Granting fortunes : how networks of an intrapreneurial/entrepreneurial class act on development strategies in Malta

Abstract

As a qualitative exploratory research, the main focus of the study is to understand how entrepreneurship is practiced in Malta as a case study of a small island state. How do social networks of the entrepreneurial or entrepreneurial class act on development and economic growth? The research is therefore informed by theories and previous empirical studies on small island states, especially on entrepreneurship and economic development. Further to this, as has been attested in social research on small island states, social capital is viewed as key to bolster the entrepreneurial spirit on such territories. With a focus on the importance of social capital and social networks, the study leveraged theories from Social Capital, Social Network Analysis and Relational Sociology to understand the practices of entrepreneurs in Malta. These theories provide the backbone to understand the social characteristics of entrepreneurial networks and how they foster relations to access opportunities, resources and knowledge. Therefore, from a new economic sociology perspective, the research centres around the importance of how social relations inform economic action. It explores entrepreneurship through broad research questions. 1) How is entrepreneurship practiced? 2) How does social capital affect entrepreneurship? 3) What are the advantages and disadvantages of social networks for entrepreneurship in small island states? Choosing Malta as a case study of a small island state, the study adopts a qualitative methodology and focuses on the network approach to social capital. Elite interviews with 5 representatives of ‘corporate actors’ (entities that represent and assist entrepreneurs) were conducted and analyses using reflexive thematic analysis to produce themes that informed the narrative of the findings. As an exploratory research the findings include how corporate actors focus on fostering social networks and how important such social relations are for both economic and entrepreneurial growth. Social capital through social networks is seen as positive and beneficial to gain access to new opportunities or resources. In the case of Malta, as a small island state, social networks are described as connections to the right persons and although most of the interviews hailed the positives of social capital there are downsides. Entrepreneurs in Malta were characterised by the lack of innovation, knowledge and entrepreneurial spirit. The interviewees highlighted the fact that many entrepreneurs prefer to replicate their peers’ ideas rather than pursue their own. Further to this, entrepreneurs tend to create cliques to dominate or limit a market and create disadvantages to new entrants to stifle competition. Furthermore, due to Malta’s ‘third wave democracy’, the interviewees noted that entrepreneurs tend to have strong ties to the political class. Not all enterprises leverage such relations, larger SMEs tend to be more prevalent in the interviewees experience. This therefore could create ‘favouritism’ and lead to collusion and corruption and possibly rent seeking.