Networks: Multi-Rational Routes for Knowledge Acquisition and Dissemination?

Networks:Multi-Rational Routes for

Knowledge Acquisition and Dissemination?

Claire Seaman

Family Businesses• What do we know?

– 60-80% of businesses across the developed World– Mixture of small, medium and larger firms– The family dimension often impacts on the business dimension

• What does this mean?– Many – if not most – businesses have some family dimension– The family dimension and the business dimension inter-twine

– This may create multiple rationalities which impact on decision making

Focus for Today:• Communication

• Local Culture

• Generational Knowledge Transfer

• Power Balance

• Organisational Culture

• Leadership Styles

• Family Relationships

Inspiration

Q. ‘What helped during the succession process?

A. ‘Just hearing his friends talking about the same sort of thing, really ……. realising lots of people were thinking about it …..’

Networks• Key to business development at start-up

and beyond• Contain knowledge – and facilitate its

dissemination• Reflect the culture and dynamics of the

business and the family• Theories of mono- and multiple

rationalities

Current Research• One case study• Developed as part of a much broader

swathe of research• Theories of mono- and multiple rationalities• Network focus• Focus on knowledge acquisition,

dissemination and transfer

Husband and Wife in Business Paid Employment in the UK

East Lothian

Reasons and Rationales• Attractive job• Wish to return ‘home’• Growing family

• BUT the company called in the receivers: – Critical Incident 1

Reactions to Critical Incident 1

• First reaction was to gamble!• Formally employed individual took over the

contract from his erstwhile employer• Overnight transfer to self-employment –

building on the entrepreneurial heritage of the USA

• UK provided a very different environment

The Result of the Gamble …

• Initial success• Business growth• Solid base in East Lothian• BUT …….

– Need for substantial further investment– Search for capital– Investment by a firm of venture

capitalists• Critical Incident 2

Venture Capital, Culture and Capitalists

• Search for funds was successful – if approached from a mono-rationalist business perspective

• Substantial inward investment• But ……….

– Different cultures– Different approaches

Quotes ‘Q. So there was this tension between the commercial reality as they saw it

and what you and your husband saw ….. and the culture and familieness of the business: was there conflict between those two dimensions?

A. Yes, and another strange conflict ….. if there isn’t any money, you don’t take any and if there is you look at everything twice …… but when the million pound investment came in, there were all these salesmen on fat salaries …. they just sign an expense receipt …. I resented that….’

WifeAnd later …..

‘They [the venture capitalists] seem to think that if you have a paper qualification they can manage, the fact that you have sort of grown into it, I had no management training, you sort of grow into it, that’s how it is in a family business …..’

Wife

Did This Create a Sustainable Business?

• From a mono-rational perspective:– Yes – sort of …..

• Inward investment• Fast Business

Growth• Business sale• Loss of business from

the local area

• From a multi-rational perspective– No – not really ….

• Inward investment accompanied by a clash of cultures

• Loss of business to the local area

Culture, Direction and Strategic Development in the Family Businesses

• Purchase of one existing business locally• Created 3 ‘shell’ companies• No clear purpose to the companies at first• No ‘real’ borrowing• No bankers!• Sole aim:

– A sustainable business portfolio – A sustainable business family

Modelling Multiple Rationalities in Family Business Networking

Accepting Different Priorities

Accepting the Cultural Dimension

Business Network

Rational 1

Wife/Mother Husband/Father

Business 1

Business 2

Business 3

Contact in Major Accountancy firm

Entrepreneurial Exchange

Local Economic Development UnitScottish

Enterprise

Previous Business Partner 1 Previous

Business Partner 2

Local Traders Association

Venture Capitalists

Federation of Small Businesses

Friendship NetworkRational 2

Wife/Mother Husband/Father

Charity 2

Charity 1

Charity 3

Charity 4

Friendship with Local Business Family

USA Contact 1 USA Contact

2 USA Contact 3 USA Contact

4

Local Business Community

Friend 1Friend 2

Friend 3

Friend 4

Friendship NetworkRational 2

Wife/Mother Husband/Father

Charity 2

Charity 1

Charity 3

Charity 4

Friendship with Local Business Family

USA Contact 1 USA Contact

2 USA Contact 3 USA Contact

4

Local Business Community

Friend 1Friend 2

Friend 3

Friend 4

Interviewees

Business Network Rational 1

Friendship NetworkRational 2

Family Network Rational 3

Adult Child 1

Private Client Banking

Adult Child 2

ArchaeologistAdult Child 3Tourism

USA Contact 1 USA Contact

2 USA Contact 3 USA Contact

4

Friend 1Friend 2

Friend 3Friend 4

Local Business Community

Local Business Family Friends

Scottish Enterprise

Former Business Partner 1

Local Traders Association

Local Economic Development Unit

Entrepreneurial Exchange

Contact in Major Accountancy Firm

Business 1Business

2Business 3

Charity 1Charity 2

Charity 3Charity 4

Federation of Small Businesses

Venture Capitalists

Former Business Partner 2

The ‘Case’ For Multiple Rationalities• The family network – 2 parents, 3 children• The business network – 4 businesses• The friendship network – the local community, 3

charities [at least!], a group of ‘entrepreneurs’, 3 formal business networks etc etc

• BUT– The networks are not distinct– They are almost completely embedded

The Developing Networks• The role of chance• The role of culture – family, community and

business• The evolving and revolving nature of networks• The impact on knowledge acquisition,

dissemination and transfer• The route forward

Applying a Knowledge Perspective to Network Research

– Knowledge Acquisition– Knowledge Dissemination– Knowledge Sharing– Knowledge is not always ‘correct’– Knowledge is fluid, situational and

culturally based– Knowledge lives in networks

Implications for Policy

• Where does knowledge reside?

• How is knowledge exchanges/shared?

• How can the ‘quality’ of information be improved?

• Working with networks – a stakeholder approach

Knowledge

For Better, For Worse ...

For Richer, For Poorer...

In Sickness and in Health?

Thank You!Any Questions?

Interested to Learn More?

http://www.qmu.ac.uk/be/research/sffbr

Email cseaman@qmu.ac.uk