friendship, owner-manager, relationship, friendships, utility, friends, firms, personal relationships, Blackburn, business ideas, owner-managers, true friendship, building community, types of friendship, family networks, personal relationship, Small Business Administration, dynamic relationships, social responsibility, dynamic environments
Brunel University Brunel Research in Enterprise, Innovation, Sustainability, and Ethics Uxbridge, West London UB8 3PH Working Paper No. 8 Forever Friends?: Friendship, Dynamic Relationships and Small Firm Social Responsibility Laura J. Spence BRESE July 2004 An index to the working papers in the BRESE Working Paper Series is located at: http://www.brunel.ac.uk/research/brese/pub/work.htm 1
Acknowledgements This paper was first presented at the European Group of Organisation Studies' 20th Colloquium, Ljubljana, Slovenia, Subgroup 17: corporate social responsibility
and Business Ethics, 1-3 July 2004. Abstract In this paper, the case of the small firm is focused upon to explore dynamic relationships between stakeholders and the influence on ethics and social responsibility within those associations (1). Relationships among actors is an important determinant of ethical behaviour (Brass, Butterfield and Skaggs, 1998). The paper has three sections. In the first, small firms, networks and theories of friendship are introduced. Small firms are an interesting example of organisations that are commonly reliant on networks of dynamic personal relationships. Friendships are focussed upon as the archetypal personal relationship. In the second section, empirical evidence on small firm owner-managers' perspectives on business friendships is presented, drawing on data from Germany and the United Kingdom. In the third section, the implications for social responsibility of friendship as part of the dynamic relationships of small firms are discussed. It is concluded that business friendships are a positive thing, which although they may have extrinsic elements, are far preferable to the alternative of no friendships other than true friendships. The fact that business friendships may not last forever or offer deep and Meaningful Relationship
s in their own right does not undermine their contribution to the well-being of the actors. 2
1. Small Firms, Networks and Friendships Small firms and embedded networks The literature on small business has long discussed the small firm as part of a network of dynamic relations, internal and external, embedded in the local, or other environments (see Perry, 1999). They are frequently informal, network like organizations. They offer noteworthy instances of relationship building
and sustaining which is sometimes a reason for organizational longevity in dynamic environments. Brьderl and Preisendцrfer (1998: 214) note that the "organization and coordination of resources require social activity and social interaction
s". While in this paper the benefits or dis-benefits of relationships and networks are not a focus of interest, much has been written on the subject, usually expounding the positive virtues of networking. In summary, Brьderl and Preisendцrfer (1998: 214-215) identify functions of networks in the literature on entrepreneurs to include the following: 1. Social relations and social contract
s are important channels for gaining access to information. 2. Network contacts give access to customers and suppliers. 3. Network contacts may open the possibility to broaden the financial basis of a new firm. 4. Some networks such as family networks, give access to unpaid work and emotional support. Kitching and Blackburn (1999: 622) note that according to much of the literature, small and medium enterprises operating outside of strong networks are less able to acquire the necessary resources, adversely affecting innovation, competitiveness and profitability. Other advantages of networks include that they have been found to ease the settlement of disputes (Granovetter, 1985: 497) and positively affect managers' incomes (Meyerson, 1994). Networks are an important source of social capital (Burt, 2000: 282). Small firm research continues to be the poor relation of management and organisation studies as well as business ethics research. Small firms are different in nature, not just size, from their larger counterparts, and act differently from them (see Curran and Blackburn, 2001). This is also true in the sphere of social responsibility (Spence and Rutherfoord, 2001). Small and medium sized firm social responsibility has been identified at a European level as an important aspect. Building on the European Commission
Green Paper on `A European Framework for Corporate Social Responsibility' (2001), the EU has made far-reaching commitments for corporate social responsibility (CSR) in its policies, including a commitment to stimulate CSR practices among small and medium sized enterprises. Studying small firms is highly relevant since by far the majority of firms are small. The proportion of small firms in both the UK and the US is in excess of 95% (Department of Trade and Industry, 2001; Small business administration
, 2003). Small and medium sized enterprises (SMEs) are significant to the economy in a variety of ways, accounting for 50% of business turnover in the UK (Curran and Blackburn, 2001: 2), and 50% of employment in the US (Small Business Administration, 2003). firm size
is defined 3
according to the (not unproblematic see Curran and Blackburn, 1994: 53-61) standard European definition by number of employees, with below 50 employees denoting a small firm, 50-249 employees a medium firm and above this a large firm (Small Business Service, 2002). The exposed environment of the small firm, by virtue of the low number of employees often clearly spearheaded by a single owner-manager, allows a relatively ordered investigation of the personal relationships which are at the heart of these fascinating organizational types. Granovetter has suggested that small firms may survive and persist in competitive environments because "a dense network of social relations is overlaid on the business relations connecting such firms and reduces pressures for [vertical or horizontal] integration." (Granovetter, 1985: 507.) He later highlighted in particular the importance of informal relationships, trust and solidarity for small business development (Granovetter, 2000). Relationships are not isolated from economic exchange, and economic transactions are embedded in social relations (Granovetter, 1985, Perry, 1999: 6). However, the embeddedness of small firms in their local economic networks cannot be taken for granted. Curran and Blackburn (1994) found that small firms tended not to be embedded in their local community
, for reasons of time constraints and because networking is inconsistent with the personal independence typical of small firm ownermanagers. Relationships and friendship Relationships may be less intimate than either family members or friends, but nevertheless be important to the small firm owner-manager. They may take the form of what Granovetter (1973) called `weak ties' back in the 1970s. Whereas strong ties, characterised by being time and emotion intensive, with intimacy and reciprocal behaviour, may restrict options for those involved, weak ties may stimulate change and innovation. Nevertheless, strong ties offer shared learning and continuous improvement
with members having a greater motivation to help and support others (for further discussion of weak and strong ties in relation to small businesses see Perry, 1999: 17-20). Important here is the concentration on dynamic relationships governed by network characteristics rather than market or hierarchy organisations (Powell, 1990). The critical points are that the exchange is based on reciprocity and is accompanied by a concern for reputation and open-ended, mutual interests. In practice, dynamic relationships relevant to the small firm owner-manager might include suppliers and customers, competitors, neighbours, employees, partners, business networks, trade association colleagues and so on. The word `relationship' derives of course from `related' and has connotations linking to the family. People within organizations have many and varied reasons for having relationships pertaining, at least in part, to their organizational life. For the small firm, these personal relationships may well be linked to actual related members of the family. This has certainly been found to be the case for ethnic businesses operating in Western societies where the cultural and social context supports business development through extended kinship ties (Ram, 1994; Janjuha-Jivraj, 2003). Stewart (2003: 388) points out 4
