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The advantages of formalizing networks: new evidence from Italian SMEs

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  • Maurizio Cisi

    (University of Turin)

  • Francesco Devicienti

    (University of Turin & Collegio Carlo Alberto)

  • Alessandro Manello

    (University of Turin & IRCrES-CNR)

  • Davide Vannoni

    (University of Turin & Collegio Carlo Alberto & IRCrES-CNR)

Abstract

Using a large sample of Italian small and medium-sized enterprises (SMEs), we investigate the effect of business cooperation realized through a “network contract” on the economic performance of network members. We find that establishing a formal business network has a positive effect on a firm’s gross margin ratio and exports, but not on profits. The advantages of this type of networking are stronger in the cases of the following: smaller firms; firms operating in traditional markets; firms operating in turbulent markets; firms located in less developed areas; and firms not part of an industrial district. The characteristics of a network (such as its size, geographical dispersion, and the sectorial diversity of its members) also have an impact on firm performance.

Suggested Citation

  • Maurizio Cisi & Francesco Devicienti & Alessandro Manello & Davide Vannoni, 2020. "The advantages of formalizing networks: new evidence from Italian SMEs," Small Business Economics, Springer, vol. 54(4), pages 1183-1200, April.
    • Handle: RePEc:kap:sbusec:v:54:y:2020:i:4:d:10.1007_s11187-018-0127-0
    DOI: 10.1007/s11187-018-0127-0
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