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Credibility is a critical resource at start up and represents an important element of the entrepreneur’s personal contact network

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  1. Introduction
  2. Basis for credibility
    1. what makes people have confidence in you?
    2. The first component: Trust
    3. The second component: Competence
    4. The 'symbolic' or 'social network'
  3. The problem met while networking
    1. The difficulty in establishing credibility
    2. Credibility and incidents in the relationship
    3. Analysing the general characteristics of networks
  4. The advantages of the Entrepreneurs' network
    1. The theory of the 'merry go round'
    2. Credibility: A key ingredient for the success of start ups
  5. Conclusion
  6. References

Traditionally, entrepreneurs have been considered as individuals with a strong, often charismatic, leadership as well as a high drive for individualism and independence. However, a business unit does not exist in isolation since it is, or will be, in contact with a whole range of other organisations. Porter and Ketels' (2003, p45) study of British competitiveness noticed business networking often plays a particularly important role in the diffusion of new management best practice and innovation. This is particularly relevant for entrepreneurial start-ups if we consider Schumpeter's analysis that the entrepreneur leads the way in creating new industries. Thus, entrepreneurs are bound to cooperate at most during the creation of their company, which is a critical step for businesses survival, as the initial resources on which they can rely on are limited. A means to overcome this is the credibility these businesses can get from their network. However, there are no studies on credibility in the fields of entrepreneurship, as research has been linked only with marketing and organisational behaviour (Ali & Birley, 1998, p750).
Sociological studies have suggested that credibility is made up of meriting trust or confidence, as well as being able to persuade as a person or message source, which is generally associated with prestige. This has an impact on a network that consists of single nodes (actors) and connections between these nodes (dyads), (Walker 1988, p228). Firstly, this paper reviews the existing literature on the credibility of the entrepreneur. Secondly, the problem encountered while entering the network will be discussed. Finally, the essay will analyse the structure of networks related to the services provided by partners and to start-up success. The paper critically examines empirical studies on the subject, in order to highlight the features and weaknesses which could possibly be the object of further research.

[...] That can become an advantage since the small size of new start-ups is often a barrier to reach some services and inputs, like for example advertising, training, access to loan or finance at advantageous rates, consultancy, advice, financial services. Those items cannot be easily affordable for entrepreneurial businesses. The main advantage of networking is that it surmounts weaknesses by allowing entrepreneurs to get resources cheaper than they could be obtained on markets, and to secure resources that would not be available on markets at all, like reputation or customer contacts. [...]

[...] Yet, the notion of credibility is more complex and can be regarded as divided into two parts: perceived trustworthiness and competence. The first component, trust, can be a solution to the threat of risk and uncertainty within any business relationship. When trust and co-operation are safe and secured, the potential risk to the company is minimised whilst the partners are able to establish their reputation for honesty and consistency (Thompson 1993, p59). Contracting might also be a way of reducing hazards, though as Macaulay in Carter and Jones-Evans (2000, p 118) noted, detailed written clauses have their limitations since many of them engage non-legal sanctions. [...]

[...] Mayer, R C., Davis, J Schoorman, F D (1995). Integration Model of Organizational Trust', The Academy of Management Review. Briarcliff Manor: Vol Issue pp 709-735. Pittaway L Robertson Munir Denyer (2004), 'Networking and Innovation: A Systematic Review of the Evidence', Lancaster University Management School Working Paper, Lancaster, LUMSWP2004/016. Porter, M. and Ketels (2003), Competitiveness: Moving to the Next Stage', Management Research Forum, Summary report Advanced Institute of Management. Sako, M. (1992),'Prices, Quality, and Trust : Interfirm Relations in Britain and Japan' [...]

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