SMEs, Growth, and Networks: Understanding the Missing Links

Liang, Liang (2022) SMEs, Growth, and Networks: Understanding the Missing Links. Doctoral thesis, Birmingham City University.

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Abstract

This study examines the relationship between SME connections and their growth. Small and medium enterprise (SME) growth usually requires collaborations, since SMEs often do not have the knowledge and business resources to grow individually. Existing research shows that SMEs can benefit from inter-organisation connections to access external knowledge and business resources, thus these connections among SMEs are crucial to their growth. However, it is not clear what the influences, structures, and dynamics are of SME connections. This study explores SME connections through three research questions: 1) What is the relationship between SME connections and SME growth? 2) How do SMEs connect with each other? 3) How do SME connections evolve through growth?

The data covers SME connections in Beijing and Shanghai. They are the most active areas and the time period in SME collaborations, in terms of the number of SMEs. The chosen SME networks have overall positive revenue growth in the time period 2011 to 2015 and has 1041 active SMEs with 1187 collaborations. Successful network development results and active SME connections in these areas provide two representative SME networks.

This study adopts network theory and network analysis to explore the effects of SMEs networks on SMEs growth. To answer the research questions, this study uses network analysis as the method to generate network snapshots and test the relationship between SMEs network connections and their growth, determined through increase in revenue. In addition, this study shows the SME connection structures and dynamics to provide details about how SMEs are connected with each other and how connections change during their growth.

This study's results provide further developments in network theory. First, this study suggests that open and closed SME connections can influence revenue growth, since they are strategic choices to get network positions which other firms rely on their connections. Second, this study demonstrated that open and closed SME connections are not caused by the context of the information technology industry, in which this study's data is based. They are effective structures in inter-firm collaborations. Third, this study added three tendencies to explain how existing connections influence new connections formed between SMEs.

The contribution of this study is to improve the understanding of SME growth and networks. Existing literature shows that SME growth can benefit from inter-organisation connections. However, there remains a lack of understanding of the extent of SME connection influences, the SME connection structure details, and the evolving dynamics of SME connections. To improve these, this study explores SME connection influences, structures and dynamics. Consistent with prior research, this study confirms that SMEs revenue growth can benefit from having open and closed connections in their networks. In addition, this study emphasizes the importance of not only the SME connection influences, but also the structures and dynamics. This study shows that SMEs have five types of open connections and four types of closed connections. And there are three tendencies about which SMEs are more likely to be connected through growth. Thus, there are implications in how SMEs connect into networks to achieve growth.

This study has implications in SME management practices, especially, in how to manage the collaborative connections among SMEs. This study’s findings show that, in order to achieve growth, SMEs need to 1) connect with the well-connected SMEs, 2) be interconnected with other SMEs, and 3) connect with SMEs with different types of network roles. At the micro level, these results can be used as a guideline for SME managers to improve their inter-firm collaborations. Also, at the macro level, the results can be used by policymakers to improve SMEs performances as clusters.

Item Type: Thesis (Doctoral)
Dates:
DateEvent
28 February 2020Submitted
25 July 2022Accepted
Uncontrolled Keywords: Business growth, business development, inclusive growth, inclusiveness, company revenue growth
Subjects: CAH17 - business and management > CAH17-01 - business and management > CAH17-01-02 - business studies
Divisions: Doctoral Research College > Doctoral Theses Collection
Faculty of Business, Law and Social Sciences > College of Business, Digital Transformation & Entrepreneurship
Depositing User: Jaycie Carter
Date Deposited: 17 Jan 2024 10:26
Last Modified: 17 Jan 2024 10:26
URI: https://www.open-access.bcu.ac.uk/id/eprint/15130

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