FACILITATING CO‐OPERATIVE NETWORKS OF HIGH‐TECHNOLOGY SMALL FIRMS: PROBLEMS AND STRATEGIES

Abstract

The growing importance of small‐ and medium‐sized enterprises (SMEs) in high‐technology innovation and the importance of innovation in maintaining competitive advantage has been acknowledged. The possibilities of co‐operation between high‐technology SMEs as a mechanism for enhancing individual firm growth is considered. The current stock of empirical evidence on high‐technology SMEs is outlined and the fact that few small firms achieve substantial growth highlighted. The major barriers to growth which lie behind this outcome are considered. The possibilities of networking, in its various forms, are considered as a facilitating medium for aiding business growth, with particular attention paid to high intensity co‐operative arrangements. The need for heterogeneous skill possession is emphasized, and how environments comprising homogeneous core competencies make networking an inappropriate solution for business growth. The existing empirical data on SME networking is considered and the relative costs and benefits of membership tabulated on the basis of network type. This leads on to an analysis of how beneficial, long‐term arrangements between actors may not occur in the market because of short‐term risks associated with other party(ies) defecting, as can be modelled within a prisoner's dilemma game theory structure. The final section discusses the possible role for network brokers in lessening these risks and aiding the development of mutually beneficial, growth‐oriented relationships between high‐technology SMEs.

Citation

White, J.E., Gorton, M.J. and Chaston, I. (1996), "FACILITATING CO‐OPERATIVE NETWORKS OF HIGH‐TECHNOLOGY SMALL FIRMS: PROBLEMS AND STRATEGIES", Journal of Small Business and Enterprise Development, Vol. 3 No. 1, pp. 31-47. https://doi.org/10.1108/eb020964