that strong kinship ties "are needed for networking with distant or weak ties, and not only for their more obvious value in mobilization and management of people within the family firm". The effectiveness of partners, in practice usually wives of small firm ownermanagers in building social capital and aiding the success of a firm has been found elsewhere (Brьderl and Preisendцrfer, 1998; Spence, Schmidpeter and Habisch, 2003). In addition to relatives, however, friendship may be a form of relationship which implies a greater degree of social intimacy and caring than a mere business acquaintance. Friendships are particularly important to study since they serve as a prototype for personal relations (Silver, 1990: 1475). Kapur (1991: 483) defines friendship as "a practical and emotional relationship marked by mutual and (more or less) equal goodwill, liking and pleasure". The inclusion of `practical' seems particularly relevant to business friendships, since they are likely to be concerned with the practical elements of running the business in some way. Relationships and friendships formed for business purposes may offer a variety of benefits to the small firm and its owner-manager. However, the instrumental cultivation of friendship may not be successful, either in terms of friendship or organisational progress. Cooley (2002) summarises a helpful categorisation of types of friendship based on books eight and nine of Aristotle's Nicomachean Ethics
. The division between extrinsic and intrinsic friendship is the most fundamental. An intrinsic friendship is an end in itself, "characterized by activities that are done not solely, or even primarily, for the sake of any end beyond itself not even for the sake of furthering the friendship but, rather, out of friendship" (Kapur, 1991: 492). This is inkeeping with a Kantian perspective. Cooley identifies characteristics of intrinsic friendships as including reciprocal help in developing each other's character, demonstration of an element of altruism to each other and sharing intimate personal information
(2002: 196-197). A further characteristic of friendship is non-substitutability, (Silver, 1993: 1477), i.e. one party cannot be replaced without a change to the dynamic of the relationship, and perhaps the loss of the friendship entirely. An extrinsic (or instrumental) friendship is one in which each individual involved in the relationship uses the other person as a means to achieve some end (Cooley, 2002: 197). Aristotle identifies two bases of extrinsic friendships, pleasure and utility. Pleasure friendships are those in which the pleasure given as a result of the friendship is the ultimate end. In a utility friendship, the relationship is externally useful to both people. Cooley adds a third kind of extrinsic friendship, called a pseudo-friend, which is "a person who exhibits the behaviour associated with that of a friend, without having the appropriate, necessary feelings for the other to whom he exhibits the behaviour."(Cooley, 2002: 198). Cooley (2002) takes the stance that everything except intrinsic friendship is false and doesn't really qualify to be called friendship. In this paper we challenge this position, and argue that the friendships experienced by small business owner-managers in their work context enrich the lives of individuals and are worthy of more than a dismissal as mere utility relationships. Business friendships exhibit many of the characteristics of `normal' 5
friendship. Such relationships may not be the lifelong commitments to each other's character development necessary for true intrinsic friendship, they may be time and context restricted and not last forever, but they can be important dynamic relationships characterised by reciprocity, sharing information, non-substitutability, empathy, goodwill, liking and pleasure. One of the owner-managers in the study presented in the next section gives us a clue as to one reason why friendships are a normal part of small business life. SCUK4F : 241: if you are the Manager it is a lonely place, I mean, it is a very isolated place to be. Owner-managers are the ones where the buck stops, the only ones in that position in the hierarchy, often without even shareholders to look to for guidance on what to do. It is not surprising, then, that some look externally for friendships and people to draw upon for support. The independence which comes with small business ownership, is often one of the factors which owner-managers enjoy, so they may be reluctant to seek official advice and guidance, and prefer less formal, Social Support
if any. While much has been written on the theory of friendship over the centuries by eminent philosophers such as Aristotle, Kant, Hume, and Derrida, there remains a lack of understanding of the detail of friendship in business life (Koehn, 1998: 1762). Empirical work on small firm owner-managers in the UK and Germany will be drawn upon to further this endeavour. 2. Empirical Research on Business Friendships for the Owner-Manager Empirical research is presented on small firm owner-managers in Germany and the United Kingdom (UK). The research employed semi-structured interviews to explore social capital for small and medium sized enterprises in Munich and West London. The firms were from one of three sectors: marketing, garages, or food manufacturing and processing. A total of 30 owner-managers were interviewed, one from each organisation. The interview schedule was designed to elicit information about the connections of the owner-manager, covering formal membership of organisations, business friendships and personal family connections. Extracts relating to friendship have been analysed for this paper. The analysis draws broadly on Erving Goffman's Frame Analysis (1974) to identify different ways of organising the experience of business friendship. Like Stewart (2003) in his work on kinship and family firms, I would argue that ethnographic rather than interview methods would enhance greatly the validity of the findings presented here on friendship and small firms. When analysing the gathered data in the light of the theoretical discussions of friendship which constitute the first part of this paper, the following continuum of business friendships was constructed. In the case of this paper, they refer to small firm ownermanager's friendships, primarily with external (potential and actual) stakeholders to the firm. The continuum is designed to go beyond the somewhat dyadic positioning of either extrinsic or intrinsic friendships. While this position may be philosophically problematic, the complexity of the social world and the messy lives of individuals within it suggests 6
that it is a realistic proposition. In practice, and this is borne out by the data on small firm owner-managers, individuals have mixed motives in pursuing friendships. Extrinsic and intrinsic approaches are extremes which may be true in only the purest cases (see Figure One). Furthermore, this use of a continuum allows for relationships to change character over time, perhaps starting in one position and ending up in another. Figure One: Business Friendship continuum
The extrinsic intrinsic axes of the diagram pertain to the type of friendship pursued by the actor. Extrinsic aspects may be for either pleasure or utility, although in the business context it seems most likely that utility is the main extrinsic force. As discussed in the previous section, intrinsic friendships are for the sake of friendship alone.
