Networking strategy of boards: implications for small and medium-sized enterprises

Development of linkages with the external environment, e.g. interlocks, is a mechanism to access scarce resources. Creating and maintaining these link ages may be an organizational capability that creates a competitive advanta ge for small and medium-sized enterprises (SMEs). A partial model of networ king strategy is proposed, which includes measures of board composition, in terlocks, entrepreneurial orientation and environmental hostility. Analysis of 70 community bank Chief Executive Officer (CEO) responses (58% response rate) lends support to the proposition that firms with a networking strate gy performed better (higher return on assets (ROA) and higher return on exp enditure (ROE)) than those firms that did not actively pursue the developme nt of networks.