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When going Dutch means a free lunch: how Australians could build social capital

Is your social capital worth a free lunch? Research shows only certain types of people benefit from networking opportunities. Silverstone

We’re often told networking is essential to our careers, but how many people actually use their contacts? Perhaps filling a LinkedIn or Facebook profile is more of a comfort feeling than a useful resource. And would you really ask a person for help with your career or business?

These questions have been the focus of a three year, two-part study into the effect of social networks for people wanting to start businesses, or those already running businesses.

In the first study, we found a difference between people who had contacts they felt were useful and the contacts they really felt they could call on when needed.

Just the thought that these contacts were there – even if they would never be used – was enough to change some of those characteristics that are so valuable to entrepreneurs. People who believed they had access to these resources were more likely to take risky decisions and feel overconfident.

In the second part of the study, we surveyed a large number of people using a very popular Dutch co-working site. The site advertised a free lunch in return for “social capital”: you “pay” for the lunch using your “social capital”.

The company rents out meeting rooms for profit, but allows the free use of co-working spaces and open areas, where lunch is provided free of charge, in an attempt to facilitate networking. But is there really such a thing as a free lunch and can you “pay” so quickly with social capital?

The first step was to experience this personally. Over lunch at one of these sites we met, amongst others, entrepreneurs in the dairy industry, IT industry and a journalist; all young, outgoing, and all open to meeting and exchanging ideas. We followed this up with extensive surveys over a period of several months to determine what type of people are capable of using and benefiting from this sort of social networking.

The initial results are convincing – social networking does pay dividends. People are gaining new contacts, new ideas for processes and products for their businesses.

A quarter of respondents later collaborated on a project with someone from the co-working spaces, but far less used the networking opportunities to find employment. Authors

A slightly unexpected finding was that these entrepreneurs do not use these networks for emotional support as suggested in previous research, one of the roles of networks critical to starting a new business. This suggests an alternative network is required for that role, and traditionally this is a role that family and friends have played.

We also found that only a certain type of person really benefits from these opportunities. We found three types of people using the co-working sites.

The first group we term “positively networking, or positives”: these people have a high degree of self esteem, are highly self conscious but also see themselves as highly socially adaptable. They score themselves as high in interpersonal skills and variety seeking as well as trust.

A second group of people we term “midrangers”: these score in the mid-range on all these variables, and a third group of people we call “reluctants” who have the lowest score on these variables.

But it is interesting to see that the people who feel strongly about being part of a co-working community, and also experience serendipity (i.e. getting unexpected but positive outcomes from their networking) are not the “positives” or the “reluctants”, but the “midrangers”.

The researchers grouped respondents into three categories, depending on self-described personality traits. Authors

There are important implications for businesses attempting to create settings for networking – it is not the networking opportunities that make the difference, but the beliefs and behaviours of the people attending. These beliefs and behaviours should be the focus of entrepreneurial training.

What might this mean for Australia? Chambers of Commerce and state governments could encourage entrepreneurship and small business in two ways: the first is by having more co-working spaces, providing a sociable environment where entrepreneurs can network and work (and potentially including a free lunch).

This would cost the government or businesses very little – or even nothing based on the Netherlands model – and can provide a wonderful breeding ground for new ideas and a nurturing environment for new entrepreneurs.

Instead of simply focusing on networking environments and opportunities, entrepreneurship programmes should be focusing on personal skills development. Get this right and social capital and its benefits will naturally follow.

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