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Firm networks: external relationships as sources for the growth and competitiveness of entrepreneurial firms

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  • Christian Lechner
  • Michael Dowling
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    Abstract

    Inter-firm networks, as an inter-organizational form, are increasingly perceived as a model for entrepreneurial firm growth. We study egocentric networks of high-growth entrepreneurial firms in the IT industry and explore how these firms grow through the use of external relations and become competitive. Based on case study research, we identify that firms are using relations for a variety of purposes and that every firm has an individual relational mix. This relational mix changes with the development of the firms. While the relative importance of social and reputational networks decrease with the firms' development, co-opetition networks increase over time. Knowledge and innovation networks are a function of reputation and management capacity while the development of marketing networks depends on the firm's culture and management style. Both weak ties and strong ties are important for the growth of the firm since they fulfil different functions. Firm growth is determined by path-dependent relational capability that eventually reaches its limits and leads to the reconfiguration of a rather stable network. Additionally, firm growth depends not only on the building of egocentric networks but also on the existence and development of healthy sociocentric networks.

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    File URL: http://hdl.handle.net/10.1080/08985620210159220
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Entrepreneurship & Regional Development.

    Volume (Year): 15 (2003)
    Issue (Month): 1 (January)
    Pages: 1-26

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    Handle: RePEc:taf:entreg:v:15:y:2003:i:1:p:1-26

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    Cited by:
    1. Cantner, Uwe & Michael, Stuetzer, 2013. "Knowledge and innovative entrepreneurship - social capital and individual capacities," MPRA Paper 52482, University Library of Munich, Germany.
    2. J. Augusto Felicio & Eduardo Couto & Jorge Caiado, 2013. "Human capital, social capital and organizational performance: A structural modeling approach," CEMAPRE Working Papers 1302, Centre for Applied Mathematics and Economics (CEMAPRE), School of Economics and Management (ISEG), Technical University of Lisbon.
    3. Marina van Geenhuizen & Peter Nijkamp, 2011. "Knowledge Virtualization and Local Connectedness among Smart High-tech Companies," Tinbergen Institute Discussion Papers 11-119/3, Tinbergen Institute.
    4. Krug, B., 2006. "Enterprise Ground Zero in China," ERIM Report Series Research in Management ERS-2006-024-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
    5. Jack, Sarah L., 2010. "Approaches to studying networks: Implications and outcomes," Journal of Business Venturing, Elsevier, vol. 25(1), pages 120-137, January.
    6. Stuetzer, Michael & Obschonka, Martin & Schmitt-Rodermund, Eva, 2012. "Balanced skills among nascent entrepreneurs," MPRA Paper 37524, University Library of Munich, Germany.
    7. Wincent, Joakim & Anokhin, Sergey & Örtqvist, Daniel, 2010. "Does network board capital matter? A study of innovative performance in strategic SME networks," Journal of Business Research, Elsevier, vol. 63(3), pages 265-275, March.
    8. Huber, Franz, 2013. "Knowledge-sourcing of R&D workers in different job positions: Contextualising external personal knowledge networks," Research Policy, Elsevier, vol. 42(1), pages 167-179.
    9. Houghton, Susan M. & Smith, Anne D. & Hood, Jacqueline N., 2009. "The influence of social capital on strategic choice: An examination of the effects of external and internal network relationships on strategic complexity," Journal of Business Research, Elsevier, vol. 62(12), pages 1255-1261, December.
    10. Charlotte Schlump & Thomas Brenner, 2013. "Firm's cooperation activities: The relevance of public research, proximity and personal ties - A study of technology-oriented firms in East Germany," Working Papers on Innovation and Space 2013-06, Philipps University Marburg, Department of Geography.
    11. Manuela Presutti & Cristina Boari & Antonio Majocchi, 2013. "Inter-organizational geographical proximity and local start-ups' knowledge acquisition: a contingency approach," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 25(5-6), pages 446-467, June.
    12. Broström, Anders & Baltzopoulos, Apostolos, 2013. "Higher education experiences and new venture performance," Working Paper Series in Economics and Institutions of Innovation 321, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    13. J. Augusto Felicio & Eduardo Couto & Jorge Caiado, 2009. "Interrelationships between human capital and social capital in small and medium sized firms: The effect of age and sector of activity," CEMAPRE Working Papers 0905, Centre for Applied Mathematics and Economics (CEMAPRE), School of Economics and Management (ISEG), Technical University of Lisbon.
    14. Chen, Chung-Jen & Hsiao, Yung-Chang, 2013. "The endogenous role of location choice in product innovations," Journal of World Business, Elsevier, vol. 48(3), pages 360-372.
    15. Bilitis Schoonjans & Philippe Cauwenberge & Heidi Bauwhede, 2013. "Formal business networking and SME growth," Small Business Economics, Springer, vol. 41(1), pages 169-181, June.
    16. Alex Coad & David J Storey & Richard G Roberts & Julian S Frankish, 2013. "New venture survival and growth: does the fog lift?," Working Papers 2013/36, Institut d'Economia de Barcelona (IEB).
    17. Marina van Geenhuizen & Peter Nijkamp, 2011. "Knowledge Virtualization and Local Connectedness among Smart High-tech Companies," Tinbergen Institute Discussion Papers 11-119/3, Tinbergen Institute.

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