Small Firm Networks: A Successful Approach to Innovation?

7 Pages Posted: 6 May 2003

See all articles by Victoria Hanna

Victoria Hanna

University of Melbourne - Department of Management

Kathryn Walsh

Loughborough University


This paper considers the increasing trend of inter-working among small firms. Networks of small firms co-operate in certain activities, such as marketing, purchasing, R&D, training or manufacturing. But does co-operation lead to innovation? To answer this question published evaluations of small firms co-operating for mutual benefit are reappraised. Inter-working among small firms is then investigated further by interviewing three network brokers. The brokers were funded by regional governments and they facilitated co-operation between small firms. These semi-structured discussions explored the key characteristics of successful networks, the responsibilities of the broker and the level of innovation occurring. Networking is primarily a competitive response. It needs to evolve into a mechanism to enable small firms to develop innovative products and processes jointly. Small firms may have to rethink their approach to co-operation, and their motives for initiating inter-working if they are to benefit fully from co-operation.

Suggested Citation

Hanna, Victoria and Walsh, Kathryn, Small Firm Networks: A Successful Approach to Innovation?. R&D Management, Vol. 32, pp. 201-207, 2002. Available at SSRN:

Victoria Hanna (Contact Author)

University of Melbourne - Department of Management ( email )

200 Leicester Street
Melbourne, Victoria 3053

Kathryn Walsh

Loughborough University ( email )

Ashby Road
Loughborough, Leicestershire LE11 3TU
United Kingdom

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