Proceedings of the 3rd European Conference on Intellectual Capital

Anna Romiti and Daria Sarti
outcomes (Saxton, 1997). Members’ selection, is particularly important to hard networks in order to
lower operation risks. Finally, information technology is more important in hard networks because it is
useful in facilitating <strong>the</strong> coordination <strong>of</strong> more interdependent activities. What Sherer (2003) suggests
implies, in an indirect manner, a critical role played also by intermediaries (i.e. brokers) and control
mechanism (i.e. governance mechanisms – Makadok and C<strong>of</strong>f, 2009) in <strong>the</strong> coordination <strong>of</strong> hard
networks.
Lane and Lubatkin (1998) found relative absorptive capacity measures positively related to
interorganizational learning. Fur<strong>the</strong>rmore, <strong>the</strong> way firms behave, according to environmental and
internal characteristics from <strong>the</strong> point <strong>of</strong> view <strong>of</strong> proactivity, has an important impact on <strong>the</strong> formation
and development <strong>of</strong> networks (Weaver and Dickson, 1997; Sherer, 2003; Park and Zhou, 2005;
Parkhe, Wasserman and Ralston, 2006).
For <strong>the</strong> current study we decided not to include some <strong>of</strong> <strong>the</strong> above mentioned factors (i.e. information
techonolgy, trust and partner characteristics) but only five out <strong>of</strong> <strong>the</strong>se.
In fact, according to Sherer (2003) small-sized firms may not have <strong>the</strong> time or <strong>the</strong> resources to build
trust and many networks <strong>of</strong> SMEs appear to be driven mainly by intermediaries. Fur<strong>the</strong>rmore, <strong>the</strong>
networks studied present analogous levels <strong>of</strong> trust due to <strong>the</strong> similarity <strong>of</strong> context conditions (i.e. <strong>the</strong>y
belong to similar local systems <strong>of</strong> small enterprises and to <strong>the</strong> same small-enterprise national
association). Partner characteristics were not included in this first stage <strong>of</strong> analysis due to <strong>the</strong>
necessity <strong>of</strong> more in depth interviews. Information technology was not included for <strong>the</strong> similarity <strong>of</strong> this
condition among <strong>the</strong> four networks.
4.1 Proactivity
External relationships are considered relevant for small firms (BarNir and Smith, 2001) and in some
case also determinant <strong>of</strong> small business survival. Indeed small firms have limited resources and
limited market presence. By means <strong>of</strong> an interfirm alliance, small firms can access to needed
resources (Oliver, 1990) and build a strategic block to defend <strong>the</strong>mselves from competition (Nohria
and Garcia-Pont, 1991). In this case <strong>the</strong> strategy <strong>of</strong> <strong>the</strong> network firms is defensive.
Small firms can decide to form a strategic alliance to improve competitive position as well (Park and
Zhou, 2005), for example to capture windows <strong>of</strong> market opportunities in favourable markets and
outmatch a stronger competitor (BarNir and Smith, 2001). In this case <strong>the</strong> behaviour <strong>of</strong> <strong>the</strong> network
firms is <strong>of</strong>fensive.
Firms can also call for o<strong>the</strong>r firms to join <strong>the</strong>ir efforts (even in terms <strong>of</strong> joint investment) with <strong>the</strong> aim to
create new firms. The result in this later case is an entrepreneurship development by means <strong>of</strong>
network.
4.2 Governance mechanisms
Gulati and Singh (1988: 781) define <strong>the</strong> governance structure <strong>of</strong> <strong>the</strong> alliance as “<strong>the</strong> formal
contractual structure participants used to formalize it”. Different factors can affect <strong>the</strong> choice <strong>of</strong>
governance mode <strong>of</strong> an alliance: trust between <strong>the</strong> partners, <strong>the</strong> purpose <strong>of</strong> <strong>the</strong> alliance, <strong>the</strong>
symmetry <strong>of</strong> assets among partners (Kuittinen et al, 2008); <strong>the</strong> amount <strong>of</strong> property or knowledge base
involved in <strong>the</strong> assets <strong>of</strong> <strong>the</strong> network (Hoethker and Mellewigt, 2009); <strong>the</strong> appropriation concerns
(Pisano, Russo and Teece, 1988, Williamson, 1991); anticipated coordination costs in contests <strong>of</strong>
high interdependence and coordination (Thompson, 1967).
Our focus is based on <strong>the</strong> prevalence <strong>of</strong> market or hierarchies inside <strong>the</strong> alliance. On this basis,
networks are considered hybrid governance forms. There are three key dimensions that differentiate
markets from hierarchies: ownership, level <strong>of</strong> authority (or hierarchy) and rewards system (Makadok
and C<strong>of</strong>f, 2009). In <strong>the</strong> first dimension (<strong>the</strong> ownership), alliances can present two types <strong>of</strong>
governance: equity sharing and non-equity sharing (Kuittinen et al, 2008; Gulati and Singh, 1998;
Makadok and C<strong>of</strong>f, 2009). Regarding <strong>the</strong> second dimension, hierarchy in alliances refers to <strong>the</strong>
presence <strong>of</strong> several elements: use <strong>of</strong> authority and legal contracts (Powell, 1990; Ring and Van de
Ven, 1994), command structure, systems for certifying <strong>the</strong> authority <strong>of</strong> communications, incentive
systems that link rewards to performance, standardization <strong>of</strong> procedures (Stinchombe, 1985);
contracts and non-market pricing (Gulati and Singh, 1998). Alternatively governance mechanisms are
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