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					                     Networks and networking on the spatial and economic periphery
                                    A case study - small hotels in the Scottish Borders

                        Keith Halcro, Acting Head of School, School of Business & Enterprise,
                                  Queen Margaret University College, Edinburgh
                                Paul Lynch, Senior Lecturer, Business Management,
                                  Queen Margaret University College, Edinburgh

Postal address: Keith Halcro, School of Business and Enterprise, Queen Margaret University College, Clerwood Terrace,

Phone 0044 (0)131 317 3451
Fax: 0044 (0)131 317 3777
Email khalcro@qmuc.ac.uk


Research suggests that networks and networking play a significant role in many small businesses and their role has been
cited as a mechanism and explanation for helping small businesses to survive and succeed. These findings appeared to be
reflected in earlier studies of the Scottish hotel sector, but these earlier sectoral studies whilst hinting at the importance of
networks and networking in this sector lacked substantive evidence. This study sought to investigate the role networks and
networking play amongst small Scottish Borders hotels and to consider the findings applicability to the wider small business
community. The choice of industry and location leant itself to investigation, as the industry and the location often appears
peripheral to policy makers‟ economic thinking; a perception shared by many small firms operating on the economic and
spatial periphery.

The researchers interviewed 30 owner-managers of small hotels. The interviews consisted of two parts. Part one sought
background information about the respondent and the business; whilst part two explored in depth the use of personal
relationships for business purposes. The researchers used a variation of the critical incident technique (CIT) called Self-
defined Incident Technique (SIT) to identify any incident which has helped or hindered the business‟s development. This
helped the researchers to place the interviewee within a network, and to assess the depth and nature of the network.

The results found that both successful and unsuccessful hotels use networks, but in different ways. The manner in which they
use they use these networks is shaped by a variety of influences. More specifically the findings reveal how inherited
networks influence the firm‟s development and help to underpin the iconic nature of the „local‟ hotel in supporting and
maintaining a network. The findings also raise a number of policy issues, including; what are the implications for agencies in
developing and harnessing small firm networks for disseminating ideas, and how can agencies use social networks to further
ideas and good practice in the business community? Finally the study questions if existing public policy could be socially
and economically damaging to a region that is economically and geographically peripheral.


This paper aims to explore the use of formal and informal networks amongst small hotels in the Scottish Borders in
particular their relationship with three groups; the family, staff, and support agencies in sustaining or hindering the
businesses‟ development. The research seeks to place its findings within the context of the wider body of small business
knowledge and to suggest that its results have implications for policy makers‟ strategy within the Scottish Borders, but also
implications for other industries operating in geographically peripheral areas.

Research has suggested that networks and networking play a significant role in the life of many small businesses,
transcending industries and countries (Lean 1998; Underdown and Talluri 2002) and reflects the premise networking can
help to underpin small firm survival (Marquardt 1996:1 in Dabs, Hall and Muir 2000:137; Gilmore, Carson and Grant 2001;
Underdown and Talluri 2002). A variety of reasons have been posited for small businesses‟ willingness to engage in
networking notably; small business owners‟ traditional distrust of external organisations and agencies, a belief that large
scale organisations theories and applications is not relevant to the needs and wants of small firms. Previous studies
undertaken by the research team have tended to confirm such criticisms (Buick, Halcro and Lynch 1998, Halcro, Lynch and
Buick 1998, Buick, Halcro and Lynch 2000; Lynch, Halcro, Buick, Johns and Gillham 2000; Halcro, Lynch, Buick, Johns
and Gillham, 2000; Lynch 2000). These studies have highlighted the importance of social and business relationships to small
hotel owners, yet little research has been undertaken within the small hotel sector to observe how networks enable hotels to
survive and succeed in geographically and economically marginal areas, one exception being Lowe (1988). A number of
researchers have commented on the use of informal and formal relationships in business development but have chosen not to
develop the idea, because the research focus lay elsewhere. This study into small Scottish Borders hotels seeks to fill a gap in
current knowledge about small hotels and to consider whether this may have implications for policy makers such as
enterprise agencies or area tourist boards which have traditionally favoured a more traditional strategic perspective.

