Ah.docx - Ah relationships moaned a dejected Alvy...

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“Ah, relationships,” moaned a dejected Alvy Singer (Woody Allen) at the end of the film, Annie Hall, “Who needs them.” The fact is that any business today, whether a sole proprietorship or a multi- national, needs to build relationships. Which is why knowing how to leverage the value that social networks can contribute to establishing and sustaining relationships is crucial. This author offers several key suggestions for doing so effectively. The importance of relationship-building in business has been discussed extensively in the academic literature. But its importance in the business world is often under-acknowledged, especially in contrast to the more specialized skills and expertise involved in running a business. However, effective relationship building is a crucial ingredient in business success, perhaps even the critical success factor. Academic researchers have studied this issue using concepts and techniques such as social capital and social networks analysis. They have provided empirical as well as theoretical evidence of the value generated by different types of business relationships. At the same time, the business world is being dramatically modified by the growing use of the Internet and social media, raising questions about the evolving nature of business relationships and the skills and attributes needed to develop and maintain them. Such questions are the focus of this article, which examines the traditional role of relationships in business, highlights some key changes resulting from the increasing use of social media, and discusses what firms need to do to adapt to this new business reality. Relationships in the traditional business world Researchers have traditionally used the concept of “social capital” to explain how and why relationships between individuals or organisations generate value for the parties involved (Bourdieu, 1977; Coleman, 1988). Participation in business networks in particular has been shown to provide firms with valuable assets in the form of industry knowledge, new ideas, sources of funding and complementary skills and expertise. All of these assets can improve business performance and help firms achieve competitive advantage. The importance of external contacts and networking was illustrated in a study by Cross & Katzenbach (2012), which found that around 90 percent of the information used for decision-making by senior company executives came from their informal networks rather than formal reports or databases.
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Granovetter’s (1973) conceptualization of “strong and weak ties” provides further insights into the role of relationships in business by distinguishing between the types of value generated by different types of contacts in a network. Granovetter defined the strength of a “tie” in terms of factors such as the time invested in the relationship, the extent to which reciprocal services are exchanged and the level of intimacy or familiarity between the respective parties. Strong ties exist between individuals or
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