On building competitiveness in strategic SME networks : empirical analysis of 54 firms in two networks

Abstract: Most people would agree that today's business environment presents competitive challenges for SMEs. As such, strategic SME network participation has been suggested as a mean for surviving and staying competitive. Although strategic SME networks have received research attention, most scholars have focused solely on between network variance of competitiveness building rather than on within network variance. As a consequence, we know that firms in SME networks are better off than firms that are not part of a network, but know little about why some firms are more competitive than others within networks. The present research adds to existing literature by explaining how certain firms in strategic SME networks are better equipped to build firm- and network-related competitiveness compared to other firms when in a network. Seeking to advance the field of competitiveness building in strategic SME networks, the purpose of this study is to (1) identify and determine important factors associated with firm and network related competitiveness development, and (2) develop and test explanatory models that show how these factors shape competitiveness. In a collection of six papers based on data from 54 strategic network participating SMEs, this thesis examines three abstract factor categories - firm characteristics, inter-firm relation factors, and factors stemming from a firm's cooperative partners - vis-à-vis competitiveness development on the firm and network level. It is shown that paths and patterns among identified factors are more complex than the fragmented literature on strategic SME networks suggests. Individual papers have found that firm characteristics, such as CEO personality and firm size, are an important starting point for explaining inter-firm relationships and partner selection within strategic SME networks. Although networking is an important tool for firm level competitiveness development in strategic SME networks, a firm must be cautious in selecting partners. Organizational entrepreneurship is important for competitiveness development on the network level, especially larger entrepreneurial firms that serve to strengthen the network entity. Expected effects from organizational entrepreneurship on the firm-level (i.e. firm performance) seem to be absent when networking outside the strategic SME network does not occur simultaneously. Firm cooperative orientations to partners in the strategic SME network seem to determine firm level competitiveness development.