Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

It Is Good To Have Friends in Business

12.10.2010
Store managers with few friends and acquaintances among their competitors have lower sales than those that have established good social relations, according to a new study from BI Norwegian School of Management.

Business clusters is a hot term in the debate on value creation. The thought is for the social networks between the different actors in a cluster to contribute to increased profitability for the businesses in the networks.

Examples of wellknown clusters are the Diamond District between Fifth and Sixth Avenues in midtown Manhattan, the financial district around Wall Street and the theatres around Broadway. We find clusters of biotechnology businesses in San Diego (Biotech Beach) and San Francisco (Biotech Bay). Silicon Valley is synonymous with innovative business activities by colocalized enterprises. Napa Valley is the cluster for the wine industry in the USA. Hollywood in the USA and "Bollywood" in India are business clusters for the film industry. The high tech clusters in Bangalore, India, are one of the world's most innovative clusters of software enterprises.

Shopping centres as labs

A shopping centre represents an excellent laboratory for studying how business clusters affect financial profitability.

Shopping centres are a cluster of shops that have decided to set up at the same location. Commercial enterprises achieve a number of benefits in the form of a good infrastructure and economies of scale.

Customers are flocking to shopping centres. Here they can 'shop' among different competing options, without spending a great deal of time. If you want to purchase a garment, you can compare at least four or five options at most Norwegian shopping centres.

Most research studies of business clusters are about the export industry, goods-producing industry and technology enterprises.

However, in terms of business policy, shopping centres provide many workplaces, workplaces for women, and are very important to regional business development.

The growth of shopping centres during the past 20 years in Norway shows that clusters of shops have dynamics and financial profitability that stimulate the growth of such clusters.

Study of social networks

Market researchers Arne Nygaard, Ragnhild Silkoset and Robert Dahlstrøm at BI Norwegian School of Management, together with Research Manager Harald Nilsen at Steen & Strøm conducted a study of Norway's largest shopping centres, in terms of sales.

The study included responses by a total of 127 store managers at stores that had been at the shopping centre for at least 1 year.

The BI researchers found that the competence of each store manager increased with her (or his) social association with the other store managers at the shopping centre.

This indicates that store operation competence flows through the social networks. "Good store managers are also good at establishing social ties to other stores," observed the researchers.

The study shows that the social ties between store managers stimulated creativity, new ideas, and innovation. According to the research team, creativity also appeared to be a key explanatory variable for the stores' turnover (in terms of sq.m. of store space).

Few friends, less change in the till

The researchers charted the number of friends and acquaintances store managers had among their competitors at the shopping centre, and studied the importance of the size of the social networks for the stores' sales.

The researchers also looked at whether there were financial differences between friendships and acquaintances. A store manager must invest more time and resources to maintain a friendship than an acquaintance.

The study documents that both friends and acquaintances among the centres' competitors helps increase sales. On average, the store managers studied were friends with 5 per cent of the other store managers at the centre, and were acquaintances with 40 per cent.

If a store manager is friends with less than 10 per cent of the other store managers at the centre, this has a negative impact on sales. If the share of friends exceeds 10 per cent, sales also increase per sq.m. of store space.

It is profitable to have 20–70 per cent of the other store managers as acquaintances. If there is a greater share of acquaintances, the study indicates that the relations cost more than what is earned.

Audun Farbrot | alfa
Further information:
http://www.bi.no
http://www.bi.no/en/Research/News/News-2010/It-Is-Good-To-Have-Friends-in-Business-/

More articles from Studies and Analyses:

nachricht Amputees can learn to control a robotic arm with their minds
28.11.2017 | University of Chicago Medical Center

nachricht The importance of biodiversity in forests could increase due to climate change
17.11.2017 | Deutsches Zentrum für integrative Biodiversitätsforschung (iDiv) Halle-Jena-Leipzig

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: First-of-its-kind chemical oscillator offers new level of molecular control

DNA molecules that follow specific instructions could offer more precise molecular control of synthetic chemical systems, a discovery that opens the door for engineers to create molecular machines with new and complex behaviors.

Researchers have created chemical amplifiers and a chemical oscillator using a systematic method that has the potential to embed sophisticated circuit...

Im Focus: Long-lived storage of a photonic qubit for worldwide teleportation

MPQ scientists achieve long storage times for photonic quantum bits which break the lower bound for direct teleportation in a global quantum network.

Concerning the development of quantum memories for the realization of global quantum networks, scientists of the Quantum Dynamics Division led by Professor...

Im Focus: Electromagnetic water cloak eliminates drag and wake

Detailed calculations show water cloaks are feasible with today's technology

Researchers have developed a water cloaking concept based on electromagnetic forces that could eliminate an object's wake, greatly reducing its drag while...

Im Focus: Scientists channel graphene to understand filtration and ion transport into cells

Tiny pores at a cell's entryway act as miniature bouncers, letting in some electrically charged atoms--ions--but blocking others. Operating as exquisitely sensitive filters, these "ion channels" play a critical role in biological functions such as muscle contraction and the firing of brain cells.

To rapidly transport the right ions through the cell membrane, the tiny channels rely on a complex interplay between the ions and surrounding molecules,...

Im Focus: Towards data storage at the single molecule level

The miniaturization of the current technology of storage media is hindered by fundamental limits of quantum mechanics. A new approach consists in using so-called spin-crossover molecules as the smallest possible storage unit. Similar to normal hard drives, these special molecules can save information via their magnetic state. A research team from Kiel University has now managed to successfully place a new class of spin-crossover molecules onto a surface and to improve the molecule’s storage capacity. The storage density of conventional hard drives could therefore theoretically be increased by more than one hundred fold. The study has been published in the scientific journal Nano Letters.

Over the past few years, the building blocks of storage media have gotten ever smaller. But further miniaturization of the current technology is hindered by...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

See, understand and experience the work of the future

11.12.2017 | Event News

Innovative strategies to tackle parasitic worms

08.12.2017 | Event News

AKL’18: The opportunities and challenges of digitalization in the laser industry

07.12.2017 | Event News

 
Latest News

Engineers program tiny robots to move, think like insects

15.12.2017 | Power and Electrical Engineering

One in 5 materials chemistry papers may be wrong, study suggests

15.12.2017 | Materials Sciences

New antbird species discovered in Peru by LSU ornithologists

15.12.2017 | Life Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>