Contractual networks: an organizational model to reduce the competitive disadvantage of small and medium enterprises (SMEs) in Europe’s less developed regions. A survey in southern Italy

Patrizia Pastore (), Antonio Ricciardi () and Silvia Tommaso ()
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Patrizia Pastore: University of Calabria
Antonio Ricciardi: University of Calabria
Silvia Tommaso: University of Calabria

International Entrepreneurship and Management Journal, 2020, vol. 16, issue 4, No 16, 1503-1535

Abstract: Abstract Limitations faced by southern Italy’s small enterprises due to their dimensions may be overcome by cooperation strategies and network contracts. The international literature has highlighted that effectively governed business networks appear to more successfully allow partner firms to improve their economic performance and survive over time. This paper combines qualitative and quantitative analyses to test the above hypothesis. It also analyses the performance of southern Italian firms that have joined business network contracts equipped with legal personality — the so called “reti soggetto” or “heavy contractual networks” (HCNs) — compared to firms participating in business networks based only on contractual agreements, devoid of legal personality—the so called “reti contratto” or “light contractual networks” (LCNs). Our findings demonstrate that only 13% of all registered business networks are in fact operative. Among the networks with legal personality, approximately 28% are active networks. A similar trend was observed for network contracts devoid legal personality: only 11% are truly active. Performance measures (including profitability, financial situation indicators, and debt sustainability) also differ for firms belonging to HCN, compared to those belonging to LCN, in the years following the subscription of the network contract. Empirical analysis suggests that HCNs have significant positive effects on the performance of participant firms. We thus propose to verify the conditions that strengthen business networks in the south of Italy. We also recommend promoting the establishment of networks with juridical subjectivity. Such networks can be effective tools to strengthen the competitiveness of SMEs despite external diseconomies, which can markedly improve their creditworthiness.

Keywords: Business networks; Business network contracts; Contractual networks; Networks with legal personality; SMEs; Less developed European regions (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s11365-019-00616-2

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