IDEAS home Printed from https://ideas.repec.org/p/ttu/wpaper/129.html
   My bibliography  Save this paper

Theory and Empirical Evidence of Business Support Networks

Author

Listed:
  • Kaie Kerem

    (School of Economics and Business Administration, Tallinn University of Technology)

  • Vello Vensel

    (School of Economics and Business Administration, Tallinn University of Technology)

Abstract

Business firms operate in a certain environment in which they interact with one another, with individuals, governmental organisations, financial institutions and various other interest groups. Operation of respective economic and social networks (both voluntary and private market determined) may have an important effect on the overall business environment. This paper presents and analyses some results of the special sample survey of Estonian firms undertaken in 1994-2003. Our main attention in this paper is focused on business supporting services provided by various institutions and on the operation of disputesí resolution mechanism, using the concept of social networks. It is argued that the state enforcement mechanism is working weakly in the still unstable legal environment and firms have to use different self-enforcement mechanisms (through social networks) to resolve disputes. Social networks are also used for obtaining additional financing for investment. The success of the operation of social networks depends on the government economic policy.

Suggested Citation

  • Kaie Kerem & Vello Vensel, 2005. "Theory and Empirical Evidence of Business Support Networks," Working Papers 129, Tallinn School of Economics and Business Administration, Tallinn University of Technology.
    • Handle: RePEc:ttu:wpaper:129
    Note: Financial support from the Estonian Science Foundation (projects No. 5185 and 6186) for carrying out sample surveys in Estonia is greatly acknowledged by the authors.
    as