In position 1 on the continuum, the pseudo friendship, as mentioned previously, is a false friend, who makes the other person believe that the friendship is genuine in order to achieve an ulterior motive not shared by the other (Cooley, 2002: 198). This is a fully extrinsically motivated friendship, where to borrow Kantian terminology, one person can be said to be using the other, without his or her consent, as a means to an end.
In position 2, a friendship is pursued for extrinsic reasons, but this does not preclude some of the elements of true friendship, such as development of a trusting reciprocal relationship and empathy, from being part of the friendship mix.
In position 3, the extrinsic and intrinsic factors are evenly matched. An individual may make friends with another, clearly aware that there may be utility to that friendship but equally motivated by what Adam Smith
would call a `fellow feeling' toward that person.
In position 4, the driving intention behind pursuit of a friendship is predominantly intrinsic, but it is not lost on the individual that there may also be some utility reward, although this is not the purpose of the relationship.
In position 5, a person, in this case related in some way to the business, is a true friend, with no thought given to any utility or indeed pleasure gains resulting from the friendship.
In the following section, data from the study which indicates a tendency to one of the positions on the continuum is used to illustrate and expand the points made.
1. Pseudo Friendship Cases of pseudo friendship were not commonly found in the sample. This may be due to socially desirable response bias which prevents the owner-manager from admitting to coolly using other people for their own gain. However, the owner-manager of a very small marketing firm, SCUK5M, made it clear that he would not pursue friendship or network relations unless there was a clear utility gain for him and his business. In the excerpt from the interview below, he explains an opportunity which he `grabbed' to gain customers.(2)
SCUK5M 66.R 67.LS 68.R 69.LS 70.R 71.LS 72. R 73.LS 74.R 75.LS 76.R
I tried the er, our local tennis club I set it up. At Woodside, I actually set up a business group there. But again I found too many consultants coming. What motivated you to set it up? If I see an opportunity I grab it. What did you think was the opportunity? Well the likely chance to get the 4000 members together and that we talk about business. So I went to the club with the idea, and they said `yes', and I chaired the meetings for about a year. But I didn't get enough personally out of it to make it really worthwhile investing in it. What were you seeking? More senior level contact. Is that to get business from them or is that? Of course. Business. There's no other reason for doing it. OK. I am not a social animal.
The final comment, `I am not a social animal', does seem to indicate a complete lack of intrinsic motivation for getting to know the people at the tennis club, and in line 74 he makes the intended business utility for the activities clear.
Pseudo friendship, it seems likely, is hard to disguise completely and may, like the example above, ultimately be unsuccessful. As Perry suggests, "the attempt to build goodwill by cultivating friendship is stymied by the instrumental motive for the courtship" (1999:15)
2. Primarily Instrumentally Motivated Friendship Small business owner-managers who identify potentially `useful' people then pursue a friendship, which may nevertheless have elements of respect and reciprocity, were quite common in the sample.
