Sowing the seeds: The impact of initial ties on growth and innovation among micro and small firms

Issam Laguir (), Matthijs Den Besten (), Jamal Elbaz () and Rébecca Stekelorum ()
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Issam Laguir: MRM - Montpellier Research in Management - UPVM - Université Paul-Valéry - Montpellier 3 - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier
Matthijs Den Besten: MRM - Montpellier Research in Management - UPVM - Université Paul-Valéry - Montpellier 3 - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier
Jamal Elbaz: Université Ibn Zohr = Ibn Zohr University [Agadir]
Rébecca Stekelorum: MRM - Montpellier Research in Management - UPVM - Université Paul-Valéry - Montpellier 3 - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier

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Abstract: We investigate the influence of networking on micro and small enterprises (MSEs) innovation and growth. We claim that people whom the entrepreneur approaches for advice as well as the companies with which initial relationships are forged leave an imprint that is reflected in MSEs tendency to upgrade - that is, innovate and grow. Our analysis of a sample of forty-six thousand French MSEs shows that the likelihood that MSEs upgrade within the first five years of existence is affected by their initial partners. Specifically, we find that companies seeking professional advice early on have a higher likelihood to achieve growth through innovation than others whilst companies relying primarily on advice provided by family members and/or organizations specializing in entrepreneurship have a lower likelihood. Moreover, we find that initial cooperation with other companies as well as cooperation with suppliers and customers leave a positive imprint on the MSEs' propensity to innovate and grow. Thus, the paper provides unique insights on the importance of fostering opportunities for networking in the earliest stages of MSEs development.

Date: 2017-05
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Published in Economics Bulletin, 2017, 37 (2), pp.1021-1032

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02057589

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