Networking in Asia, the West

By Peter Verhezen

This is the first of two articles exploring the concept of networking in Asian and Western communities.

JAKARTA (JP): In an Aug. 25, 1997 article in this paper, Bob Widyahartono addressed the issue of Asian networking resulting from the establishment of trust. He wrote "although there have been few empirical studies on the trust and networking issue, in reality guanxi or networking based on trust has a positive impact on efficiency and growth."

Although Widyahartono did not define what trust exactly means and where or how that differs from a western interpretation, the notion that networking helps to boost an economy could be interpreted as a normality since all businesses are based on a certain trust, both in the East as well as in the West.

Networking is not a uniquely Asian or Chinese practice. Networking is also important in the West.

It can be concluded from Francis Fukuyama's latest book Trust: The Social Virtues & The Creation of Prosperity that in some Western cultures, the extended family concept plays a dominant role in community and business matters.

"Linkages" in Italy are a good example of such strong bindings. Networking is as important in Italy as it is in Asia. The famous (Mafia) kiss in business transactions is an outward display of this.

Indonesia -- especially Java and Ambon -- possesses some unique cultural values. However, one can easily identify general Asian values claimed as norms in Indonesia, the West and Southeast Asia.

Hard work, respect for learning, honesty, obedience to parents, helping others, self-discipline, personal success, respect for authority, social harmony and an orderly social consensus -- all proclaimed as Asian values by Widyahartono -- are not so unique to the East as they also can be found in Western ideals.

Stating that networking through trust is a unique characteristic of Asia disregards empirical facts and suggests that the West is not aware of the value of trust.

Trust is a fundamental aspect of interaction, whether cultural, philosophical or economic. Trust and networking are the basis of almost every financial transaction.

Warren Bennis, a famous author on leadership, notes: "Trust is the emotional glue that binds followers and leaders together. The accumulation of trust is a measure of the legitimacy of leadership. It cannot be mandated or purchased; it must be earned. Trust is the basic ingredient of all organizations, the lubrication that maintains the organization."

According to Fukuyama, trust constitutes one of the basic features for any social and economic community. It is the underlying force in establishing societal and economic ties, communication and networking. Trust is the basis on which business communities survive.

Dramatic economic and international business changes are making trust more important and more elusive. Trust is necessary in any marketplace. The hypothesis is that a world completely devoid of trust can only exist in our imagination -- people cannot survive without trusting each other. Yet the competitive environment that makes trust more important is also making it more difficult to sustain.

Trust can be defined as the belief that those we depend upon will meet our expectations of them. The word trust is derived from the German word trost which suggests comfort. Trust is, therefore, partly based on faith in a sense that those being trusted are both willing and able to meet our needs.

Confidence, however, is more the result of specific knowledge and is built on reason and fact. Trust is more than simple confidence and less than blind faith.

The key components for building trust are achieving results, acting with integrity and demonstrating concern.

Anthropological and sociological studies have shown that networking is more easily established among members of the same family, tribe or culture.

The well-known distinction between old Greeks and non-Greeks -- or "barbarians" -- is a case in point. Richard Rorty, a contemporary American philosopher, goes so far as to state that compassion and trust is limited to those with close ties. Or more broadly expressed: To trust somebody you are familiar with is easier than with somebody unknown from another tribe or culture.

Networking is a characteristic or feature rather than the basis of trust. Trust means that a party, whether belonging to the same culture or same community, believes that another party will value its commitments.

Historically, economies have grown the fastest within closely- tied communities. Trade among the members of the Association of Southeast Asian Nations has grown dramatically over the last decade.

In economic terms, it is quite obvious that almost any transaction is based on a certain amount of trust. The so-called prisoner's dilemma has proven the trade-off between trust, loyalty and cheating.

The utilization of trust in business is definitely more lucrative even from a pure economic point of view. Trust indeed leads to extensive relationships and consequently to networking.

Moreover, trust in somebody will likely benefit that person by increased economic transactions.

Many Western and non-Asian examples could be given where networking is a sine qua non for any business deal. The Chinese term guanxi, networking, also plays a major and quite unique role in obtaining business in Asia.

But it is not always as efficient as Widyahartono proclaims. Networking which is not entirely based on business principles could easily fall prone to nepotism which often can become counterproductive.

Although trust in business transactions is assumed to be essential to any business deal, economists and versed consultants are aware of the dangers of exclusively relying on already established networks as the sole basis for business practices.

Empirical studies would prove the opposite of what many consider healthy practices to attain long-term growth or real efficiency. Recognizing this, the Indonesian central bank has limited borrowing between closely connected groups because kinship is not always the best guide for the most efficient or sound business decisions.

There are many examples in which corruption, resulting from excessive deference between partners with close ties, resulted in economic disasters -- though sometimes the individuals responsible did indeed extraordinarily benefit from it.

These practices surely do not positively impact efficiency and economic growth.

The writer is the managing partner of Cimad Pacific Consultants Ltd, Jakarta.