Theory and Empirical Evidence of Business Support Networks

Kaie Kerem () and Vello Vensel
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Kaie Kerem: School of Economics and Business Administration, Tallinn University of Technology
Vello Vensel: School of Economics and Business Administration, Tallinn University of Technology

No 129, Working Papers from Tallinn School of Economics and Business Administration, Tallinn University of Technology

Abstract: Business firms operate in a certain environment in which they interact with one another, with individuals, governmental organisations, financial institutions and various other interest groups. Operation of respective economic and social networks (both voluntary and private market determined) may have an important effect on the overall business environment. This paper presents and analyses some results of the special sample survey of Estonian firms undertaken in 1994-2003. Our main attention in this paper is focused on business supporting services provided by various institutions and on the operation of disputesí resolution mechanism, using the concept of social networks. It is argued that the state enforcement mechanism is working weakly in the still unstable legal environment and firms have to use different self-enforcement mechanisms (through social networks) to resolve disputes. Social networks are also used for obtaining additional financing for investment. The success of the operation of social networks depends on the government economic policy.

Keywords: economic and social networks; social capital; business supporting services; enforcement mechanism; value creation. (search for similar items in EconPapers)
JEL-codes: K42 P30 Z13 (search for similar items in EconPapers)
Pages: 16
Date: 2005
New Economics Papers: this item is included in nep-bec, nep-law, nep-net and nep-soc
Note: Financial support from the Estonian Science Foundation (projects No. 5185 and 6186) for carrying out sample surveys in Estonia is greatly acknowledged by the authors.
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Published in Working Papers in Economics, School of Economics and Business Administration,Tallinn University of Technology (TUTWPE), Volume 16, Pages 5-20

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