 are members of a tight, local community where roles are clearly defined. In these circumstances online networking activity and the value of random connections to the business is low. They have no real ambition to scale and are content to sit in the lower left hand box. (296) Group 2 are trying to take their products into a wider arena and are more inclined to be networking with much larger numbers of people. They are more likely to plan, not to want to cooperate, have faster growth and have higher revenues. They follow the traditional growth route to the top right hand quadrant and are more likely to have the resources to act as a bridge between different communities and foster diversity in the form of a dedicated business networker. (204) Group 3 avoid growing in the conventional sense through formalised IT systems and increased staffing but compensate by using the tools of web 2.0 to collaborate. They stay in the non-scalable quadrant but significant time spent online networking allows them to view their marketplace through a global lens. They are also skilled at offline networking, endorsing our earlier results (Harris and Rae, 2009a). (63)

13. Strong ties v weak ties Strong ties can provide credibility and embed the business in local community but restrict its reach and diversity Weak ties increase the chance of access to ‘connectors’ who can link diverse groups but make network management more complex and time consuming Building on Granovetter (1973) Tetan and Allan (2005) Key skill for growth company is the ability to build process – as outlined by Prof. Foss yesterday

14. Conclusions and further research Online and offline networking are not alternative practices. Strategic networkers are fluent in both, and they expand their reach by either scaling up in a conventional way (Group 2) or they achieve a similar effect using Web 2.0 communication tools while keeping their physical business at a manageable size (Group 3). Key challenges for Group 3 include the significant amount of time involved and need for communications to be more transparent, open and honest than in more traditional approaches. Our next project will explore the role of weak and strong ties in more depth, using case studies of networking with Twitter