THE IMPACT OF INTER-ORGANIZATIONAL RELATIONSHIPS ON INDUSTRIAL GROWTH: THE CASE OF THE HANDICRAFT INDUSTRY IN THAILAND
John E. Butler
University of Washington
DJ-10 Dept. of Management & Organization
Seattle, WA 98195
University of Virginia
McIntire School of Commerce
Charlottesville, VA 22903
How networks form at the industry level was studied. Specific attention was paid to the different types of organizations that affect the evolution of an emerging entrepreneurial industry. Initial research efforts focused on identifying industry participants, positioning them within a larger network, and attempting to determine the value they added to the network. This phase involved a field study of 26 organizations. To gain more in-depth information about the manufacturing sector, a questionnaire was administered to 22 additional firms, who were not in the field study. The focus of the questionnaire was to determine the type of network activity that entrepreneurs found important and to determine the impacts on performance.
This research was conducted in two stages, one of which is ongoing. In the initial stage, a field study was used to identify inter-organizational linkages that existed in the handicraft industry in Thailand. Founding-entrepreneurs, as well as executives in support organizations. were visited and interviewed to uncover the underlying dynamics that they felt were important to the success of their firms or organizations, and to the growth of this industry. The second phase of information collection involved the construction of a questionnaire. To date, 22 responses have been received by mail, but additional data collection efforts are contemplated in order to increase the sample size sufficiently to allow for statistical analysis.
The major finding of this research relates to the depth and breadth of organizations involved in the evolution of this industry. In addition, the segmentation of the industry into different levels of firms reveals that diversity of background and entrepreneurial motivation may actually facilitate industry development. The results suggests that industries are structured in a level fashion, and that networks between levels may be just as as those between different types of organizations, at the same level. In addition, broad networks were perceived by entrepreneurs as having a major impact on the degree to which their firm enjoyed superior performance.
For industry participants, this study suggests that entrepreneurs make more concerted efforts to ensure that needed support organizations are either sponsored by governments, or instituted through private efforts. In developing their models of organizational success, it appears imperative that attention be given to the type of support they need if growth goals are to be achieved. This study reveals that the success of the individual entrepreneurs, especially in a economic developing country, may be rather heavily influenced by the overall completeness of the industry. In addition, government planners and those who design economic policy would be well advised to pay more attention to the diversity of support mechanism that exist within an industry. This is especially true where industry growth is a desired goal.
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