Here, garage owner-manager SCUK2G talks about the many local garages to whom he subcontracts with a network of people `helping each other out'. When asked how he knows all these people he replies. SCUK2G:
316: Of course, I mean, you don't go through life without meeting people do you? Making friends. I think I am a fairly amicable sort of person and if I think a person, not that I use people, but if I think something is interesting or you know that people have got something that I haven't then I will go and speak to them and learn from them, you know I was down getting an MOT down at Robin's yesterday and was discussing the job that I have had trouble with, with Brian and Mike and you sort of bounce off when another lay man has a suggestion that you haven't thought of, and you know, at the end of the day, I solved the problem that I have been batting for about three weeks. You know you never go through life lying low, I don't think so anyway. SCUK2G sees no difficulty in pursuing friendships with people who may be useful for him. Interestingly he interrupts himself to say that he does not use people. This may be concern to appear `nice' to the interviewer or indeed reassurance for himself, or an authentic reference to the openness to intrinsic friendship which is also part of his relationship building. He goes on to say: SCUK2G 318-322: And the more people you know the better it is for you.. Some people are not worth knowing.. Well the takers not the givers. The meaning of `not worth knowing' is a little ambiguous here. He may literally mean there is no utility to be gained, indeed that is indicated by the next sentence referring to `the takers not the givers'. However, the phrase `they are not worth knowing' could also simply mean they are not nice people, suggesting some extrinsic pleasure motive or negative relationship
in the form of dislike. Food processing manufacturer SCD1F makes clear that the business friendships he has are quite normal relationships of helping each other out, i.e. they are based on reciprocal utility. 278-282: Дhm, es ist aber mehr durch Problematik im Betrieb entstanden, wie mir die Leute ausgefallen sind und sonst irgendwas. Und da hat man gesagt `Gut, du lieferst mir das' `Ich liefer dir das'... Дhm jeder spart sich irgendwo ein bisschen was, solche Verbindungen bestehen schon. Aber das artet nicht in groЯe Aspekte aus... Das ist eigentlich nichts anderes als wie ein Unter-dem-Arm-greifen, dass der andere oder jeder ein bisschen, das Ganze ein bisschen leichter nehmen kann. SCD1F 272-282: Erm, it has come about mainly through problems with the business, where we have lost people and other sorts of things. And then someone says `OK, you deliver this for me' `I will deliver that for you'. Erm, everybody saves a bit on the way, such connections do exist. But that isn't a big deal. That is actually nothing more than giving someone a helping hand, so that they can get on with everything a bit more easily. When asked what the value was of his wide network of contacts in the food processing business, owner-manager SCUK4F makes clear the benefits of other people's experiences that can be found via business friendships and relationships. 9
453: I think they are very important because you make connections, that's where your network is, to know people that can be useful because you draw on their experience and so on and so forth that's how I see the value of it. An example of pleasure extrinsic motivation for friendship is shown in this quotation by garage owner-manager SCD5G. This owner-manager is at the end of his career, with no one to take over the business. He is in his sixties and is fed up with working. When asked whether he has contact with ex-colleagues he says: 183: Da muss ich eigentlich, da muss ich eigentlich sagen, dass die alle, wenn sie einmal weg sind, dann sind sie weg und dann hin und da schaut da mal einer noch vorbei und so. Aber es ist nicht mehr... Es ist ja so, es ist, du bist ьberall so schnell und so fest dann gleich mit verflochten, dass du nicht mehr recht viel Zeit hast. 183: Actually, I have to say, I actually have to say, that they all, once they are gone, they are gone, although occasionally one looks in, but it just isn't the same any more...It is like this, it is, you are, everything moves on so quickly, and straight away things get caught up again, so that you really don't have much time. He implies that friendship is there when you are working together, but once someone has left, daily contact and interest evaporates, and things are never quite the same again; the pleasure of the friendship is gone. 3. Evenly Mixed Motives Owner-manager of an events marketing firm, SCD2M offered a textbook example of evenly mixed motives in business friendships. She is quite clear that her friends in the trade are useful to her and vice versa. In the quotation below she is responding to a question concerning why she is not a member of the somewhat costly relevant trade association, the answer is that she doesn't need to be she can get any useful information from others who are members. SCD2M 122-124: Aber dadurch, dass diese Agenturszene in Deutschland oder auch in Mьnchen sehr verzahnt und sehr klein ist, дhm, habe ich also auch aus meiner frьheren Tдtigkeit oder aus meiner Berufserfahrung einfach noch viele Bekannte und Freunde, sage ich jetzt mal, дhm, die ich auch anrufen kann, da wo ich weiЯ, die sind bei der EKA und die sind noch bei irgend `nem anderen Branchenverband und wenn ich da irgendwas wissen will...dann kann ich die auch fragen. Also das ist mehr so'n kein unbedingt Netzwerk im Sinne von Mitgliedschaft... 122-124: But because the Agents scene in Germany or also in Munich is so integrated and very small, erm, I have got many acquaintances and friends from my earlier activities and business experience. I can call them up and I know that they are members of [the trade association] and if I want to know something.. then I can ask them. But that isn't a network in the sense of official membership... 10
The owner-manager such as SCD2M who has a network rich in information benefits demonstrates "1) contacts established in the places where useful bits of information are likely to air, and 2) a reliable flow of information to and from those places" (Burt, 2000: 288). Here she identifies how what was originally a primarily extrinsic relationship with business colleagues has developed into more intrinsic friendship with mutual support and help. SCD2M 134- 140: Und da ist eigentlich, sag ich mal, bis hin zu `ner Freundschaft einfach дhm... .dieses Netzwerk da, wo man sich gegenseitig auch hilft. Weil es kommen auch zum Beispiel immer wieder so Anfragen, wo `ne Firma einfach zehn Agenturen versucht, gegeneinander auszuspielen.. Und wir rufen uns halt untereinander an und sagen...und fragen halt `Hast Du die Ausschreibung auch bekommen?' Damit man halt zusammenarbeitet und nicht gegeneinander. Und ich bin da eh relativ offen, sage ich jetzt mal, 134-140: And that is actually, I would say, it has developed put simply into friendship erm, this network, in which we help each other out. Because we get examples time and again, inquiries where a firm tries to make ten agencies play off against each other. And we call each other up and ask `Have you got the inquiry too?'.. In order to work together and not against each other. And I am, I would say that I am er relatively open about that. Finally, she identifies herself the mixed nature of her business friendships SCD2M 148. wir haben ein irrsinniges Netzwerk an, also wo sich auch dieses Freundschaft und Arbeiten einfach total vermischt. 