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Houston research: Strong connections go a long way in job hunting

Professionals are more likely to refer a friend, rather than an acquaintance, for a job. Photo via Getty Images

Job hunting can feel like prying open a succession of elaborately padlocked doors, and making it through all of them might seem to require a miracle. In reality, though, you could know someone who has the right keys – and is willing to use them for you.

As layoffs and furloughs continue to transform the workplace, commentators often discuss whether job hunters are better served by a team of close friends or a wider, less intimate army of acquaintances. This discussion is especially relevant when about 20 percent of high-income workers appear to get jobs via firm-driven referral practices.

For years, research pointed toward the less intimate army. Casual acquaintances or friends-of-friends, the types of relationships known as "weak ties," seemed preferable because they offered a greater number of and more diverse job tips. Social media platforms such as LinkedIn, Facebook and other networking sites thrived on the notion that loosely connected groups were more effective networks than the concentrated energies of a few friends.

But Rice Business professor Minjae Kim and Massachusetts Institute of Technology professor Roberto M. Fernandez have taken a fresh look at the matter, questioning whether weak ties are really that useful. In a recent paper, they analyzed when and why socially connected people share job opportunities they know about.

To gather their data, the team surveyed 196 first-year MBA students, asking half of them (randomly assigned) their willingness to help close friends and the other half about acquaintances. Both close friends and acquaintances were described as qualified for the opportunities.

Past research assumed that regardless of the strength of the ties, people would be equally likely to relay job information, thus focusing on the reach of weaker, more numerous ties. But in Kim and Fernandez' study, the participants, most of whom were former professionals, said they were more likely to help friends than people with distant, weaker connections.

This was true even when the students being surveyed were offered a hypothetical financial bonus. Offering money for referrals is a time-honored practice in many industries, and indeed, when a bonus was offered, participants in the study were more willing to give a job tip to an acquaintance.

But the study also revealed that money isn't always enough to make people pass along job information, which other recent research confirms. For some people, Kim and Fernandez found, helping a good friend is more important than gaining professional or social benefit by helping a mere acquaintance.

In fact, even when an acquaintance was known to be qualified for a job, and even with referral bonuses as an incentive, when it came to passing on job tips, most participants surveyed favored close friends over people with whom they only had weak ties.

Praising the weak tie is still de rigueur in many employment think pieces. But, the team concluded, landing a job requires more than simply knowing people who know about possible job opportunities. In many cases, someone needs to make an effort for you. We all have a range of motivations, only some of them financial, for sharing information. Friendship, Kim and Fernandez discovered, is a surpassingly strong motivator for relaying job information.

Having an intricate network can be a highly effective way to learn what's out there. But because individuals have such a strong bias toward friends, big networks should not be a job hunters' lone strategy. Keeping your friends close, it turns out, offers professional benefits. The person with the key to your next job may be standing nearer than you think.

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This article originally ran on Rice Business Wisdom and is based on research from Minjae Kim, an assistant professor of management at Jones Graduate School of Business at Rice University.

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Building Houston

 
 

this one's for the ladies

Texas named a top state for women-led startups

A new report finds that the Lone Star State is ideal for female entrepreneurs. Photo via Getty Images

Who runs the world? According to Merchant Maverick's inaugural Best States for "Women-Led Startups'' study, Texas is a great place for women to be in charge.

The Lone Star state cracked the top 10 on the list, earning a No. 6 spot according to the small business reviews and financial services company, which based the study on eight key statistics about this growing segment of the economy. Colorado (at No. 1), Washington, Virginia, Florida, and Montana were the only states to beat out Texas on the rankings—leading the Merchant Maverick team to conclude that "the part of the country that lies west of the Mississippi is great for startups led by women entrepreneurs."

Women-led startups in Texas received $365 billion in VC funding in the last five years, the report found. This is the seventh largest total among U.S. states. Too, about 20 percent of Texans are employed at woman-led firms, which is the fifth highest percentage among states. Roughly 35 percent of employers in Texas are led by women.

A few other key findings that work in female founders' favor: The startup survival rate in Texas is nearly 80 percent. And a lack of state income tax "doesn't hurt either," the report says.

Still there are shortcomings. On a per capita basis, only 1.27 percent of Texas women run their own business. The average income for self-employed women is also relatively low ranking among states, coming in around $55,907 and landing at 31st among others.

This is not the first time Texas has been lauded as a land of opportunity for women entrepreneurs. A 2019 study named it the best state for business opportunities for women. Houston too has proven to support success for the demographic. The Bayou City was named in separate studies a best city for female entrepreneurs to start a business and to see it grow.

Still, as many findings have concluded, the realities of the pandemic loom for all startups and small business owners. The Merchant Maverick study was careful to add: "The pandemic has changed the economic landscape over the past year, and often for the worse.

"This means that not every metric may be able to accurately gauge how a state might fare amidst the pandemic," the report continues. "To help factor in COVID's impact, we included some metrics that take 2020 into account, but it will be a while until we get a full picture of the pandemic's devastation.""

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