Dimensionality and Performance Effects of Social Networking in Small Businesses 1 Gerard George Department of Management Voice: (804) 828-7163 School of Business Fax: (804) 828-1602 Virginia Commonwealth University E-mail: mgt4gxg@atlas.vcu.edu Richmond, VA 23284-4000 D. Robley Wood Jr. George W. Rimler Virginia Commonwealth University Philip R. Sturm Mary Baldwin College 1 This project was supported by the Durrell Foundation, Virginia Abstract Research in family business tends to concentrate on the founder and CEO but rarely discusses the importance of the board members in business development. It is the primary contention of this paper that social networks of small business board members have strong performance and growth implications. Analysis of 73 community bank CEO responses indicates that firms that use their board’s networks show higher ROA, ROE, and asset increase. Introduction In the resource-based view, competitive advantage is created and sustained due to ‘distinct competencies’ that facilitate a firm to deploy a value creating strategy that cannot be perfectly imitated by its rivals (Barney, 1986, 1991). A network is a set of people tied together by work, friendship, influence, or communication relations (Knoke & Kulinski, 1982) and can be classified as a systemic resource (Miller & Shamsie, 1996). This paper considers social networking to be a competence enhancing activity that creates and sustains competitive advantage. Networking has traditionally been treated as falling within the purview of organizational behavior and organization theory (Lincoln 1982; McElroy & Shrader, 1986). Research on networks has been extensive, including its effects on: (1) performance (Pearce & David, 1983), (2) leadership and attribution processes (McElroy & Shrader, 1986), (3) power and social influence (Ibarra, 1993a), and (4) innovation (Ibarra, 1993b). Not till recently has the role of networks been viewed within a strategic context (Hall, 1992; Lado & Wilson 1994; Ostgaard and Birley 1994). Though network analysis literature has tended to focus inside the organization, this