A networking model supporting small and medium enterprises to develop new processes and products
Small and Medium Enterprises (SMEs) are a key part of manufacturing economies. However, the move towards globalisation of supply can potentially be harmful to SMEs, which, because of their size and lack of internal resources, often lack the capability to add value to their products and differentiate themselves in the marketplace. Networks are seen as a key method by which SMEs can acquire "know how" on the external environment as well as in collaborating to supply customers to overcome these constraints. However, there is a lack of clarity in the literature on the appropriate type of network to support specific outcomes in SMEs. Nor is there an understanding of the specific characteristics, which define a network's internal dynamic. Without an understanding of network typologies and characteristics it is difficult to effectively support existing networks or seek to develop new ones. This research therefore, focuses on providing an understanding of network typologies and network processes to inform SME network policy and to provide practical help to facilitators of networks in forming and then supporting SMEs in meeting their network objectives. The research takes a longitudinal approach, examining two SME manufacturing networks in the West Midlands region of the UK over a two-year period as well as a Control Group of non-networking firms for comparison. The networks are from the Vertical Supply Chain and Industrial District traditions. The emphasis is on seeking to establish the impact of networking on new processes and new products in the SMEs as well as the external facilitation process. A Case Study approach was undertaken tracking SME activity and obtaining rich insights into the way SMEs behave in networks. A Questionnaire was administered at three stages (start, middle and end) to establish Performance Indicators and to then register changes in performance in the SMEs to reflect on network activity. A version of the Questionnaire was then utilised within a regional sample of SMEs for comparison. The results show that networks support SMEs in learning from others, in sharing ideas, in gaining information on trends, in benchmarking and in assisting in process improvements. The research describes a typology for assessing networks and describes two new distinct network types, a Closed Strategic Network of SMEs from the Supply Chain tradition and an Open Social Network from the Industrial District tradition. A series of "Characteristics" including, Purpose, Trust, Compatibility, Equity and Entrepreneurial and Collaborative Behaviour have been identified. The Typologies, Characteristics and Performance Indicators can be used to systematically help in support of existing networks and in developing new ones. These Typologies, Characteristics and Performance Indicators, have been incorporated into a Three- Stage Networking Model. The research defines the types of facilitation needed at distinct stages of development in the Model and also identifies how SMEs then make partnership arrangements (in dyadic relationships) to transfer to a business relationship external to the network.