There’s a well-worn myth about entrepreneurs. That they’re lone wolves with brilliant ideas who, against the odds, make it on their own.

But that story doesn’t hold up. Even famous founders leaned on others. A young Mark Zuckerberg sought advice from Steve Jobs on building Facebook’s management team. Spanx creator Sara Blakely turned to Richard Branson for branding guidance. At the same time, Branson took hiring tips from Blakely.

When business owners talk shop, good things happen. They trade ideas, swap lessons and walk away stronger. The benefits aren’t just anecdotal. Research supports the power of these connections, says Stefan Dimitriadis, assistant professor of strategic management at the Rotman School of Management.

“It’s long been established that an entrepreneur’s network and the relationships they develop affect their ability to launch and scale their ventures,” Dimitriadis says. These networks help business owners access financing, improve operations and adopt new ideas that boost efficiency and profitability.

In Canada, the U.S. and other developed countries, such networks are baked into business ecosystems. Think industry conferences, startup accelerators, trade shows and even local chamber of commerce breakfasts. But such formal opportunities are harder to come by in many developing nations. That’s often due to barriers known as “networking frictions.”

These frictions can include poor transportation to get to meetings and events, a lack of public meeting spaces, expensive mobile communications or even cultural divides between ethnic groups. These frictions all reduce the chances that business owners meet peers and maintain relationships.

So Dimitriadis wondered: In places where networking frictions are high, how can entrepreneurs be encouraged to connect – and more importantly, stay connected? Meeting someone at an event, he reasoned, would only be the beginning. The real value in networking was in the ongoing relationship, which could boost the chances of learning and applying new business practices. It didn’t matter whether two entrepreneurs met at a formal event or informally in their neighbourhood. What mattered was that they continued the conversation.

To probe this idea, Dimitriadis and a colleague launched a study in Lomé, the capital of Togo in West Africa. They followed participants in an existing training program with a networking component that brought entrepreneurs together – some from the same neighbourhoods and others from across town. After the event, they tracked which connections stuck and the effect those relationships had on the businesses.

Their findings, published in “Networking frictions and entrepreneurial learning in developing economies,” reveal valuable lessons, not just for growing economies abroad but for entrepreneurs here at home too.

So what did the researchers discover? Call it the “power of proximity.”

When entrepreneurs formed relationships with peers whose businesses were nearby, they were more likely to stay in touch and adopt best practices they observed.

Meeting someone farther away could still help. But in Lomé, where networking frictions are high, longer-distance relationships were harder to maintain, and so learning opportunities often dried up.

“When you get to know another entrepreneur located near you, you’re likelier to stay in touch, likelier to visit their business, and likelier to have opportunities to follow up with questions,”  Dimitriadis says. “All this makes it a lot easier to learn from your neighbours.”

For example, if a peer around the corner has clever marketing tactics, it’s easier to observe and adapt those strategies in your own business.

And the impact in Lomé was measurable. The study found that entrepreneurs who networked with a peer located within one kilometre saw an average 30 per cent increase in profits. At two kilometres, profit gains dropped to 20 per cent. At three kilometres, 10 per cent.

The study also found that entrepreneurs who connected with someone within one kilometre were 28 per cent more likely to have stayed in touch a year later. Entrepreneurs adopted one new managerial best practice when they networked with peers who were on average one kilometre closer to them. Crucially, they did not need to work in the same sector: A shoe manufacturer, for example, could learn something about supplier negotiations from a solar panel installer.

What are some takeaways from this study?

First, entrepreneurs in developing countries where networking frictions are high should build hyper-local connections.  As Dimitriadis notes, “Meeting your neighbours was much more valuable than meeting people who were further away.” (Many in Lomé didn’t always know business people close by.)

The lesson for policymakers: Encourage peer-to-peer learning at the local level in these countries. For example, many entrepreneurship training programs run by international development agencies could be made more effective if a local networking component was added.

But the study has a message for entrepreneurs in developed countries too.

If you don’t know a lot of other business people in your area, it’s worth the effort to reach out. “If you’re working in a co-working space or an incubator, don’t just get to know the people immediately next to you,” Dimitriadis says. “Go down the hall or to another floor and get to know those people as well.”

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