Business networks within a regional industrial cluster

Business networks within a regional industrial cluster

Cooperative strategies are becoming increasingly relevant in coping with an increasingly dynamic and complex business environment. A concentration upon core competencies is made easier when businesses are able to cooperate with other specialist businesses with different core competencies. Cooperative strategies range from formal alliances reinforced by contracts through to informal networks based upon relationships cemented by trust. Some examples of the motivators of networks include working together to win or carry out a project, or learning. However, unless the network delivers mutual benefit, it is unlikely that the trust and relationships necessary to cement the network will eventuate. Interaction based upon mutual benefit is normally expected to result in strengthened relationships and trust, provided the experience was positive for all concerned.
This study explores a formal business networking group in a regional industrial cluster. The research question that emerges from this background is: how does knowledge sharing emerge within a formal business networking group? Knowledge is a common component across the research issues that support this research question. Exploring the type of alliance, network or cluster that the formal business networking group takes is the first research issue. The second research issue examines how members perceive benefits from networking and how members build and maintain relationships is the third research issue. How do members exchange knowledge is the fourth research issue and the role of the active members in integrating knowledge is the fifth research issue. The sixth and final research issues examine how important trust is to members.
A qualitative methodology based upon the analysis of case studies is used for this explorative study. Fourteen embedded case studies are used with each case being a small, large or medium sized member business. A literature review provided prior theory, which is combined with in depth pilot interviews to formulate an interview protocol. Primary data was collected by conducting a total of 24 interviews with owners or senior managers of the participating businesses.
In summary, the group is a formal business networking group that includes informal relationships between members. Benefits of membership include both intangible and tangible benefits. Relationships are built through community focused participation enabling interaction around issues, problems and domain similarity. Knowledge is exchanged primarily through relationship development and with active members acting as knowledge integrators. Trust is built over time through demonstrated dependability. Open and honest communications cements all aspects of this relationship-based formal business networking group.
The main contribution to theory was a confirmation that the literature based around cooperative strategies was applicable to a formal business networking group in a regional industrial cluster. It was confirmed that participation in networking group activities enabled the interaction required to build the relationships and trust necessary to exchange knowledge by way of rational discourse. A definition of a formal business networking group was developed and confirmed by members. Benefits of networking paraphrased from the literature are confirmed by members as are the indicators of trust. A formal business networking group model was also developed as a product of this research project.
The contribution to management practice include a number of education tools that can be used to improve the performance of the formal business networking group and the member businesses. The tables of the benefits of networking and indicators of trust developed for this research can be used as a discussion tool for learning within or outside the group. A better understanding of the knowledge exchange process may encourage interaction amongst members with a resultant strengthening of relationships, trust and knowledge. Finally, the formal business networking group process model is an educational tool that can be used as a discussion piece for members, industry groups or Government when reviewing the allocation of scarce resources. Whilst of interest academically, this study may assist industry groups, Government policy, business networking groups, and individual businesses in working towards outcomes that deliver increased productivity and a greater business knowledge base.