Digital peer networks to support small businesses

Insight - Capacity Building

June 2022

Digital peer networks to support small businesses

This insights page is regularly updated and highlights what Strive Community is learning about digitizing peer-to-peer networks and interactions to better support small businesses to grow and build their resilience. Do you have best practices or insights to share about this topic? Reach out to us.

Introduction

Peers can support their fellow entrepreneurs and small-business owners by sharing relevant business practices, facilitating new connections and partnerships, and offering tailored advice as they grow their businesses. In fact, research found that 80% of small and medium businesses (SMEs) believe interacting with their peers improves their business outcomes. Below, we outline the evidence on the impact of peer interactions on small businesses and share some insights for designing and managing digital peer networking communities.

Evidence on the impact of peer interactions

Evidence suggests that peer interactions that facilitate learning and networking can contribute to small business growth through higher revenue, increased sales, or other business efficiencies. In China, for example, SME owners who met monthly with other firm owners saw increases in sales of up to 10% due to shared information on trading partners. Similarly, members of Enablis Senegal's and CEED Moldova’s business networks reported significant revenue growth and job creation as a result of peer interactions. The median revenue growth among Enablis members was higher than the OECD's official definition of a high-growth firm.

Peer-to-peer learning can be more effective than traditional modes of learning for driving behavior change due to greater engagement, collective problem solving, and fostering accountability. Further, research suggests that the quality of peer interactions leads to more meaningful impact. For instance, McKenzie et al. found that peer interactions were most effective when firms are matched with similar, but slightly better peers who are not close competitors. In India, research on high-growth technology entrepreneurs who were randomized into pairs to share advice found that those who were matched with higher-quality entrepreneurs (who used formal management approaches, for example) grew 28% larger and were 10 percentage points less likely to fail than those who were paired with lower-quality peers.

Long-term participation in peer networks is also beneficial. Small business members who spent at least six months in Enablis Senegal’s peer network had 9% higher revenue growth than members who had spent less than six months. Similarly, young micro-entrepreneurs in East Africa who engaged with Shujaaz Inc’s digital peer-to-peer platforms for more than one year earned KSH 2,096 (US$20.90) more a month than those who did not.

Insights on building and growing digital peer networking communities

The prevalence of digital technology, further accelerated by COVID-19, means that peer interactions are increasingly occurring online. How can organizations supporting small businesses better facilitate these digital interactions? We’ve identified some insights below, and we’ll continue to update as we learn more.

Building digital communities

Much like the offline communities to which we belong, online communities that exhibit commonalities, such as shared perspectives, values, and identities, are more likely to flourish. Digital communities that set a clear purpose and guidelines, segment and match peers, and moderate their communities are more likely to build engaging and active peer networks. 

Setting a clear purpose and guidelines

Online communities that set a clear focus and ensure peer interactions remain relevant to their purpose increase the community’s value and build a collective sense of identity, which can encourage users to engage with each other more deeply. Similarly, online communities with clear member guidelines or rules are more likely to ensure members understand which interactions are appropriate and which are not within the community. Dotsy, a Brazilian virtual community for small businesses and artisans, created eight community rules for members, from asking users to always introduce themselves to outlining that disrespectful messages will not be tolerated. These guidelines have ensured that interactions remain both relevant and appropriate. 

Segmenting and matching peers 

Digital networks that segment peers into relevant groups or recommend meaningful matches between peers are more likely to increase the relevance of their digital interactions.  

Research found that SMEs ranked peers in the same industry (48%), peers facing similar challenges (41%), and peers who sold similar products and services (37%) as the top three characteristics of valuable online peers. Entrepreneurs who participated in TechnoServe’s (a Strive Community grantee) capacity-building programs in Botswana, Ghana, and Guatemala requested that digital peer-networking groups be segmented by business size and sector to increase networking opportunities. However, TechnoServe notes a delicate balance when segmenting: “While some entrepreneurs worried about sharing information with a similar business due to competition, they also saw fewer benefits in engaging with businesses operating in completely different industries.” Instead, broad segmentation categories, such as “retail” or “food service,” enable entrepreneurs to interact with each other and exchange relevant information without direct competition.

Similarly, digital networks that provide users with suggestions for who to connect with and/or what discussion groups to join are more likely to encourage interaction. For example, Shujaaz Inc’s MESH platform offers users suggested peers or mentors who have complementary skills and interests, in addition to relevant group discussions they could join.

Moderating the community  

Online communities that utilize some form of content moderation are more likely to establish a purposeful, trustworthy, and safe online community environment for their members. Moderators play important roles in peer networks; custodians (removing spam and ensuring discussions are on-topic); facilitators (starting discussions and creating a sense of belonging); and advisors (offering useful guidance on how to interact). For example, Dotsy employs full-time moderators to manage their online community and support members, while Shujaaz Inc invites regular members of its MESH platform to moderate discussion groups. 

Growing digital communities

Like leading that proverbial horse to water, small businesses may not have a natural inclination to interact with each other. However, those looking to digitally support small businesses can create opportunities to encourage connections, through the following strategies.

Building trust online

Evidence suggests that proactively building trusting online communities, where peers are more willing to share information and ask for support, can lead to better outcomes for entrepreneurs. To help build trust with new members, Enablis Senegal, a member-driven support organization for small and growing businesses, integrates new members by spending additional time with them and ensuring they feel welcomed. Similarly, CEED Moldova, a peer-to-peer business network, models “trusting behavior” for new members by setting clear commitment and communication expectations, such as talking openly about business successes and failures.

Promoting the benefits of peer networking

Culture can play a role in the hesitancy to engage, and entrepreneurs in countries with more reserved networking cultures may be less inclined to do so. TechnoServe found that explicitly highlighting networking benefits and making small efforts to consistently encourage peer interaction helped promote the benefits of networking in their programs in Botswana and Guatemala. For example, Guatemalan entrepreneurs recommended that TechnoServe program staff actively moderate WhatsApp groups by regularly asking the group questions and offering prompts.

Encouraging long-term interactions

Evidence suggests that small businesses that participate in peer networking over the longer term can derive greater benefits, such as increased revenue or earnings. This was found to be the case among members of Enablis Senegal’s and Shujaaz Inc’s communities. Building conversation momentum by “net weaving” is one way to encourage longer-term interactions. Net weaving is an approach to building connections that are focused on reciprocity by helping others to meet people who can help solve their challenges. Dotsy founder and CEO Kuki Bailly used this net weaving approach by encouraging members to introduce themselves, share their stories, and make requests for information or help. This helped conversations to take off and interactions flourish in their online community.  

Seeking feedback from members

Peer networks that seek feedback from members and modify their programming based on this feedback are more likely to thrive and increase their value for small businesses. Argidius identified learning from continuous feedback and monitoring as a key success factor when creating meaningful peer-to-peer networks. For example, Enablis Senegal receives an annual third-party evaluation that measures member satisfaction, so that they can improve future programming for their members. 

Looking ahead

In the coming months, Strive Community, in partnership with our grantees, will be gathering insights and best practices on using digital peer networks to support small businesses.

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