The nature of networking : a study of small and medium enterprises of the service sector in Swaziland

Abstract

It is widely accepted that SMEs and especially small firms are critical to the success of their economies. Small firms however, due to their smallness are confronted with challenges to their survival and growth. The Government of Swaziland, in recognition of the crucial role that SMEs play in the economy, has adopted the SME policy on the development of SMEs. In order to maximise the contribution of SMEs to the economy, it is necessary to develop knowledge on how they operate so that any assistance provided to them is based on an understanding of the nature of this sector. The aim of this research is to discover the nature of networking of the owners of SMEs in the service sector in Swaziland. By studying the behaviour of these entrepreneurs, knowledge on how they operate will be developed so that any assistance provided to them is based on an understanding of the nature of this sector. The nature of networking has been investigated using a cross-sectional study design by finding out the structure and content of networking activities of entrepreneurs in the SME services sector. The study draws on data from 50 Small and Medium Enterprise owners and managers to assess the nature and importance of networking activity. Networking is viewed as a means through which participants gain access to the resources held by others. Some of these resources include advice, problem solving, business information, and marketing opportunities. A distinction is made between networking and ordinary business behaviour whereby ordinary business behaviour is a one time market mediated transaction, for example buying a newspaper from a vendor, while networking refers to the expectation that both parties are investing in a long term relationship. There is an expectation that the networked members will receive a mutual benefit from the relationship and it is founded on trust. Networking also involves proactively seeking out and maintaining network relations. The results show that the owners and managers of Small and Medium Enterprises in Swaziland actively engage in relationships for trading purposes although most of the networking activity is done as the need arises. Engaging in relationships that are beneficial to them and their businesses is considered to be important. The resources obtained from networking are mostly advice and information while financial resources are least likely to be obtained through networking. Both weak and strong ties provide resources for business purposes. The SME owners and managers also provide assistance to others for business purposes and this shows the element of reciprocity in networking.