148 We have an incredible network, where friendship and work are totally mixed. Garage owner-manager SCUK3G gives three examples of connections he has which he spells out have utility aspects, stating clearly in each case that `he is a good friend of mine' too. SCUK3G sponsors a racing car through his small garage business. When asked why he does this he says: 140 : Well the guy is a very good friend of mine, he puts a lot of business my way, that's one [reason]. Again he's a one-man band competing with big companies ....... My boy's gone into racing cars and all that, so I want to give him another interest, then obviously if he comes into this trade, that will give him more interest so he can start doing that side of it. Plus Shaun himself puts a lot of work my way from his business, he works for a company down the road. So it's more of that side of it and he said I was the only one who ever just gives him money like that, but that Ј1000 is a lot to me but then again in business it's nothing because it will earn you more over the year. So it's a long-term investment if you want to call it, which it has, I've done it in the past and it's given us a bigger return. SCUK3G, who is chairman of the football team near to his garage, talks about the owner of a local sports and leisure newspaper 11
284: He's a very good, close friend of mine just through football and gives a lot of ideas and business ideas. I give him Ј200 of advertising, no-one else, he's another one that's [a good contact] through the football. SCUK3G 318: The leader of the Council,, he's a good friend of mine, a customer through here, he's also the Chairman of the local Police as well. Note in the first extract (140) he also identifies the fact that the friend is a small business owner as relevant, highlighting the empathy evident for those in similar circumstances. SCUK3G is a classically well embedded small firm owner-manager. Interestingly, he doesn't live in the village where his business is located and he is a British Asian, building friendships and networks with the predominantly white local community. This case underscores the role that friendship can play where ethnic and family ties are weak. 4. Primarily Intrinsically Motivated Friendship Several owner-managers in the sample made it clear that they did not like to pursue friendships for extrinsic reasons, although some consequences of friendships may be good for them or their business. Owner-manager of two bakeries, SCD1F, shows his distaste at people who `worm' their way into a friendship with ulterior motives. SCD1F 864-866: Und дh vom vom Sehen weniger, auЯer halt, dass man so frьher so viel zu den Festivitдten gegangen sind. Weil wir sind ja auch nicht aus der Ortschaft selber, sondern wir haben da halt das erste Geschдft angefangen. Aber wir haben ein paar gute Freunde nachher gekriegt da dort, die wo uns ьberall mit hingenommen haben. Aber sonst hдtte ich gar keinen kennengelernt. Weil ich, ich bin, und ich hab noch nie groЯen Wert daraufgelegt, irgendwie дhm mich irgendwo `reinzuwutzeln'...Das wollte ich nicht, und das das mag ich auch heute noch nicht. Muss ich sagen, das ist auch der Grund, warum ich wahrscheinlich nichts anderes groЯ mache. SCD1F 864-866: And er I was not really known by sight [in the local area
] unless, people went to the festivities I used to go to. Because we are not from the area, but we opened the first business there. But we made a few good friends through that who took us everywhere with them. But without that I wouldn't have got to know anyone. Because I, I am, and I have never put much store by it, worming myself in somehow...I didn't want that, I don't like that even today. I have got to say that that is also the reason why I don't do any other such thing [in terms of networking] Food processing owner-manager SCUK4F gives a neat example of how people with a business connection can form friendships over time. When asked about his relationship with his business contacts SCUK4F replied: 415-419: Yes you meet people you know, you talk about trade and how things are going, the economy and [it] helps you make decisions about when to expand, 12
when to spend money. Erm, I suppose there is a network of businesses around the airport that used to be actually called the X Association there and then, we are sort of the second generation, the X Association is no more, its gone but it was an association of businesses on the perimeter of the airport that supplies the airport but there are a few guys that I have met here and there, half a dozen or 10 of us who meet for lunch every so often and go out either individually or normally there is five or six of us so, one is an engineer, one is a hotel / pub owner, Frank my partner who is a butcher and also have other catering businesses, his son, there are others. We meet up and put the world to right as it were. Then in that process you pick up feelings of how they are doing, whether they think the economy is right or not, so you chat up people you know, no formal network but it is an informal gathering of people. Food manufacturer SCD3F maintained that playing golf was not something he did for business reasons, although coincidentally he had met the company's general manager on the golf course. SCD3F 295: Unseren jetzigen Verkaufsleiter habe ich beim Golfspielen kennengelernt, aber das ist sicher Zufall. 295: I met our current General Manager playing golf, but that is just a coincidence. Owner-manager of a marketing firm SCD3M is still in touch with friends with whom he studied. 188: Erfahrungsaustausch. Aber das ist nicht jetzt `ne Institution, in die (...127). Das ist einfach nur so ganz locker, dass man sich mal zusammentelefoniert oder sich irgendwo trifft und sagt `Kommt, lasst uns mal wieder ein Bier trinken, bisschen ьber die Branche quatschen und wie's jedem so geht, wo die Probleme sind und....' 188: We swap experiences. But that is not an institution, in that... That is just a casual thing, that we telephone each other, or meet somewhere and say `come on, isn't it time we had a beer again and gossip about the industry and how it is going with everyone, what the problems are and....' Despite this statement, he later notes that it has happened that they become clients, although this is not the motivation of the relationship. 5. True Friendship True friendship is the one which onlookers might least expect to find in a business context. In a sense they would be right. The following examples are of people who take a conscious decision not to have true friends in their business life, not to seek intrinsic friendship, but to separate business and friends. Direct Mail Marketing owner-manager SCUK2M, whilst discussing a social group organised by people in the same industry locally said 13
