Strategic Networking Behavior of SMEs: Practical Considerations from Bulgaria

Strategic Networking Behavior of SMEs: Practical Considerations from Bulgaria

Maria Vasilska (University of National and World Economy, Bulgaria), Iliya Kereziev (University of National and World Economy, Bulgaria) and Yordanka Ivanova (University of National and World Economy, Bulgaria)
DOI: 10.4018/978-1-4666-5962-9.ch018
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Strategic networking behavior of SMEs is an issue that has not yet been thoroughly studied in the context of emerging market economies in Eastern Europe. No doubt, through strategic networking, SMEs could gain access to valuable resources – information, know-how, technologies, finance, etc., needed for strategy development, and building and maintaining competitive advantages. In addition, the networking of Bulgarian firms operating in a limited domestic market can be viewed as a tool for gaining access to external markets. On the other hand, intensive collaboration and networking creates problems and challenges for the SMEs and places new requirements to their strategic management. Therefore, this chapter draws upon the data and results of three researches which investigated strategic networking behavior of Bulgarian SMEs in order to reveal the specific benefits and challenges of SMEs involved in networks and to examine the impact of networking activities on SMEs strategic development. Finally, recommendations for the strategic networking behavior of Eastern European SMEs are formulated with a view to improve their results from networking and hence their competitiveness.
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Significant changes in the global competitive environment, which we have witnessed in recent decades, have led practitioners and researchers to examine contemporary business as not functioning in the well-known traditional market and industrial structures but in networks of interconnected firms. Assuming that firms operate in such a complex and dynamic environment, their business behavior should be analyzed with a view to the dynamics of their relationships with wide range of stakeholders and other organizations – distributors, suppliers, competitors and customers as a way of extracting strategic benefits and increasing competitiveness (Jarillo, 1988; Hеkansson & Snehota, 1995; Gulati, Nohria, & Zaheer, 2000). Effects of networking on firms performance and competitiveness may vary depending on the context, including characteristics of the industry, characteristics of the network – configuration of links, partners’ and firm’s profiles – e.g. age, size (Gulati, Dialdin, & Wang, 2002, p. 294).

In response to the growing demands of competitive environment, SMEs obviously need to form and develop supportive and strategically focused partnerships and networks aimed not only for their survival, but also for increasing competitiveness. Therefore, cooperation and networking emerge as a preferred small firms’ strategy (Pichler, 2007, p. 111). Formation, involvement and location in networks express the strategic networking behavior of SMEs in case they search for strategic benefits from cooperating with other firms. In turn, partner relationships, networking and related challenges set certain requirements for the strategic management of SMEs. In line with the growing trend of inter-firm cooperation, in recent years researchers shifted their focus from just the need to understand the nature and functioning of business partnerships and networks to the strategic aspects of firm behavior towards networking. This interest in strategic management of firms, operating in network environment and particularly in strategic aspects of firms’ development in a network can be defined as a relatively new one (Ritter, Wilkinson, & Johnston, 2004, pp. 175-183). It is noteworthy also that the studies on this topic focus mainly on the review, modeling and analysis of behavior and management of firms in networks or the networks themselves in the context of developed countries such as the model of “managing in networks” proposed by Ford, Gadde, Hakansson and Snehota (2003) which is illustrated by a case study on a famous retailer IKEA.

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