The research was undertaken amongst small Scottish Borders hotels, an industry and a location that was regarded by the
authors to be largely peripheral to many people‟s thinking. Sectorally, the hotel industry often appears marginal to
mainstream policy making, despite being part of one of the UK‟s largest industries (Guerrier, Baum, Jones and Roper 1998).
The Scottish Borders is one of the most sparsely populated areas of the United Kingdom and a region characterised by poor
transport infra-structure and below average GDP; 12% below the UK average and 11% below the Scottish average (Regional
Trends 1999). This economic and geographical peripherality helps to explain the region‟s narrow economic base of farming
and textiles, although latterly electronics has influenced the local economy. All three industries have experienced
considerable problems in recent years (Borders Forum 1999 and 2000); and this lack of economic opportunity may indicate
why the region suffers the second highest rate of out migration in the UK amongst 16-34 year olds (Borders Forum 2000), an

age group critical to a society‟s future economic prosperity. The one industry that offers some salvation is tourism, ironically
one that frequently plays on its geographical peripherality for economic effect.


The problems of geographical peripherality burden many communities and may help to explain their lower economic growth
and higher unemployment rates (Ilouz-Winicki and Paillard 1998). Their low population densities, poor transport infra-
structure and narrow economic base often leaves them exposed to external factors (Haugh and Pardy 1999). Nonetheless,
certain geographical areas and economic sectors have thrived despite their peripherality e.g. Lower Bavaria, Germany (Ilouz-
Winicki and Paillard 1998), or manufacturing in Northern Ireland (Hart and Gudgin 1999). Explanations as to why these
regions have managed to overcome their peripherality are complex: The role local networks play appears to be one (Pitt,
Szarka and Bull 1991; Ilouz-Winicki and Paillard 1998), whilst Hart and Gudgin (1999) cite the role of Northern Ireland‟s
local enterprise company as being of critical importance in overcoming the region‟s relative isolation within Western
Europe. In these examples it appears peripherality has been harnessed to competitive advantage to develop a strategy based
on local natural and cultural resources. Anderson and MacAuley (1999) argue firms in this environment can successfully
provide goods and services aimed at either a local or a national market, a strategy that often reflects the owner‟s origins.
„Local‟ firms owned by indigenous people provide national goods and services to a local market e.g. petrol, baked beans, and
clothes; whilst the second group often owned and managed by „immigrants‟ from urban areas sell the area‟s local natural
beauty to a national/international audience e.g. country house hotels, arts and crafts. The different strategies nonetheless are
rooted in using an area‟s geographical peripherality for economic advantage.


This observation finds parallels in the hotel industry where some hoteliers deliberately cultivate their geographical
peripherality for marketing purposes, whilst other hoteliers have migrated to the periphery through the economic
consequences of large firm actions (Morrison 1996). It is evident that within these geographically peripheral areas there are
at least two groups of hotels operating; one trading on an area‟s scenery and views to attract national/international customers,
another trading on their relative inaccessibility to create a spatial monopoly and thus avoid competition with their larger
counterparts. These observations arguably re-emphasise Kozak‟s and Rimmington‟s (1998) comments that small hotel firms
are heterogeneous and in part springs from the owner-managers‟ own motivations, perspectives, and economic and social
philosophies, for example someone‟s desire „to escape the rat race‟ for a better quality of life. The difficulty for the sector is
that its perceived lifestyle values and low barriers of entry have attracted many who appear to lack the business skills to

significantly grow the business (Halcro et al 2000). This outlook presents a major conundrum to many policy makers who
are charged by their funders to meet performance targets, invariably ones rooted in profitability or economic growth (British
Venture Capital Association 1996). Middleton (1999) suggests many policy makers are unable or unwilling to recognise
their target market‟s contrasting philosophies or motivations and persist in focussing their efforts on what they perceive to be
growth firms. This strategy makes economic sense to policy makers when confronted with limited resources, yet the social
importance of these small businesses argues for a mechanism that will lever up their financial potential, whilst recognising
the social role they play within the community; these facets are combined within networking.