465-469: I'm not into it. I prefer to be with people I actually want to be with, not sort of glad-handling. I'm much better on the phone with my clients.... The girls quite enjoy the social side and they go, they tend to find out industry gossip, who's done what. It's a small world. Note that even though he doesn't participate, he still gets benefit from these events because some of his employees join in he himself maintains `clean hands' from what he calls glad-handling. SCUK2M explained that he liked to keep his business and personal life quite separate, saying further: 497-501: I don't see socialising as an integral part of networking... So, I won't be socialising with the client but we'll be talking to them and as I say, I prefer to work with the phone anyway. I'm not very good in in cold presentations SCUK2M 521-535: We try not to do any business with friends. As a friend or family, we just try not to. Erm, it doesn't work very well. It's normally petty business. Erm, we fell out with, fell out, that's the wrong expression. But, a friend, one of our original partner's best mates works for [company name]. I took a pension scheme from him as a favour. He was going to try to give us mailing list activity. And it was a nightmare. And he got quite upset when we said it would be a much better idea if he'd stayed with his supplier. He got quite upset. This incident clearly left an impression on the owner-manager such that he wouldn't want to mix business and friendship again. Interestingly he makes the point twice that he is happier talking to customers on the telephone than fact-to-face. This is something which could be considered further elsewhere the difference between face-to-face friendships and disembodied ones via telephone or of course email. Marketing owner-manager SCD1M makes it clear that he considers a professional distance to be important when dealing with business relationships SCD1M is talking about being friends with clients. 114: grundsдtzlich zu Kunden, дhm, wдr es auch aus meiner Sicht gar nicht unbedingt gewьnscht, sondern es ist, дh, ganz gut, `ne gewisse Neutralitдt zu halten, weil es wird immer mal gut und mal schlechter gehen. 114: fundamentally to clients, erm it would not be my preference, but erm it is really good to maintain a certain neutrality, because there will always be times when it goes well and not so well. Finally, the following example of sections of transcript from the interview with financial marketing owner-manager SCUK1M demonstrates how people from different walks of his life are treated in different ways. SCUK1M distinguishes between types of friends. In the first example he talks of friends that may turn out to be useful (Position 4). In the second example, he refers to true friendships (Position 5), and the third is a case of primarily instrumentally motivated friendship (Position 2). SCUK1M noted that warm contacts and word of mouth are without a doubt his main way of getting business, he relates this particularly to the financial city of London, where his business operates. 14
135: And, you know, the friend of a friend of a friend. I mean the City has been like a village, you know since time immemorial 179-183: I mean I spend several days of the week there anyway [in the City] so it's not difficult to get down there. So people are meeting there, it might be there in a pub or wine bar or something. There is a bunch of people that worked at XYZ, you knew, a few years back meeting here for a drink and dinner afterwards. So, probably we'll do that....Tonight, for instance, my wife and I are going out with my old university friends, and then there are course friends. My course at university was Economics, so, you know, it's obviously quite useful to stay in contact with them as well as a lot of fun... But, I mean, there are loads of these informal networks that, I mean, of ex-colleagues, of people that I've worked for and then left to go to other companies, you know, so it goes on. SCUK1M 233-243: , I mean most of my friends, who are in, erm, who are friends first and happen to be in related businesses second. Erm, we don't talk about, we normally don't talk about work. It's almost like an unwritten law...We don't talk about work in real detail. You know, it'll be `how is it going', `busy' and `who are you working for'. But, you know, some, I mean, nobody would really say, `well, tell me precisely what project'... That doesn't really come up. You know, a friend of mine will say `Oh I'm having real trouble with this manager who is reporting to me or whatever, and he's being a real pain' you know, that sort of stuff. More personal than professional. Because they are friends first. SCUK1M 285-289: I've been on the Friends-Reunited-Site and, erm, hooked up with a guy I haven't seen since primary school, 32 years ago who happens to be a partner of a major accountancy firm. So, you know, that's I mean he is not actually precisely in the area I'd like him to be in, but obviously that's interesting. This example demonstrates that owner-manages do not have a uniform approach to all contacts and relationship in their lives and make qualitative judgments about the types of friendships they have. 3. Implications for Social Responsibility The relationships of friendship identified in the empirical data presented above support the socially located nature of friendship ties and ethics. The fact that business ownermanagers are tied by business connections and friendships is according to Brass, Butterfield and Skaggs (1998: 18) an example of multiplexity, where two actors are linked by more than one form of relationship. These ties exert an influence on behaviour over time, such that "ongoing social relationships provide the constraints and opportunities that, in combination with characteristics of individuals, issues, and organizations, may help explain unethical [and ethical] behavior in organizations" (Brass et al., 1998: 17) There is a sizeable body of literature drawing from networking and embeddedness theory which argues that strong ties encourage ethical behaviour between actors in terms of 15
factors such as trust, reciprocal arrangements, fair dealing and honest handling. Brass et al. (1998:14-15) argue that "unethical behavior is inherently a social phenomenon it involves a relationship between actors that is also embedded in a structure of other social relationships." In their paper on relationships and ethics, they draw on the work of Granovetter, who takes the stance that "The embeddedness argument stresses [instead] the role of concrete personal relations and structures (or "networks") of such relations in generating trust and discouraging malfeasance" (Granovetter, 1985: 490). Uzzi (1997: 42) argues that embedded relationships have three main components that regulate the expectations and behaviors of exchange partners: trust, fine-grained information transfer and joint problem-solving arrangements. In addition, it should not be forgotten that `many SME already practice social and ecologically responsible management even if they are not familiar with the CSR concept or regularly communicate about their practices. For many SME such practices are simply a consequence of responsible entrepreneurship' (Observatory of European SMEs, 2002). Hence the responsible behaviour found between friends is not necessarily the only responsible behaviour practiced by owner-managers. Brass et al. (1998:17) argue that strong relationships, characterised by reciprocal cooperation, trust intimacy and empathy, offer increasing opportunities for unethical behaviour as the frequency of interaction increases. However, the satisfaction involved in the relationship and the time invested become disincentives to act unethically. Emotional intensity and intimacy build empathy and mitigate against unethical behaviour. Jones (1991) has used the notion of moral proximity to argue that people are more likely to act ethically towards those who are physically closer to them than strangers. Perhaps most powerfully, Gilligan (1982) of course laid the foundation for the ethics of care, and the concept that it is inevitable that those with whom we have a close relationship will be treated more favourably by us than others, allowing for the emotional element in relations to emerge. Brass et al (1998: 18) point out that actual dislike of another person (a negative relationship) results in the absence of any constraining effects on behaviour produced by empathy or psychological proximity, and may be positively related to unethical behaviour. We have a moral obligation to promote the well-being of our friends (Jeske, 1997: 51). While this may be at the expense of others, it does bring moral obligations into the workplace with expectations of moral behaviour beyond those which may be found in a laissez-faire capitalist system
