IDEAS home Printed from https://ideas.repec.org/a/spr/jknowl/v6y2015i1p105-124.html
   My bibliography  Save this article

The Role of Knowledge and Trust in SMEs

Author

Abstract

This paper aims to explore the role of interpersonal trust and knowledge in the number of Small and Medium Enterprises (SMEs), both conceptually and empirically. The number of SMEs in an economy seems largely to depend on level of knowledge of employees and educational level of leading entrepreneurs. Furthermore, existence of trust in transactions lowers cost of such transactions, as it allows financial agreements to be less dependent on formal regulations and facilitates investment and innovations. This study uses a series of variables to express these structural relationships, which are analysed using a principal component analysis (PCA), a regression analysis and a two-stage least squares (2SLS) analysis. Through our empirical work, we conclude that there is an endogeneity problem between interpersonal trust and the number of SMEs. By solving the endogenous problems, the conclusions confirm two strongly positive effects; knowledge positively affects the number of SMEs, which in turn, positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • P. Petrakis & P. Kostis, 2015. "The Role of Knowledge and Trust in SMEs," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 6(1), pages 105-124, March.
    • Handle: RePEc:spr:jknowl:v:6:y:2015:i:1:p:105-124
    DOI: 10.1007/s13132-012-0115-6
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s13132-012-0115-6
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s13132-012-0115-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1251-1288.
    2. Zoltán J. Ács & Pontus Braunerhjelm & David B. Audretsch & Bo Carlsson, 2015. "The knowledge spillover theory of entrepreneurship," Chapters, in: Global Entrepreneurship, Institutions and Incentives, chapter 7, pages 129-144, Edward Elgar Publishing.
    3. Audretsch, David B. & Lehmann, Erik E., 2005. "Does the Knowledge Spillover Theory of Entrepreneurship hold for regions?," Research Policy, Elsevier, vol. 34(8), pages 1191-1202, October.
    4. Davidson, Russell & MacKinnon, James G., 1989. "Testing for Consistency using Artificial Regressions," Econometric Theory, Cambridge University Press, vol. 5(3), pages 363-384, December.
    5. Ottati, Gabi Dei, 1994. "Trust, Interlinking Transactions and Credit in the Industrial District," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 18(6), pages 529-546, December.
    6. Sarasvathy, Saras D., 2003. "Entrepreneurship as a science of the artificial," Journal of Economic Psychology, Elsevier, vol. 24(2), pages 203-220, April.
    7. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    8. Ikujiro Nonaka, 1994. "A Dynamic Theory of Organizational Knowledge Creation," Organization Science, INFORMS, vol. 5(1), pages 14-37, February.
    9. Bengt-Åke Lundvall, 2010. "Scope, Style, and Theme of Research on Knowledge and Learning Societies," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 1(1), pages 18-23, March.
    10. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    11. Anne Gausdal & Etty Nilsen, 2011. "Orchestrating Innovative SME Networks. The Case of “HealthInnovation”," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 2(4), pages 586-600, December.
    12. Manivannan Velmurugan, 2010. "Revisiting Accounting in the Knowledge-Based Economy," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 1(4), pages 318-332, December.
    13. Anderson, Alistair R. & Miller, Claire J., 2003. ""Class matters": human and social capital in the entrepreneurial process," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 32(1), pages 17-36, March.
    14. Ouchi, William, 1981. "Theory Z: How American business can meet the Japanese challenge," Business Horizons, Elsevier, vol. 24(6), pages 82-83.
    15. Carole Howorth & Andrea Moro, 2006. "Trust within Entrepreneur Bank Relationships: Insights from Italy," Entrepreneurship Theory and Practice, , vol. 30(4), pages 495-517, July.
    16. Yosem Companys & Jeffery McMullen, 2007. "Strategic Entrepreneurs at Work: The Nature, Discovery, and Exploitation of Entrepreneurial Opportunities," Small Business Economics, Springer, vol. 28(4), pages 301-322, April.
    17. Scott Shane, 2000. "Prior Knowledge and the Discovery of Entrepreneurial Opportunities," Organization Science, INFORMS, vol. 11(4), pages 448-469, August.
