Tamil Nadu   

“Building social capital can give small firms a competitive edge”

CHENNAI: They used to call it “having the right connections” or the “old boys network”. Today, they call it “social capital.”

However you wish to name the term, it is this strategic use of relationships that will form the key to small industries competing on the global stage, according to Shameen Prashantham’s new book, ‘The Internationalisation of Small Firms: A Strategic Entrepreneurship Perspective”.

The book, published by the Taylor and Francis Group, was released in Chennai on Friday by Pradipta Mohapatra, regional chairman of the Confederation of Indian Industry.

“We know the old notion of capital, that you draw from banks. And in India, we have known the importance of knowledge capital for a long time ... But it is social capital that small firms can acquire faster and better than large firms, and building social capital could give them a competitive edge,” said Mr. Mohapatra.

The book, which draws from Dr. Prashantham’s PhD thesis and his intensive research into the small fish in Bangalore’s software industry pool, presents tested ways for small companies to leverage network relationships. They can be used to expand a company’s knowledge base, and if leveraged proactively, can result in increased business as well.

With multinationals realising that they can not be self-sufficient in innovation, there is a big opportunity for small players willing to collaborate with the big players or “dance with the gorillas”, as Dr. Prashantham put it.

Most importantly, small companies need to ensure that their networks are a dynamic resource base adapting to changing needs, he said.

P.M. Belliappa, president of the Association of British Scholars, under whose auspices the book was released, encouraged Dr. Prashantham to give his work a more practical edge by conducting seminars and workshops for small industrialists in the city.

“Small and medium industries are the employment generators … In the context of globalisation, it is necessary that small industries are able to hold their own,” he said.

Several small scale industry representatives present at the book launch networked with Dr. Prashantham for future interactions, but reserved judgement on his book’s advice.

“So much of it is relevant for the software industry. But social capital has to be exploited in a different way for small manufacturers,” said K. Saraswathi, director of the Tamil Nadu Small and Tiny Industries Association-Friedrich Naumann Foundation service centre.

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“Building social capital can give small firms a competitive edge”

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