Frontiers of Entrepreneurship Research
1996 Edition
SUMMARIES

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ENTREPRENEURIAL NETWORKS: LEVEL OF DEVELOPMENT AND SME COMPETITIVENESS


Michael Merenda
William Naumes
Craig Wood
Allen Kaufman

University of New Hampshire
McConnell Hall
Durham, New Hampshire 03824

Telephone
603-862-3371

Fax
603-862-3383

Principal Topics

SME’s role in forming entrepreneurial networks with firms within the value chain is studied. The value chain includes the SME, suppliers, customers and competitors. Competitiveness is analyzed according to SME type and participation in entrepreneurial networks, as well as gross margin and export performance. The relationship between problem-solving and non-problem solving SME suppliers within entrepreneurial networks is compared.

Method

A Competitive Advantage in Manufacturing questionnaire was constructed and pre-tested. The pretest took place at three manufacturing firms perceived to be involved at three different stages in the development of an entrepreneurial network. The stage one firm exhibited limited networking activities with customer; stage two was perceived to be involved at an intermediate level networking with customers and suppliers; and stage three being the most advanced fully participating in entrepreneurial networks with customers, suppliers, and competitors. The questionnaire was administered to 50 manufacturing firms. Measures of relative gross margin, exports, networking relationships, and strategic types using lean manufacturing practices were analyzed using factor and correlation analysis.

Major Findings

Competitiveness was found to be directly related to the stage of SME involvement in entrepreneurial networks. The most advanced stage of development of entrepreneurial networks was exhibited by problem-solving suppliers who involved all members of the value chain to manufacture custom designed products. Furthermore, to help leverage their limited resources they broadly define the value chain to include competitors. Collaborative specialists limited their involvement in entrepreneurial networks with their customers by designing to customer specifications. Many SME’s were found to compete at an intermediate stage of involvement in entrepreneurial networks by manufacturing primarily products according to customer’s detailed specifications while moving toward becoming a problem-solving manufacturer.

Implications

The resurgence of U.S. manufacturing competitiveness in global markets is driven by a corresponding growth in entrepreneurial networks. An entrepreneurial network is a problem-solving coalition of SME’s and their suppliers, competitors and larger OEM customers. When value chain relationships are jointly used to exploit market opportunities, primarily through product and process innovation, then the focus of entrepreneurship shifts from the firm to networks of firms.

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