. Drawing from Adam Smith's Theory of Moral Sentiments and Wealth of Nations, Silver notes that "The mutual control of behavior that results [from the associations of private individuals], through a complex play of interacting and reflexive mechanisms, is both source and prototype of moral conduct. Therefore, sympathy moderates ideas and conduct, distributing fellow feeling in an essentially democratic spirit" (Silver, 1990: 1484). This contrasts of course to a Marxian perspective where a "capitalistic system fosters distrust among members of the society, in part because no one can ever trust anyone else, lest the person be put at a competitive disadvantage" (Cooley, 2002: 195). 16
For the utilitarian, "duties of friendship are moral afterthoughts with only instrumental significance" (Jeske, 1997: 52). However, Koehn (1998: 1758-1759) argues that virtue is also evident in utility relations in four ways. First, like the parent child relationship, utility relations in commercial life serve important purposes, such as teaching basic social skills in building community and preparing for more complex friendships. Second, commercial friendships of utility are tacitly assumed to have longevity (even where in fact they may not have), resulting in mutual obligations to act appropriately. Third, utility enables exchange, which gives people the opportunity to display their `wares' thus helping to render people their due and contributing to justice. Fourth, to be virtuous, wealth and power are needed which can be obtained with the help of utility friendships. Friendship has an inherent concern with the `other' and their view of the subject. This `other' is an interesting concept in ethics. While Aristotle is concerned with the fact that only a limited number of people can be one's friends, Derrida, in his `Politics of Friendship' argues that non-friends denoted as `Other' are somewhat dangerously excluded (see Jones, 2003). Silver (1990) also talks of Brotherhood and Otherhood. Roberts (1991) draws on Levinas and the `ethics of Narcissus' to consider accounting to the self and the other (which he calls indvidualizing and socializing processes of accountability). Brass et al. (1998: 15) suggest that most definitions of ethics involve a consideration of `the other'. Development of the work on business friendship to consider the role of the self and the other would be interesting. A stumbling block for much of the discussion in the literature and thus far in this paper is the lack of discussion of symmetry in the relationship. Of the types of friendship discussed in the previous section, it has been suggested that all bar the pseudo friendship constitute legitimate relationships worthy of being called, at least, business friendships. As long as the friendships are taken for what they are, they have some value in their own right. Indeed, returning to the definition of friendship earlier in the paper by Kapur (1991: 483) as "a practical and emotional relationship marked by mutual and (more or less) equal goodwill, liking and pleasure", the emphasis is on the even balance of goodwill liking and pleasure rather than the amount of these factors. These things are difficult if not impossible to quantify, but it seems reasonable to expect that a higher level of mutual goodwill, liking and pleasure is more relevant to a true friendship than a mixed friendship, for example. This does not, however, preclude a mixed friendship from meeting Kapur's definition of friendship. This overlooks the ethical problems that arise when there is an asymmetrical understanding of what is going on in a friendship. Brass et al. (1998: 19) put it as follows: "Asymmetric ties place the trusting party at risk, while they increase the opportunity and payoffs for the non-trusting, emotionally uninvolved other party". This occurs when one party, for example, considers the hand of extended friendship to be a desire for true friendship, when in fact it involves some extrinsic goal such as gaining a new client. It could be proposed that the further away from each other on the continuum in Figure One that the motive for friendship is for the two parties, the unhappier the result for reasons of transparency, honesty and trust. Diverging from other work on friendship, however, I maintain that if the two parties have the same approach to the relationship, even if that at the extreme is one of pseudo 17
friendship, then there are grounds for defending them on ethical terms. Admittedly a twoway pseudo friendship would fail all Kantian tests, but it does not really harm anyone if everyone knows where they stand. (Here of course I tend to a consequentialist perspective.) What the point of such a mutually empty gesture would be remains open for discussion. The empirical work presented in the previous section points particularly to two stakeholders as primary material for business friendships employees and mainly colleagues in the same industry, often small firm owner-managers themselves and to some extent competitors. Moral obligations between competitors are not often noted, but some work has found that competing firms, particularly when they are roughly the same size, can have strong ties of association and friendship (Spence, Coles and Harris, 2001). This is, however, sector specific. Curran and Blackburn (1994: 104) found "tremendous sector variations" in the economic linkages of small business owner managers from nine sectors. Organisations within the same sector have been found to exhibit bonds of friendship commensurate with Adam Smith's notion of fellow feeling. "Businesses operate within different industry sub-cultures and economic climates which may affect strongly the character and content of external connections." (Curran and Blackburn, 1994: 92). A number of researchers have found that relationships within sectors impact on moral standards. Granovetter (1985: 498). argues that embeddedness of relations within the same industrial community "generate standards of expected behavior that not only obviate the need for but are superior to pure authority relations in discouraging malfeasance." According to Silver (1990:1494-5), patterns of friendship among business people from the same sector "contribute to occupational community, the political integrations of individuals and democratic unionism"...they "sustain community, linking small personal worlds with urban society". Small business owner-managers operating within the same sector will certainly experience many of the same challenges as each other, and may have similar backgrounds and experiences. This increases the ownermanagers ability to empathize with others on the basis of familiarity, attraction and generalisation (Brass et al., 1998: 18). Neighbouring firms, whether of the same sector or not, might also benefit from the fact that "spontaneous relations of friendly neighbors may be linked to the provision of public services so as to enhance both efficiency and community" (Silver, 1990: 1495). Subcontracting is typically a key example of network establishment and relationship building for small firms (Perry, 1999: 142). "The extensive use of subcontracting in many industries also presents opportunities for sustained relationships among firms that are not organized hierarchically within one corporate unit" (Granovetter, 1985: 497). The instrumental advantages can be significant on both sides. "For the supplier, subcontracting can ... provide insight into the managerial practices of the customer and access to its technology, providing valuable learning opportunities. For the buyer, it potentially provides access to specialised resources and skills as well as avoiding the risk associated with additions to internal 18