Networking can be described as the casual alliance between individuals or organisations who exchange ideas and
information to each other‟s mutual benefit (Knoke and Kuklinski 1982:12), whilst the network itself reflects the pattern of
these networking relationships (Szarka 1990). The role they play in sustaining small business has been identified as
beneficial (Deakins and Philpott 1995) for it provides a learning environment in which small businesses can draw on their
peers, customers and suppliers for ideas and inspiration (Gibb 1998, Gilmore et al 2001, Underdown and Talluri 2002).
Evidence suggests that networking provides a more relevant and applicable learning experience than other forms of learning
(Dragoi-Wilkinson 2000) and that out of this shared learning experience can emerge a group of like minded individuals for
competitive advantage (Chatson 1999). Chatson (1999) claims to date few support agencies have realised the benefits of
networks as a tool for SMEs to acquire skills and information, instead policy agencies have utilised networks for specific
issues e.g. entry into overseas markets. Dragoi-Wilkinson (2000) believes the challenge for policy makers is to encourage
small firm owners to realise the benefits to be gained from networking, and to this end the emphasis should be on developing
the owners confidence to enter and participate in these networks.

The successful networks appear to be characterised by co-operation, loyalty and trust (Galbreath 2002), which in turn are
influenced by social, geographical and chronological forces, the more homogeneous these experiences the more deeply
embedded the network and the patterns of networking. These relationships seem to be more marked amongst business
friends, suppliers and customers than amongst national and local support agencies which have been established to foster
small firm growth (North, Blackburn, and Curran 1996). Consequently social networks appear to generate more tangible
benefits than commercial networks (Dodd 1997). Additionally these social networks are noted for their informality and lack
of regulations, attributes favoured by small businesses (www.fsb.org.uk 2003). This juxtaposes the philosophy of many of
the policy makers‟ networks which are required to follow guidelines and regulations, since they are funded by the public
purse. Other explanations also highlight the owner-manager's reluctance to fully integrate into the formal network; fear of

losing their independence (Morrison 1996); owner-manager‟s aims and objectives not co-inciding with the policy makers‟
aims and objectives (Chatson 1999); or lack of resources and time (Kotey and Meredith 1997).


Hospitality researchers have commented about the presence and even role of networks and networking within small hotels
(Hankinson 1989, Quinn, Larmour and McQuillan 1992, Morrison 1994, Buhalis and Main 1996), yet it has received
surprisingly little attention. This seems ironic given that both government and researchers have recognised the potential
benefits of networks and networking, a viewpoint echoed by Birley, Cromie and Myers (1991:57) who believe that
networking is „an ideal mechanism (for small businesses operating) in variable environmental conditions‟. Lowe (1988)
commented on these variable conditions and sought an explanation for their apparent success in an economically challenging
environment. Lowe (1988) identified key groups in the small hotels‟ network(s): notably: family, employees, customers,
professional agencies, suppliers, non-family friends and travel companies. He also observed that partners appeared to operate
separate, but connected networks for business purposes.


Curran, Jarvis, Blackburn and Black (1993: 13) criticise „much of the theorising and research about networks and
networking as conceptually and methodologically poorly realised‟ and argue that if researchers are to understand how they
operate, they need to consider networks and networking as „primarily cultural phenomena‟. The authors adopted Curran et
al‟s (1993) methodological approach of Critical Incident Technique (CIT), although alternative methodologies were
considered, for example; Noble (1973), and Cubitt (1973), however comparable studies have endorsed Curran et al‟s (1993)
methodology (for example, Saker 1992, Ram 1994, Dodd 1997). Curran et al‟s methodology involved face-to-face
interviews with owner-managers in „steady state‟ firms using a semi-structured schedule which explored four themes of
importance to owners: the family and kinship; co-directors and partners; customers and the market; and investment and
finance. The themes were selected as a means of examining the character and content of small business owners‟ economic
relation to other groups. Critical incidents were chosen in relation to the selected themes, for example, in the context of the
family, incidents such as divorce, bereavement or retirement. Curran et al (1993) notified the respondents in advance of the
themes and critical incidents the interviews would focus upon, and asked them to recall any such incidents within the
previous two years.

