Interfirm Relationships and Business Performance

Adam Szeidl and Jing Cai

No 11717, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We organized business associations for the owner-managers of randomly selected young Chinese firms to study the effect of business networks on firm performance. We randomized 2,800 firms into small groups whose managers held monthly meetings for one year, and into a "no-meetings" control group. We find that: (1) The meetings increased firm revenue by 8.1 percent, and also significantly increased profit, factors, inputs, the number of partners, borrowing, and a management score; (2) These effects persisted one year after the conclusion of the meetings; and (3) Firms randomized to have better peers exhibited higher growth. We exploit additional interventions to document concrete channels. (4) Managers shared exogenous business-relevant information, particularly when they were not competitors, showing that the meetings facilitated learning from peers. (5) Managers created more business partnerships in the regular than in other one-time meetings, showing that the meetings improved supplier-client matching. (6) Firms whose managers discussed management, partners, or finance improved more in the associated domain, suggesting that the content of conversations shaped the nature of gains.

Keywords: Business networks; Meetings; Field experiment; Peer effects; Information diffusion; Referrals; Trust (search for similar items in EconPapers)
JEL-codes: D22 L14 O12 O14 (search for similar items in EconPapers)
Date: 2016-12
New Economics Papers: this item is included in nep-bec, nep-cse, nep-hrm, nep-net, nep-sbm and nep-tra
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Citations: View citations in EconPapers (13)

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Related works:
Journal Article: Interfirm Relationships and Business Performance (2018)
Working Paper: Interfirm Relationships and Business Performance_ (2017)
Working Paper: Interfirm Relationships and Business Performance (2016)
Working Paper: Interfirm Relationships and Business Performance (2016)
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