capacity...there is considerable mutual dependence between buyer and supplier, and associated with this may be the exchange of technical and financial information
, interchange of personnel and assistance in training and equipment purchase. (Perry, 1999: 142-145). Friendships with industry colleagues are likely to last as long as the utility element is upheld for example as long as the subcontracting relationship is mutually beneficial. They are not likely to last forever. Within the small firm as indeed elsewhere, work is seen as being "both a technical and a social activity" (Kitching 1994: 115). The employment relationship in small firms has been the subject of much speculation. Ram (1999) summarises the dominant claims of industrial harmony or otherwise, from the positive Bolton Report (1971) in the UK, which assumed that the owner-manager was typically a benefactor with a paternalistic relationship with employees, to work by Curran (1991) who finds against this supposition. Relationships with employees have not emerged strongly in the sample presented here but could be `business friends' of small firm owner-managers all be it ones which are temporally restricted, not enduring beyond the length of the work contract or perhaps even the end of each working day. Friendships with employees could be researched further to investigate type of relationship, but the limited evidence here points towards a primarily instrumentally motivated friendship such as that illustrated by ownermanager SCD5G. Friendships with employees are not likely to last forever. The empirical data used in this paper came from Germany and the UK. While identifying national differences and similarities has not been a key theme, it might be interesting to reflect on any indications apparent from the limited research presented here. From my reading of the data it would be worth considering further whether German business owners are more likely to keep friendships and worklife separate. Given the greater number of average working hours in the UK and more relaxed retail opening times, UK business owners might foster friendships through their work since they have little time outside of work. Given the European wide actions to encourage social responsibility amongst small and medium sized firms, it would be worth considering how propensity to friendships link to social responsibility in different countries and the associated institutional influences. In this paper I have not touched on the corollary of business friendships with their inherent mutual support and help, which is the disadvantage which non-friends are put to. Friendship does encompass preferential treatment as a result of empathetic and emotional links. This, in fact amounts to discrimination, with merit being sidelined as a decisionmaking factor in favour of friendship. This aspect of business friendships needs further investigation thus far little attention has been paid to the cost of not being friends. Another aspect for consideration is where the common goal of the friends is unethical, perhaps to create a price cartel or to blacken the reputation of a competitor. It is not suggested that owner-managers are of a particular type and will be represented in all their business friendships by a position on the continuum shown in Figure One. As the 19
example of SCUK1M shows, owner-managers may have different approaches to different groups. In this sense, business friendships are dynamic. Furthermore, their approach may change over time. One could imagine a diminished enthusiasm to invest time in building business friendships at the end of one's career, like garage owner SCD5G. On the other hand, perhaps that is the stage at which the owner-manager has rather more time and can think about building up intrinsic friendships more actively. Whether intrinsic friendship would be sought from business relationship is another matter. What does all this talk of business friendship mean for purely social friendships, if such a thing exists for the owner-manager whose business consumes much if not all of her time? If, as has been presented here, extrinsic friendships are of some ethical value and indeed are worthy of being called friendships, does this devalue the intrinsic friendship? Not necessarily, if we believe that they are different versions of a similar thing. Business friendships should not indeed be assigned a status equal to intrinsic friendships, but, as long as business people understand their status, they are perfectly desirable. Indeed, it would be naпve to think that an owner-manager developing a relationship with a potential customer or sub-contractor would not recognise the restrictions inherent in any friendship developed. That said, true friendships have to come from somewhere. People are not born true friends, and it might be that a friendship made for primarily extrinsic reasons of utility eventually develops into a true friendship independent of the Business Link
s which may or may not still exist. I believe that many different kinds of friendship are ethically valuable and worthwhile. It is concluded that business friendships with elements of extrinsic motivation are included in this, as long as the relationship is symmetrical. Business friendships are not likely to remain forever, but they do have a moral worth. Reflecting on the alternatives, it seems that a life in which people do not pursue friendships with people with whom they are in regular contact, or at the very least are not prepared to be friendly, would be a sad kind of world. It would be a baron life indeed for the potentially lonely owner-manager if she did not make business friends. It is concluded that there are links between dynamic relations and social responsibility such that ties between individuals and groups bring disciplines of behaviour that include socially responsible activity. Typically, these relationships are built up over the longer term, taking on a form of friendship between individuals. Though dynamic in the sense that they may change in importance and form, the longevity of the connection, allowing the development of goodwill and reciprocal support, is critical in many small firm relationships. That is not to say that these friendships will last forever, since they are normally bound up with utility which sooner or later will diminish or no longer be relevant (such as when one part retires). Business friendships are a form of friendship which is unlikely to be everlasting. These business friendships can encourage a host of ethical behaviour for the parties concerned. Further investigation of the link between relationships and social responsibility is recommended. 20
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