The authors adapted Curran et al's (1993) methodology to recognise sectoral differences. This included the addition of new
themes; suppliers, competitors, staff, and support infrastructure, and the decision to include hotels which had been operating
for less than two years. Memory is notoriously fickle, and in practice it is often very difficult to be historically precise,
furthermore, given that networks are particularly associated with the early stage of a business‟s growth (Birley and Cromie
1988), and the high turnover of small hotels (Boer, Thomas and Webster 1997), it appeared inappropriate to set time limits.
It was intended that the CIT method should be employed as a subjective methodology through the collection and analysis of
narratives, however analysis of the pilot interviews revealed that although incidents were forthcoming these were not always
significant from the viewpoint of traditional business strategies and that respondents‟ perceptions of CITs did not fit the
project team‟s pre-determined characteristics of CITs. The data from the pilot study was reviewed, and the methodology
revised to meet the respondents‟ criterion rather than the researchers. This adaptation led to clearer understanding and richer
stories. The term Self-defined Incidents Technique (SIT) was developed which although similar to CITs, sought to avoid the
heavily value-laden classical measures of business success associated with CIT.

The study focused on small hotels of 15 rooms or less, a category that represents 70% of Scottish hotels (Halcro et al 1998:
116). The Scottish Borders region was chosen for a variety of reasons as previously stated, but also because it is the only
mainland region in Scotland where the boundaries of three policy making bodies (Scottish Borders Tourist Board), Local
Enterprise Company (Scottish Borders Enterprise) and the local council (Scottish Borders Council) are identical. It was
suspected this could have a bearing on respondents‟ comments in the context of support infrastructure. .

The Borders Tourist Board accommodation guide was used to identify forty-two hotels of 15 rooms or less of which thirty
subsequently participated. The high acceptance rate may reflect the rigorous methodology employed, including adaptations
to the methodology following the pilot studies. An additional reason may lie in the researchers‟ employer which has been
educating hospitality managers since the early 1960‟s, and a number of the respondents have had previous contact with the
organisation either directly as a student or indirectly through the two earlier surveys undertaken by the authors. Interviews
ranged from 30 minutes to 90 minutes, although typically interviews lasted an hour. All interviews were tape-recorded and
transcribed. Two members of the research team working separately, identified and analysed SITs and subsequently discussed
any anomalies. NUDIST software was then used to code the results with categories being built up on an ongoing basis.
Subsequent analysis focused upon the eight themes which were the subject of the interviews. On analysis of the interviews, a
workshop was held with respondents in order to verify the emerging themes from the research.

Eighty-three percent of respondents were male and 17% were female. This compares to a previous study of Scottish small
hoteliers (Halcro et al 1998), where 61% of respondents were male and 39% were female. From the study in the Borders
region, it is apparent that most of the hotels are owned and run by couples. Seventy seven percent of the thirty hotels
sampled, were owned by couples. The age of the proprietors mirrors an earlier study(Halcro et al. 1998).; 50.0% were in
their forties, 33.3% were in their fifties, but only 16.7% were in their twenties or thirties. None of the respondents were aged
60 years or over. The mean age of the sample based on mid-point analysis of age categories is 46.3 years. Sixty-three percent
of respondents had children living at home, 26.7% of the hotel proprietors had children who had grown up and left home
and 10.0% had no children at all. The results indicate that for a significant proportion of the hotels, the business is also the
family home.

