Starting business networks: benefits and barriers

Policy makers advocate forming business networks to promote Small and Medium Enterprise (SME) innovation and success. However, past research concludes that owners of small businesses are reluctant to join networks and work cooperatively. In this study, we describe the process of, and challenges involved in, forming four new networks among SMEs in rural towns in the US Midwest. Findings reveal the importance of the convener in successful network formation, the role of culture in the Hispanic immigrant business network and the relationship between trust and resource exchanges among members. The possibility of substituting institutional trust (in the convener) for intramember trust in facilitating research exchanges is suggested. Two of the four networks failed to form or dissolved. It may be unrealistic at the current level of knowledge to expect a higher level of new SME network success.