    18. Chun-chieh Wang & Mu-hsuan Huang & Dar-zen Chen, 2012. "The Evolution of Knowledge Spillover and Company cluster in Semiconductor Industry," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 3(2), pages 109-124, June.
    19. Mei-Ling Wang & Bi-Fen Hsu, 2012. "A Study to Explore the Team Virtualization Level and Team Effectiveness from the Team Personality Composition," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 3(2), pages 199-216, June.
    20. Elisa Giuliani, 2007. "The selective nature of knowledge networks in clusters: evidence from the wine industry," Journal of Economic Geography, Oxford University Press, vol. 7(2), pages 139-168, March.
    21. Andrea Morrison, 2008. "Gatekeepers of Knowledge within Industrial Districts: Who They Are, How They Interact," Regional Studies, Taylor & Francis Journals, vol. 42(6), pages 817-835.
    22. Suleiman “Sul” Kassicieh, 2010. "The Knowledge Economy and Entrepreneurial Activities in Technology-Based Economic Development," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 1(1), pages 24-47, March.
    23. Shaker A. Zahra & R. Isil Yavuz & Deniz Ucbasaran, 2006. "How Much do you Trust Me? The Dark Side of Relational Trust in New Business Creation in Established Companies," Entrepreneurship Theory and Practice, , vol. 30(4), pages 541-559, July.
    24. Igor Dubina & Elias Carayannis & David Campbell, 2012. "Creativity Economy and a Crisis of the Economy? Coevolution of Knowledge, Innovation, and Creativity, and of the Knowledge Economy and Knowledge Society," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 3(1), pages 1-24, March.
    25. Zoltan Acs & László Szerb & Erkko Autio, 2017. "Global Entrepreneurship and Development Index 2016," SpringerBriefs in Economics, Springer, number 978-3-319-63844-7, October.
    26. Julie M. Hite & William S. Hesterly, 2001. "The evolution of firm networks: from emergence to early growth of the firm," Strategic Management Journal, Wiley Blackwell, vol. 22(3), pages 275-286, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Panagiotis E. Petrakis & Pantelis C. Kostis, 2013. "The Effects of Cultural Background and Knowledge Creation on Self-Employment and Entry Density Rates," Review of Economics & Finance, Better Advances Press, Canada, vol. 3, pages 18-32, May.
    2. Alistair R. Anderson & Jialin Hardwick, 2017. "Collaborating for innovation: the socialised management of knowledge," International Entrepreneurship and Management Journal, Springer, vol. 13(4), pages 1181-1197, December.
    3. Sergey M. Vasin & Leyla A. Gamidullaeva & Nicholas Wise & Konstantin Yu. Korolev, 2020. "Knowledge Exchange and the Trust Institution: a New Look at the Problem," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(3), pages 1026-1042, September.
    4. Petrakis, Panagiotis E. & Kostis, Pantelis C. & Valsamis, Dionysis G., 2015. "Innovation and competitiveness: Culture as a long-term strategic instrument during the European Great Recession," Journal of Business Research, Elsevier, vol. 68(7), pages 1436-1438.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Panagiotis E. Petrakis & Pantelis C. Kostis, 2013. "The Effects of Cultural Background and Knowledge Creation on Self-Employment and Entry Density Rates," Review of Economics & Finance, Better Advances Press, Canada, vol. 3, pages 18-32, May.
    2. Erik E. Lehmann & Nikolaus Seitz, 2017. "Freedom and innovation: a country and state level analysis," The Journal of Technology Transfer, Springer, vol. 42(5), pages 1009-1029, October.
    3. Rui Torres de Oliveira & Simona Gentile-Lüdecke & Sandra Figueira, 2022. "Barriers to innovation and innovation performance: the mediating role of external knowledge search in emerging economies," Small Business Economics, Springer, vol. 58(4), pages 1953-1974, April.
    4. Nerine Mary George & Vinit Parida & Tom Lahti & Joakim Wincent, 2016. "A systematic literature review of entrepreneurial opportunity recognition: insights on influencing factors," International Entrepreneurship and Management Journal, Springer, vol. 12(2), pages 309-350, June.