The length of ownership was characterised by a double spike. The first spike chronologically occurred amongst businesses
less than three years old, 46.7% had been business for less than three years. A second, smaller spike appeared amongst
businesses that had been owned for 9-11 years; 20.0%.Thirteen percent had owned their business for three to five years,
6.7% had been in business for six to eight years; 13.3% had owned their hotel for 12 years or more. Hotel proprietors were
asked to state the number of years they spent in education. Out of the sample, 37.0% had attended school to the age of 16
years or less, 25.9% had attended school to 18 years or less, and 37.0% had continued their education beyond 18 years of
age. In the study by Halcro et al. 1998, 20% of hotel owner/managers held an H.N.D. or a B.T.E.C qualification, and 29.5%
had completed a Degree, a Masters or a Ph.D. These results indicate that many hotel owners continue in education after
secondary school, however it is unclear whether their further study is related to the hotel industry. If the hotel proprietors‟
partners were actively involved in the business, the same question elicited similar responses; a third of partners had spent 16
years or less in education, 33.3% had been educated for 18 years or less and 33.3% had continued their education post
school. Previous employment experience is frequently cited as an influence in running a business (Littunen 2000) the results
are displayed below in Table 1.
                                             Table 1 – Work Experience (n=30)
                 Type of Work Experience               Percentage (number) of Hotel proprietors who had
          (International Standard Classification)              gained this type of work experience
          Manager – Administration                                                                       6.7%(2)
          Manager – Administration/Hotel                                                                23.3%(7)
          Professional Occupation                                                                       16.7%(5)
          Associate, Professional and Technical                                                          3.3%(1)
          Clerical – Secretarial                                                                         3.3%(1)

         Craft and Related                                                                          30.0%(9)
         Personnel and Protective                                                                     6.6%(2)
         Sales                                                                                        6.6%(2)
         Other                                                                                        3.3%(1)

In the 1998 Scottish study (Halcro et al), 73.4% of the respondents had no previous hotel background or work experience, a
figure corresponding to the nearly seventy-seven percent found in this study and indicating that the overwhelming majority
of small hotel owners have changed occupation to run a hotel. However, 50.0% of respondents were categorised under the
following occupational classifications, Professional Occupation, Associate, Professional and Technical, Craft and Related,
classifications which may imply skills related to hotel management. Thus, up to 73.3% of the sample may be perceived to
have had previous experience and possess skills of some relevance to running a hotel.

It was important to establish if occupancy levels were increasing or decreasing in an area where business is highly seasonal
and against a backdrop of economic problems. Nearly fifty two percent of hotel owners stated that occupancy had grown,
6.9% claimed it was static and 31.0% indicated that occupancy was down. 3.4% of respondents did not know and 6.9% were
not asked. This increased level of occupancy is mirrored in increased employment 46.7% stated that employment growth had
grown, 36.7% indicated it had remained static and 16.6% said that employment growth had declined. This growth in
employment level is beneficial for the Borders economy not only in direct employment but also through the multiplier effect
in creating indirect and induced employment.

The majority of small hotels had an annual turnover of between £150,000 to £300,000 (Table 2). The aggregate turnover was
approximately £6,275,000 with a mean of £232,407. The figures highlight the significant financial contribution that such
small hotels make to the region's local economy.
                      Table 2 – Annual Turnover, excluding V.A.T.         n=30
                   Annual Turnover                 Percentage % (number)
                    Up to £100,000                        6.6% (2)
                  £101,000 - £150,000                    13.3% (4)
                  £151,000 - £200,000                    20.0% (6)
                  £201,000 - £250,000                    16.6% (5)
                  £251,000 - £300,000                    13.3% (4)
                  £301,000 - £400,000                    13.3% (4)
                  £401,000 - £500,000                     0% (0)

                   £501,000 - £600,000                    6.6% (2)
                   Not Known/Refused                      10.0% (3)

