Older and Wiser? an Analysis of Advice Networks by Age

ABSTRACTInformation and knowledge are intangible resources vital to business success. Networks can help provide these resources to entrepreneurs starting and growing their ventures. As people grow older and gain more experience, they may develop more contacts from whom they can obtain advice and other resources. This study uses Eurostat data to determine if business owners in different age groups use the same advice networks. The results show that family/friends and professional acquaintances were the top two sources for all age groups, but there were significant differences in the proportion of each age group that named a given source. Those under 30 were the most likely to name their friends/family as a source of advice. Business owners between 30 and 39 years of age were more likely to list professional acquaintances as a source of advice. Those 40 and over were the most likely to say they needed no advice. These findings should be helpful to organizations that wish to assist entrepreneurs, especially younger people who have less developed networks.INTRODUCTIONNetworks can provide new business owners valuable information and knowledge that are essential for establishing and growing new firms. Research has shown that personal relationships are vital in providing knowledge and advice for decision-making and problem-solving, as well as more tangible resources such as financing and materials (Anderson, Drakopoulou-Dodd & Jack, 2010; Birley, 1985; Farr-Wharton & Brunetto, 2007; Gulati, Nohria & Zaheer, 2000; Hoang & Antoncic, 2003; Ireland, Hitt, Camp & Sexton, 2001; Kregar, DeNoble & Antoncic, 2012; Loscocco, Monnat, M Hampton, Cooper & McGowan, 2009; Moore & Lauber, 2009; Robinson & Stubberud, 2009, 2010, 2011a, 2011b; Shaw, 2006; Taylor & Thorpe, 2004). Social networks are likely to change over time. As the business grows through different stages, business owners are likely to network with different groups of people (Anderson et al., 2010; Drakopoulou-Dodd, Jack, & Anderson, 2006). On a personal level, business owners enter into new and expanded networks as they work with new colleagues, join industry and social associations, etc. Thus, people can change the sources of advice they use as they go through life. This study seeks to determine whether new business owners in different age groups use similar advice networks. The following section provides a brief overview of networks in business. The method, data and results of this study are then presented.NETWORKS AND KNOWLEDGEGranovetter's (1973) classic work on networks classified ties as either weak or strong depending on the frequency of contact and reciprocity within the relationship. Strong ties with frequent contact and high levels of reciprocity were most often found among family and friends, whereas weak ties characterized the connections between people with less frequent and intense contact, such as professional acquaintances. Granovetter saw value in weak ties that provided diverse knowledge, even though they involved less contact and reciprocity. Contacts with relevant knowledge provide a better network in terms of the importance of the information they can provide (Bruderl & Preisendorfer, 1998; Frenzen & Nakamoto, 1993; March, 1991; Nebus, 2006; Zhao & Aram, 1995). Despite the quality of information that weak ties can provide, the time and effort required to access them can limit the net value. Diminishing returns are reaped from repeated contact with the same source as valuable time could be spent on other activities (Gonum, Verreynne & Kastelle, 2012; Haas & Hansen, 2005; Hansen & Haas, 2002; Watson, 2007).Several studies (e.g. Anderson et al., 2010; Bruderl & Preisendorfer, 1998; Cooper, Woo, Dunkelberg & William, 1989; Kregar et al, 2012; Loscocco et al., 2009; Robinson, & Stubberud, 2011a, 201 lb, 2010, 2009; Shaw, 2006; Smeltzer, Fann & Nikolesean, 1988; Watson, 2007) have examined the different sources of advice used by small business owners. …