Creating the Organization 359for Matsushita’s number one brand, Panasonic. They hope to learn from these compa-
nies and to expand their innovation network.^48
External Motivations. External motivations for alliances usually involve the desire to
improve current strategic positions. A set of firms is more likely than a single firm to
influence the structure of an industry’s evolution. Sometimes a joint venture can pre-
empt possible new entrants, giving the partnership a first-mover advantage that is
unlikely to be challenged. This first-mover advantage can extend to accessing the most
desirable customers, expanding capacity to serve the entire market niche, and acquiring
resources on advantageous terms before they become fully valued. Also, it is quite com-
mon to take on a foreign partner when entering that partner’s domestic market.
Strategic Motivations. The third motivation concerns the future position and resources
of the venture. Joint ventures can be undertaken for creative reasons, to exploit syner-
gies, to develop new technologies, or to extend old technologies to new problems. Joint
ventures can be mechanisms that give the firm a toehold in a market that is not com-
pletely ready for the product or service. For example, many entrepreneurs are currently
engaged in joint ventures in China, India, and Russia, ventures with no current payoff
possibilities. But the entrepreneurs recognize that in the longer term, the relationships
created and the knowledge developed in these alliances will serve them well.
Social Motivations. Entrepreneurs also engage in networking to promote their own
values and social agenda. One example of this is the Social Venture Network (SVN).Its
primary goal is simple: The members get to meet other entrepreneurs who are commit-
ted to social change through business. This loose collection of entrepreneurs, social
activists, corporate executives, and philanthropists has attracted some high-visibility
entrepreneurs: Mitch Kapor of Lotus Development Corp.; Joe LaBonte, president of
Reebok International Co.; Mel Ziegler, founder of Banana Republic and Republic of
Tea; Anita Roddick, founder of The Body Shop International Inc.; and, of course, Ben
Cohen, cofounder of Ben & Jerry’s Homemade Inc. (SVN is on line at http://www.svn.org)..)
The Chapter 8 end-of-chapter case concerned a network developing around the social
cause of educational improvement. The network brings individuals of common purpose
together—but not just any individuals.
Types of Networks
Personal Networks. The personal networkis an informal network made up of all the
entrepreneur’s direct, face-to-face-contacts.^49 These include friends, family, close business
associates, former teachers and professors, among others. The ongoing relationships in
a personal network are based on three benefits: trust, predictability, and voice.^50 Trust
enables the entrepreneur to forgo all of the activities and legal formalities that guard
against opportunism. Predictability reduces uncertainty. People within the personal net-
work behave the same way time and time again.
The third benefit of the personal network is voice—the permission to argue, negoti-
ate, complain, and discuss any problem within the network and still maintain good rela-
tions. This permission, or norm, can be contrasted with the norm of exit. In relation-