In terms of number of letting bedrooms the majority of the hotels came under the following categories: 7-9 rooms 20%, 10-
12 rooms 26.7% and 13-15 rooms 20%; only 3.4% of hotels had 1-3 letting rooms, however, the most frequent establishment
size was between four and six rooms, 30%. Excluding those hotels for which annual turnover figures are unknown, average
turnover per room is £27,047. A more detailed analysis of the room revenue reveals that passing trade is the most important
group (table 3); a reason for this could be that many visitors pass through the region on their way to Edinburgh, Glasgow and
the Highlands and view the Borders as only a transitory stop. Traditional markets associated with the Scottish Borders figure
such as fishing and shooting, but a market identified as of increasing importance was walking. Nine hoteliers identified
walkers as a critical market and cited the development of the Southern Upland way as a key development in this market.
                                         Table 3 Identified source of business
             Business         Percentage of Hotel Owner/Managers Number of Hotel Owner/Managers
             Segment         who identified this as a Main Source of        who identified this as a Main
                                 Business for the Hotel (% of all          Source of Business for the Hotel
                                           respondents)                   (respondents may give more than
                                                                                     one category)
        Passing (Various)                       30.0                                       9
        Walkers                                 20.0                                       6
        Golfers                                 20.0                                       6
        Fishers                                 16.7                                       5
        Leisure Breaks                          13.3                                       4
        Overseas                                10.0                                       3
        Bikers                                  3.3                                        1
        Cyclists                                3.3                                        1
        Bird Watchers                           3.3                                        1
        Divers                                  3.3                                        1
        Holiday Makers                          3.3                                        1
        Visiting Friends                        3.3                                        1
        and Relatives
        Shooting                                3.3                                        1

It should be noted that although tables 2 and 3 identify revenue figures and markets associated with accommodation, when
asked to state their dependency on the local market the majority (83.3%) of the respondents ranked it as either high or
medium. The emphasis placed on the local market reflects those hotels actively engaged in bar and restaurant trade, whilst
those hoteliers rating the local market as being of low dependency arguably reflect limited food and beverage sales.

All hotel owner/managers were asked to identify involvement in any sporting clubs or organisations. Surprisingly given the
area‟s reputation for outdoor pursuit membership was limited. Six responses were recorded including one respondent who
was a member of two sports clubs, but explicit networking for commercial purposes appeared minimal limited, although two
hoteliers with strong rugby links admitted they had gained business from networking with the rugby community. Further
questionning of membership of business or trade associations (Table 4) reveals membership of small business organisations
as the most common form of membership, in contrast only three respondents are members of hospitality organisations.

                Table 4– Business Clubs and Organisations, other than Tourist Board                       n=30
                                                                Percentage of Owner/Managers who are involved
                Clubs and Organisations (Business)              with these Clubs/Organisations % (number) -
                                                                respondents may give more than one category
       Small business organisations i.e. Federation of Small                           26.4% (8)
       Business, Federation of Private Business
       Hospitality Trade Associations e.g. British                                     10.0%(3)
       Hospitality Association, HCIMA, Scottish Chef
       Chamber of Commerce                                                             10.0%(3)
       Automobile Association/ RAC                                                      6.6%(2)
       Marketing/Purchasing consortium                                                  6.6%(2)
       Rotary                                                                           3.3%(1)
       Political                                                                        3.3%(1)
       Sports Social                                                                    6.6%(2)
       Other clubs and organisation                                                     6.6%(2)
       No identified clubs and organisations                                           16.7%(5)

Analysis of the themes identifies a rich history of SITs and it is evident that whilst some hoteliers explicitly have harnessed
these networks to shape their business, other hoteliers have failed to cultivate these networks either through choice or

ignorance. Initial evidence suggests that within the context of the eight themes three networks emerge; the family, staff, and
support networks. The quality of these experiences either positively or negatively is illuminating. Networks based on the
family reflect generally positive experiences, staff relationships reveal a mixture of positive and negative incidents, and
support agencies predominately negative. These findings reflect the earlier literature (North, Blackburn, and Curran 1996;
Dodd 1997) which support the contention that those networks that had more homogeneous experiences had a more deeply
embedded and consequently successful network.