    5. Mai, Nhat Chi, 2020. "Unpacking the process of overseas knowledge recontextualisation in returnee entrepreneurship - a learning perspective : a study of returnee entrepreneurs in Vietnam," OSF Preprints y5psh, Center for Open Science.
    6. Boeker, Warren & Howard, Michael D. & Basu, Sandip & Sahaym, Arvin, 2021. "Interpersonal relationships, digital technologies, and innovation in entrepreneurial ventures," Journal of Business Research, Elsevier, vol. 125(C), pages 495-507.
    7. De Clercq, Dirk & Danis, Wade M. & Dakhli, Mourad, 2010. "The moderating effect of institutional context on the relationship between associational activity and new business activity in emerging economies," International Business Review, Elsevier, vol. 19(1), pages 85-101, February.
    8. Mikaela Backman & Charlie Karlsson, 2016. "Determinants of self-employment among commuters and non-commuters," Papers in Regional Science, Wiley Blackwell, vol. 95(4), pages 755-774, November.
    9. Hélène Laurell & Leona Achtenhagen & Svante Andersson, 2017. "The changing role of network ties and critical capabilities in an international new venture’s early development," International Entrepreneurship and Management Journal, Springer, vol. 13(1), pages 113-140, March.
    10. Lawrence A. Plummer & Zoltán J. Ács, 2015. "Localized competition in the knowledge spillover theory of entrepreneurship," Chapters, in: Global Entrepreneurship, Institutions and Incentives, chapter 8, pages 145-160, Edward Elgar Publishing.
    11. Niklas Elert, 2014. "What determines entry? Evidence from Sweden," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 55-92, August.
    12. Doko Tchatoka, Firmin & Dufour, Jean-Marie, 2020. "Exogeneity tests, incomplete models, weak identification and non-Gaussian distributions: Invariance and finite-sample distributional theory," Journal of Econometrics, Elsevier, vol. 218(2), pages 390-418.
    13. Chengguang Li & Rodrigo Isidor & Luis Alfonso Dau & Rudy Kabst, 2018. "The More the Merrier? Immigrant Share and Entrepreneurial Activities," Entrepreneurship Theory and Practice, , vol. 42(5), pages 698-733, September.
    14. Erik Lundmark & Anna Krzeminska & Dean A. Shepherd, 2019. "Images of Entrepreneurship: Exploring Root Metaphors and Expanding Upon Them," Entrepreneurship Theory and Practice, , vol. 43(1), pages 138-170, January.
    15. AFAWUBO, Komivi & NOGLO, Yawo Agbényégan, 2022. "ICT and entrepreneurship: A comparative analysis of developing, emerging and developed countries," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    16. Zoltán J. Ács & Pontus Braunerhjelm & David B. Audretsch & Bo Carlsson, 2015. "The knowledge spillover theory of entrepreneurship," Chapters, in: Global Entrepreneurship, Institutions and Incentives, chapter 7, pages 129-144, Edward Elgar Publishing.
    17. João J. M. Ferreira & Cristina I. Fernandes & Sascha Kraus, 2019. "Entrepreneurship research: mapping intellectual structures and research trends," Review of Managerial Science, Springer, vol. 13(1), pages 181-205, February.
    18. Rik Wenting & Oedzge Atzema & Koen Frenken, 2008. "Urban Amenities or Agglomeration Economies? Locational Behaviour and Entrepreneurial Success of Dutch Fashion Designers," Papers in Evolutionary Economic Geography (PEEG) 0803, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jan 2008.
    19. Yan Zhou & Sangmoon Park, 2020. "The Regional Determinants of the New Venture Formation in China’s Car-Sharing Economy," Sustainability, MDPI, vol. 13(1), pages 1-22, December.
    20. Joana Mendonça & Christoph Grimpe, 2016. "Skills and regional entrepreneurship capital formation: a comparison between Germany and Portugal," The Journal of Technology Transfer, Springer, vol. 41(6), pages 1440-1456, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jknowl:v:6:y:2015:i:1:p:105-124. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.