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Sowing the seeds: The impact of initial ties on growth and innovation among micro and small firms

Author

Listed:
  • Issam Laguir

    (Montpellier Business School and Montpellier Research in Management)

  • Matthijs Den besten

    (Montpellier Business School and Montpellier Research in Management)

  • Jamal Elbaz

    (Ecole Supérieure de Technologie (EST) d'Agadir, Ibn Zohr University)

  • Rebecca Stekelorum

    (Université de Montpellier, Montpellier Research in Management)

Abstract

We investigate the influence of networking on micro and small enterprises (MSEs) innovation and growth. We claim that people whom the entrepreneur approaches for advice as well as the companies with which initial relationships are forged leave an imprint that is reflected in MSEs tendency to upgrade—that is, innovate and grow. Our analysis of a sample of forty-six thousand French MSEs shows that the likelihood that MSEs upgrade within the first five years of existence is affected by their initial partners. Specifically, we find that companies seeking professional advice early on have a higher likelihood to achieve growth through innovation than others whilst companies relying primarily on advice provided by family members and/or organizations specializing in entrepreneurship have a lower likelihood. Moreover, we find that initial cooperation with other companies as well as cooperation with suppliers and customers leave a positive imprint on the MSEs' propensity to innovate and grow. Thus, the paper provides unique insights on the importance of fostering opportunities for networking in the earliest stages of MSEs development.

Suggested Citation

  • Issam Laguir & Matthijs Den besten & Jamal Elbaz & Rebecca Stekelorum, 2017. "Sowing the seeds: The impact of initial ties on growth and innovation among micro and small firms," Economics Bulletin, AccessEcon, vol. 37(2), pages 1021-1032.
    • Handle: RePEc:ebl:ecbull:eb-17-00358
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    References listed on IDEAS

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    1. Back, Yujin & Praveen Parboteeah, K. & Nam, Dae-il, 2014. "Innovation in Emerging Markets: The Role of Management Consulting Firms," Journal of International Management, Elsevier, vol. 20(4), pages 390-405.
    2. Stam, Wouter & Arzlanian, Souren & Elfring, Tom, 2014. "Social capital of entrepreneurs and small firm performance: A meta-analysis of contextual and methodological moderators," Journal of Business Venturing, Elsevier, vol. 29(1), pages 152-173.
    3. Rosenbusch, Nina & Brinckmann, Jan & Bausch, Andreas, 2011. "Is innovation always beneficial? A meta-analysis of the relationship between innovation and performance in SMEs," Journal of Business Venturing, Elsevier, vol. 26(4), pages 441-457, July.
    4. Tomlinson, Philip R., 2010. "Co-operative ties and innovation: Some new evidence for UK manufacturing," Research Policy, Elsevier, vol. 39(6), pages 762-775, July.
    5. Andrew & Sally Gee & James H. Love & Stephen Roper & Jack Willis, 2014. "Small firm-large firm relationships and the implications for small firm innovation: what do we know?," White Papers 0009, Enterprise Research Centre.
    6. Pooran Wynarczyk & Robert Watson, 2005. "Firm Growth and Supply Chain Partnerships: An Empirical Analysis of U.K. SME Subcontractors," Small Business Economics, Springer, vol. 24(1), pages 39-51, February.
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    Cited by:

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    JEL classification:

    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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