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The advantages of formalizing networks: new evidence from Italian SMEs

Maurizio Cisi, Francesco Devicienti (), Alessandro Manello () and Davide Vannoni
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Maurizio Cisi: University of Turin

Small Business Economics, 2020, vol. 54, issue 4, No 14, 1183-1200

Abstract: Abstract Using a large sample of Italian small and medium-sized enterprises (SMEs), we investigate the effect of business cooperation realized through a “network contract” on the economic performance of network members. We find that establishing a formal business network has a positive effect on a firm’s gross margin ratio and exports, but not on profits. The advantages of this type of networking are stronger in the cases of the following: smaller firms; firms operating in traditional markets; firms operating in turbulent markets; firms located in less developed areas; and firms not part of an industrial district. The characteristics of a network (such as its size, geographical dispersion, and the sectorial diversity of its members) also have an impact on firm performance.

Keywords: Formal business network; SMEs; Economic performance; D22; L24; L25; M21; L26 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s11187-018-0127-0

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