Twenty-two SITs associated with the family were identified and comprise three networks; one network exists between the
hotelier and his/her spouse/partner, a second network centres on his/her children, and a third network emerges between the
hotelier and his/her parents and siblings. The family is important to both the philosophy that guides the business and as a
source of ideas and advice, particularly the network that exists between the hotelier and his/her spouse/partner who were
often co-preneneurs. These partnerships were often characterised by complementary skills and competences for example one
partner may focus on administrative tasks marketing, whilst the other provides „mine host‟ skills. This symbiotic relationship
frequently reflects shared values and is evident in the philosophy underpinning choice of the property. The emotional
importance of the property reflects its position as both the family home and the centre of the business viewpoint, therefore
the way that space is managed (public/private) reflects the family dimension within the business context, for example,
opening hours of the bar, reactions to criticisms of hotel grading inspections. Interestingly, it is the „homey‟ nature of the
small hotel product which may underlie both the appeal to some guests and the dissatisfaction of others. This family/home
connection affects hoteliers' values and attitudes to relationships as the more one is bound up with the home as opposed to
the business the more likely business relationships will be conducted on a personal basis.

The hoteliers‟ children shape the business‟s practice and philosophy and are significant in developing new networks in terms
of potential customers, and when older as a „quasi agency‟ for staffing, and as a source of market research. Respondents
harnessed their children‟ networks for commercial purposes and these relationships developed and evolved over the child‟s
lifetime from primary age, through secondary, university and married life, in some instances hoteliers cited specific examples
of networks that had generated income over a period of years charting the child‟s evolution from birthday parties to
weddings, and christenings. Further evidence of networking emerges during the child‟s teenage years when the hotelier taps
into the child‟s network as a source of staff. This is a particularly valued labour source, because it is a trusted source, both
rooted in their child‟s friendship, but also in many instances the hotelier will already know the potential employee and has
had the opportunity to vet the employee‟s suitability. One hotelier cited the example of how he recruited a friend of his
daughter to be a chambermaid/waiteress, this relationship had developed and evolved to the point that the employee was not
only a member of staff, but also a customer who now brought her family to eat at the hotel. The employer reciprocated by

discounting food and drink to the family, thus re-inforcing positively the relationship between the hotelier, the employee and
the employee‟s family. Older children‟s networks also provide customers. Friends of the hotelier‟s offspring gravitate
towards the hotel to purchase food and drink either because they are assured of a welcome or because it is perceived as „the
social place‟ in the community, but evidence also exists of hoteliers accessing this network to gain market research on
competitors and to identify market trends.

The third family network that hoteliers draw on is that containing their parents and siblings either to access information or
skills. A relationship repeatedly identified was the role of grandparent(s) in helping to care and raise grandchildren, whilst
both partners worked. Words such as „trust‟ and „rely on‟ frequently found expression in this relationship and close
proximity to the grandparents was often instrumental in the decision to buy the hotel. Other SITs included hoteliers drawing
on parents managerial experience for financial advice or siblings for professional advice or contacts, particularly those
networks associated with the building and hospitality industries, and the legal profession. One example included an hotelier
whose spouse‟s brother was a carpet fitter. This enabled the hotel not only to be carpeted more cheaply, but also gave the
hotelier access to a variety of tradesmen whom he could trust. Another example included a sister who was a para-legal
secretary who provided advice on legal documentation. This study re-inforces previous research which suggests small
businesses draw heavily on networks they trust, rather than those networks marked by inherent expertise.

The relationship between hoteliers and staff has been described as more akin to that of the extended family (Lynch 2000), a
characteristic often found amongst small business. Employers often perceive staff as members of the family and frequently
express a paternalistic attitude towards employees. Forty-three incidents were catalogued, a theme that was rich in examples
of recruitment, marketing and labour relations. Staff networks were accessed to recruit potential employees because of
employees invariably share the hoteliers' values and attitudes. These shared values enabled hoteliers to recruit staff with a
similar philosophy and thus re-inforce the values and culture of the organisation. Those hoteliers which did not participate in
local networks were forced to resort to less trusted, but more expensive methods e.g. advertising to recruit staff. This form of
recruitment presents problems in small villages and tertiary locations where the local labour pool is likely to be limited, and
re-emphasises the perception that this type of hotelier is disinterested in the community . Thus, networks have strengths but
they also represent a drag to decision-making as well, since any deterioration in staff relationships can impact on custom and
the hotelier‟s status in the community. This issue can came to the fore where an hotelier inherits staff and invariably
customer networks when the business is purchased. These networks provide a stable source of cash flow during start up, but
in some instances efforts to change these inherited staff and customer networks result in personality clashes and
disillusionment that often spill out into the local community and endanger the hotel‟s commercial viability.

