THE ROLE OF NETWORKS IN SMALL FIRM COMPETITIVENESS

Contact networks as a means of obtaining external information are a we ll-accepted aspect of firm behavior. For large firms, formal ties, suc h as strategic alliances and joint ventures, are common, but for small firms more flexible, informal connections are the norm. In addition, semi-formal flexible manufacturing networks have evolved within the US as a means for firms to identify similar and compatible firms for coo perative activities. This paper examines the behavior of firms with re gard to the role played by networks in information flow and, at least speculatively, in firm competitiveness. Data come from interviews with firms throughout the US, in both rural and urban settings. Formal net works may be less critical in urban agglomerations, where proximity ma y provide advantages through informal interactions. Comparisons with i ndustrial districts in Europe provide scope for understanding the role of information in firm behavior.