The success and failure of policy-implanted inter-firm network initiatives: motivations, processes and structure

Abstract

This paper examines the processes and causes of inter-firm network success and failure, defined in terms of the ability of networks to become a sustained and valued form of business activity for their members. The paper examines four different case study network initiatives: (1) a failed informal ‘new entrepreneurs' network’ (2) a successful informal ‘local cluster group’ (3) a failed formal ‘defence contractors' network’ and (4) a successful formal ‘small-firm technology group’. It is shown that networks in business are often consciously developed and maintained by those managing directors who have recognized the importance of cooperative activities for achieving competitive advantage for their companies. The best network support consisted of brokers who are able to mix and overlap the ‘hard’ business and ‘softer’ social interests of participants. The case studies indicate that it is formal groups that are the most potent form of inter-firm network, but that it is through an initially informal structure that they are best facilitated. It is concluded that both economic and social rationalities are at play in the motivation of firms to join networks, and that their success is closely connected to pre-existing commonality between members.