The relationship between employers and staff often reflected „non-classical‟ managerial solutions to human resource issues
such as staff affairs with customers, but was a recognition that formal disciplinary approaches may jeopardize the hotelier‟s
position within the local community network. The researchers observed a tendency to tolerate employee behaviour which is
at odds with management theory presumably owing to the limited labour pool, the embeddedness of staff in local community
relations, and the importance of the way the hotel (inseparable from the owner-manager) is perceived in the community
Being „bad-mouthed‟ by a disgruntled employee could mean a loss of custom (Galbreath 2002), and might explain a
tolerance of a wider range of „family-type‟ behaviours than might be unacceptable in larger hotels.

Relationships with support agencies drew the most incidents, forty-four. A number of these incidents were positive in respect
of the quality of services and communications, however a much larger number of criticisms are made of operating processes
and practices, for example, in relation to grading, grant applications, inadequacy of specific sectoral advice. Many of the
criticisms are suggestive of systemic interface problems between the small hotels and the public support agencies, a criticism
that surfaces in earlier and current research, both at national and local level (Buick et al 1998, Paxton 2003). A perception
exists that support agency decision making is swayed by relationships, rather than commercial logical and that the enterprise
agency in particular is “not friendly” to small hotels. A frequent comment was that the more distant the hotel from the tourist
office the less likely the tourist office would be to send enquiries to the hotel, the conclusion some hoteliers drew from these
events was that the proximity of certain local hotels to the tourist office enabled them to network to better advantage, yet the
criticism was that everyone is paying equal amounts for equal access. The suggestion that support agencies networks are
fragile has been identified elsewhere (Lynch et al 2000, Paxton 2003) and addressing the problems represents a challenge for
the small hotel sector and may be arguably the wider small business community. The solution may lie in identifying key
players within the network to act as access points for the dissemination of information.


Internal and external forces are driving many small firms to the economic and geographical periphery, where many struggle;
nonetheless others thrive in this environment. The explanation why some are struggling and others are thriving is complex
and varied, yet networks and networking do appear to play a role. The question is how can policy makers tap into these
networks more effectively to disseminate the skills and knowledge contained within them? There are multiple hurdles facing
the policy makers not least the suspicion that their rules and regulations lead to a stultifying sense of inertia (Ogden 1998).
Nonetheless Kozak and Rimmington (1998) believe if small hotels can be persuaded to participate this will have a positive
effect on the organisation. The findings suggest small hotel strategy can be viewed as a cultural phenomenon and this has
implications for policy makers, because the strategy of support agencies has been to concentrate on „classical‟ growth

businesses, and on attracting chain hotels into the region e.g MacDonald Hotels, yet this study raises important questions on
whether existing public policy could be socially, as well as economically damaging to the region.

This in-depth sectoral analysis has revealed facets of networking hitherto neglected, for example, the public/private nature of
the hotel which may be relatively unique to the smaller firm. The hotel‟s public space fulfills a commercial as well as social
function, but often the hotel is also the owner‟s own domestic dwelling. The public/private nature and function of the small
hotel may be creating aspects of networking that is relatively unique. However, in a peripheral geographical area, other small
firms may share similar characteristics even if not to the same extent, for example, a general store or a post office, and until
recently, the local bank. Whilst other features of the hospitality industry such as the intensity of competition amongst small
hotels may be less unusual. Thus, in interpreting the findings, one needs to distinguish between aspects unique or
accentuated in the hospitality industry and those of a more generic relevance.


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