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Network utilization during growth by food truck entrepreneurs

Master thesis research by Ruben Kuijs 

In January 2016, Ruben Kuijs graduated from the Tilburg School of Economics and Management at Tilburg University. He followed the MSc Strategic Management and wrote his master thesis in the area of organizational growth.

As an intrinsic objective, entrepreneurs have certain growth intentions in developing a business. When becoming an entrepreneur, the newness and smallness factors determine a lack of resources and capabilities needed to achieve growth. Entrepreneurs thus pursue opportunities for growth by making use of their social network, which will ultimately help them to attain external financial resources, advice or support. With around 450 food trucks in business in the Netherlands (NOS, 2015), this thesis provides an in-depth view of how food truck entrepreneurs use their social network to obtain resources to grow.

An entrepreneur’s network consists, according to Lechner and Dowling (2003), of different combined network types. Pursuant to Uzzi’s (1996) and Haythornthwaite’s (1996) studies, this social network can be of two types: the personal/informal network (the relations where the entrepreneur occupies a focal position), and the organizational/formal network (focused on collective relations of the firms and all its ties in that network). Approaching the entrepreneur as a focal person, this thesis answers how food truck entrepreneurs use their social network to obtain financial resources, advice, and support in order to grow?

The question was addressed by conducting a literature review focused on topics such as social network, resources, growth, and a qualitative research. Nine Dutch food truck entrepreneurs were interviewed. The variables of interest used are financial resources, in the form of loans; advice, as a recommendation or opinion meant to guide an entrepreneur how to proceed; and support, as emotional support and unpaid labor.

The findings of the study suggest that food truck entrepreneurs use their social network to achieve the resources they need to grow. In terms of financial resources, if the informal social network is deemed by the entrepreneurs as better able to help, the formal network, such as banks, is almost never approached, since it is considered expensive and unable to understand the entrepreneur’s needs. To get funding, most entrepreneurs use internal money, or take loans from their informal social network in order to grow their business. However, sometimes, they also call on their informal network by using crowdfunding or a microcredit provider. An entrepreneur obtains the advice needed to grow from both informal and formal network: friends, family, business contacts, respectively business consultants. On top of that, the internet is also used as a source of information. When it comes to support, the informal social network is the only one approached. For emotional support, friends and family will help the entrepreneur and get him motivated. The informal network also offers support for unpaid labour by working in trucks during events or building new trucks.

This research indicates the resources used by Dutch food truck owners to achieve growth, which network is used to obtain them, and why these people are approached to get specific resources.

 

References:

Haythornthwaite, C. (1996). Social network analysis: An approach and technique for the study of information exchange. Library & information science research, 18(4), 323-342

NOS. (2015, 5 14). Retrieved 9 18, 2015, from nos.nl: http://nos.nl/artikel/2035622-foodtrucks-rukken-op-maar-concurreren-elkaar-kapot.html

Lechner, C., Dowling, M., & Welpe, I. (2006). Firm networks and firm development: The role of the relational mix. Journal of Business Venturing, 21(4), 514-540

Uzzi, B. (1996). The Sources and Consequences of Embeddedness for the Economic Performance of Organizations. American Sociological Review, 61(4), 674-698