Proceedings of the 3rd European Conference on Intellectual Capital

Governance <strong>of</strong> Networks <strong>of</strong> Small Enterprises: A
Knowledge Perspective - Some Case Studies in <strong>the</strong>
Mechanical Industry in Italy
Anna Romiti and Daria Sarti
University <strong>of</strong> Florence, Italy
anna.romiti@unifi.it
daria.sarti@unifi.it
Abstract: The idea <strong>of</strong> this work stems from <strong>the</strong> growing attention given to networks <strong>of</strong> small specialized firms, as
an alternative way <strong>of</strong> governance <strong>of</strong> <strong>the</strong> formal cooperative relations between enterprises in a context <strong>of</strong> market
crisis. In this paper we focus on <strong>the</strong> manufacturing networks defined as groups <strong>of</strong> organizations, most <strong>of</strong> <strong>the</strong> time
small-sized, that combine <strong>the</strong>ir competencies and knowledge in order to achieve competitive advantages that
would be difficult to reach on an individual basis. We focus primarly on concepts drawn from <strong>the</strong> RBV (resourcesbased
view) and KBV (Knowledge- based view) <strong>of</strong> firms. These <strong>the</strong>ories suggest that a firm’s competitive
advantage comes from idiosyncratic resources and knowledge and its ability to manage, combe and absorbe
<strong>the</strong>m. The methodology <strong>of</strong> multiple case studies is used with <strong>the</strong> purpose to understand <strong>the</strong> business success in
a SME context. The cases were selected among <strong>the</strong> most significant cases <strong>of</strong> manufacturing networks in <strong>the</strong>
mechanical industry in central Italy. The study shows five factors that, according to previous literature, are
considered key factors in <strong>the</strong> survival and development <strong>of</strong> networks: Commitment, Governance mechanisms,
Proactivity, Broker roles and Absorptive capacity potential. Our aim is to explore factors affecting alliance
development and success and particularly those related to differences in two kinds <strong>of</strong> networks: hard and s<strong>of</strong>t
networks. On <strong>the</strong> contrary to what emerges in previous evidence, we found some <strong>of</strong> <strong>the</strong> factors considered more
relevant in s<strong>of</strong>t than in hard networks. This can be explained because s<strong>of</strong>t network have a higher vocation in
exploration than in exploitation that characterizes hard network. These factors are: degree <strong>of</strong> commitment (both
economic and behavioral) and degree <strong>of</strong> potential absorptive capacity. At <strong>the</strong> same time, brokership and
hierarchical control do not seem to play a different role in <strong>the</strong> two kinds <strong>of</strong> network. Since <strong>the</strong>re is no in-depth
analysis for this topic in <strong>the</strong> Italian context, this paper is intended to provide empirical prior evidence for future
research as well as <strong>the</strong>oretical insights. From a practical perspective, <strong>the</strong> results <strong>of</strong> <strong>the</strong> survey may provide
significant support, in terms <strong>of</strong> managerial and policy implications, about how firms can manage knowledge
practices in order to sustain <strong>the</strong> creation <strong>of</strong> successful manufacturing networks in periods <strong>of</strong> crisis.
Keywords: manufacturing networks, governance mechanisms, small enterprises, intellectual capital, knowledge
management
1. Introduction
New trends such as trade liberalization, intensified competition, information and communication
technologies, growing significance <strong>of</strong> knowledge as a source <strong>of</strong> value creation and competitive
advantage have heavily affected, in <strong>the</strong> last decades, <strong>the</strong> competitive scenario. Due to <strong>the</strong>se
challenges, firms, in particular <strong>of</strong> small-size across many sectors, are moving towards <strong>the</strong> adoption <strong>of</strong>
new organizational forms founded on cooperative strategies.
According to recent literature on SMEs, collaboration among small firms represents a key strategic
decision for <strong>the</strong>ir survival and growth and provides a viable means for small-sized enterprises <strong>of</strong>
combining resources in order to exploit and explore new business opportunities.
Authors have highlighted a relative lack <strong>of</strong> research examining <strong>the</strong> critical factors affecting networking
within SMEs (Sherer 2003; Human and Provan 1997; Brunetto and Farr-Wharton, 2007). This,
according to Brunetto and Farr-Wharton (2007), both in terms <strong>of</strong> s<strong>of</strong>t/explorative or hard/exploitative
networks.
The idea <strong>of</strong> this work stems from <strong>the</strong> growing attention given to networks <strong>of</strong> small specialized firms, as
an alternative way <strong>of</strong> governance <strong>of</strong> <strong>the</strong> formal cooperative relations between enterprises in a context
<strong>of</strong> market crisis. In particular in this paper we will refer to manufacturing networks defined as groups
<strong>of</strong> organizations, most <strong>of</strong> time small-sized, that combine <strong>the</strong>ir competencies and knowledge in order to
achieve competitive advantage that would be difficult to reach on an individual basis.
Our aim in this paper is to explore factors affecting alliance development and success and particularly
those related to differences in two kinds <strong>of</strong> networks: hard and s<strong>of</strong>t networks.
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