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Business networking for SMEs as a means to promote regional competitiveness: A Theoretical Framework

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  • Vitor Braga

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    Abstract

    The competitiveness of regions, as a means of promoting the competitiveness of a country as a whole, has been one of the main topics on the agenda of policy makers over the last decades. Several attempts at promoting competitiveness have been made with different degrees of success. In most cases, public investment in the regions was perceived as the solution to promote regional competitiveness and top-down policies were implemented. However, competitiveness also has an important dimension that is not related to public investment and depends instead on the cultural and institutional norms of a region. These regional characteristics are not easily addressed by traditional regional policies and require the study of cognitive processes and sociological and anthropological issues. Over recent years regional development has emphasised the importance of endogenous development. From this point of view, national or local governments’ policies must recognise that competitiveness not only comes from public investment in physical infrastructures but also depends on the behaviour, attitudes and capabilities of local entrepreneurs within the business environment. The scientific literature has been unanimous in showing that business networks carry advantages for regional competitiveness. Several key issues are raised regarding this issue including trust, local culture, and transaction costs. The networking of activities gains special emphasis with respect to SMEs. In most cases the regional economy depends on these firms and they are frequently seen as a key element within regional development. Also these firms depend much more on potential networks to gain advantages in information and expertise and often require joint ventures with respect to R&D activities. This paper will address the advantages of networking and its contribution to regional development as a way of promoting competitiveness. In so doing it will analyse the factors that lead entrepreneurs to co-operate and apply these findings in the context of regional and national economic development. Keywords: Network form of organisation, Local development, Trust, Co-operation.

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    Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa04p455.

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    Date of creation: Aug 2004
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    Handle: RePEc:wiw:wiwrsa:ersa04p455

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    1. Nicolai J. Foss, . ""Coase vs Hayek": Economic Organization in the Knowledge Economy," IVS/CBS Working Papers 2001-6, Department of Industrial Economics and Strategy, Copenhagen Business School.
    2. Geoffrey M. Hodgson & Thorbjørn Knudsen, 2007. "Firm-Specific Learning and the Nature of the Firm. Why Transaction Costs May Provide an Incomplete Explanation," Revue économique, Presses de Sciences-Po, vol. 58(2), pages 331-350.
    3. Elina Varam�ki & Jukka Vesalainen, 2003. "Modelling different types of multilateral co-operation between SMEs," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 15(1), pages 27-47, January.
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