    Download full text from publisher

    File URL: http://deepthought.ttu.ee/majandus/tekstid/TUTWPE_05_129.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Berger, Allen N. & Klapper, Leora F. & Udell, Gregory F., 2001. "The ability of banks to lend to informationally opaque small businesses," Journal of Banking & Finance, Elsevier, vol. 25(12), pages 2127-2167, December.
    2. George Baker & Robert Gibbons & Kevin J. Murphy, 2002. "Relational Contracts and the Theory of the Firm," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(1), pages 39-84.
    3. Nicholas Economides, 1997. "The Economics of Networks," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 1(0), December.
    4. Steven Shavell & A. Mitchell Polinsky, 2000. "The Economic Theory of Public Enforcement of Law," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 45-76, March.
    5. Oliver Hart, 2001. "Financial Contracting," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1079-1100, December.
    6. Gautam Gowrisankaran & Joanna Stavins, 2004. "Network Externalities and Technology Adoption: Lessons from Electronic Payments," RAND Journal of Economics, The RAND Corporation, vol. 35(2), pages 260-276, Summer.
    7. McAndrews, James J. & Rob, Rafael, 1996. "Shared ownership and pricing in a network switch," International Journal of Industrial Organization, Elsevier, vol. 14(6), pages 727-745, October.
    8. N. Berger, Allen & F. Udell, Gregory, 1998. "The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle," Journal of Banking & Finance, Elsevier, vol. 22(6-8), pages 613-673, August.
    9. 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.
    10. Pierre-Philippe Combes & Miren Lafourcade & Thierry Mayer, 2003. "Can Business and Social Networks Explain the Border Effect Puzzle?," Working Papers 2003-02, CEPII research center.
    11. Samuel Bowles & Herbert Gintis, 2002. "Social Capital and Community Governance," Economic Journal, Royal Economic Society, vol. 112(483), pages 419-436, November.
    12. Steven N. Durlauf, 2002. "On the Empirics of Social Capital," Economic Journal, Royal Economic Society, vol. 112(483), pages 459-479, November.
    13. Hasan, Iftekhar & Schmiedel, Heiko, 2003. "Do networks in the stock exchange industry pay off? European evidence," Bank of Finland Research Discussion Papers 2/2003, Bank of Finland.
    14. Guibourg, Gabriela, 2001. "Interoperability and Network Externalities in Electronic Payments," Research Papers in Economics 2001:7, Stockholm University, Department of Economics.
    15. Kirman, Alan P. & Vriend, Nicolaas J., 2001. "Evolving market structure: An ACE model of price dispersion and loyalty," Journal of Economic Dynamics and Control, Elsevier, vol. 25(3-4), pages 459-502, March.
    16. Allen N. Berger & Gregory F. Udell, 2002. "Small Business Credit Availability and Relationship Lending: The Importance of Bank Organisational Structure," Economic Journal, Royal Economic Society, vol. 112(477), pages 32-53, February.
    17. Edward L. Glaeser & David Laibson & Bruce Sacerdote, 2002. "An Economic Approach to Social Capital," Economic Journal, Royal Economic Society, vol. 112(483), pages 437-458, November.
    18. Rachel E. Kranton & Deborah F. Minehart, 2001. "A Theory of Buyer-Seller Networks," American Economic Review, American Economic Association, vol. 91(3), pages 485-508, June.
    19. Allen N. Berger & Robert DeYoung & Hesna Genay & Gregory F. Udell, 1999. "Globalization of financial institutions: evidence from cross-border banking performance," Working Paper Series WP-99-25, Federal Reserve Bank of Chicago.
    20. Guibourg, Gabriela, 2001. "Interoperability and Network Externalities in Electronic Payments," Working Paper Series 126, Sveriges Riksbank (Central Bank of Sweden).
    21. Spencer, Barbara J & Qiu, Larry D, 2001. "Keiretsu and Relationship-Specific Investment: A Barrier to Trade?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(4), pages 871-901, November.
    22. Narayan, Deepa & Pritchett, Lant, 1999. "Cents and Sociability: Household Income and Social Capital in Rural Tanzania," Economic Development and Cultural Change, University of Chicago Press, vol. 47(4), pages 871-897, July.
    23. repec:zbw:bofrdp:2003_002 is not listed on IDEAS
    24. James E. Rauch, 2001. "Business and Social Networks in International Trade," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1177-1203, December.
    25. repec:zbw:bofrdp:2003_016 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    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. Vello Vensel, 2004. "Operation of Business Supporting Networks: Evidence from an EU Candidate Country," Working Papers 117, Tallinn School of Economics and Business Administration, Tallinn University of Technology.
    2. Kari Kemppainen, 2004. "Competition and regulation in European retail payment systems," Microeconomics 0404008, University Library of Munich, Germany.
    3. Sabatini, Fabio, 2006. "The Empirics of Social Capital and Economic Development: A Critical Perspective," Knowledge, Technology, Human Capital Working Papers 12097, Fondazione Eni Enrico Mattei (FEEM).
    4. Dufhues, Thomas & Buchenrieder, Gertrud & Fischer, Isabel, 2006. "Social capital and rural development: literature review and current state of the art [Sozialkapital und ländliche Entwicklung: Literaturüberblick und gegenwärtiger Stand der Forschung]," IAMO Discussion Papers 96, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).
    5. Shideler, David W. & Kraybill, David S., 2009. "Social capital: An analysis of factors influencing investment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(3), pages 443-455, June.
    6. repec:zbw:iamodp:92017 is not listed on IDEAS
    7. Fabio Sabatini, 2005. "The empirics of social capital and economic development. A critical perspective," Development and Comp Systems 0512015, University Library of Munich, Germany.
    8. Fabio Sabatini, 2005. "The empirics of social capital and economic development: a critical perspective," Development and Comp Systems 0512008, University Library of Munich, Germany.
    9. Yamamura, Eiji, 2008. "The role of social capital in homogeneous society: Review of recent researches in Japan," MPRA Paper 11385, University Library of Munich, Germany.
    10. Carpenter, Jeffrey P. & Daniere, Amrita G. & Takahashi, Lois M., 2004. "Cooperation, trust, and social capital in Southeast Asian urban slums," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 533-551, December.
    11. Kemppainen, Kari, 2003. "Competition and regulation in European retail payment systems," Bank of Finland Research Discussion Papers 16/2003, Bank of Finland.
    12. Jun-ichi Itaya & Chris Tsoukis, 2017. "Social Capital and the Status Externality," CESifo Working Paper Series 6820, CESifo.
    13. Uwe Dulleck & Dirk J. Bezemer & Paul Frijters, 2004. "Social Capital, Creative Destruction and Economic Growth," Vienna Economics Papers 0406, University of Vienna, Department of Economics.
    14. Marco Ferroni & Mercedes Mateo Díaz & J. Mark Payne, 2007. "Development under Conditions of Inequality and Distrust: An Exploration of the Role of Social Capital and Social Cohesion in Latin America," IDB Publications (Working Papers) 53818, Inter-American Development Bank.
    15. R. Grafton & Tom Kompas & P. Owen, 2007. "Bridging the barriers: knowledge connections, productivity and capital accumulation," Journal of Productivity Analysis, Springer, vol. 28(3), pages 219-231, December.
    16. Steven N. Durlauf, 2002. "On the Empirics of Social Capital," Economic Journal, Royal Economic Society, vol. 112(483), pages 459-479, November.
    17. Roberto Antonietti & Maria Rosaria Ferrante & Riccardo Leoncini, 2016. "Local market size, social capital and outsourcing: evidence from Emilia Romagna," Small Business Economics, Springer, vol. 47(1), pages 243-260, June.
    18. Hayley H. Chouinard & Gregmar I. Galinato & Philip R. Wandschneider, 2016. "Making Friends To Influence Others: Entry And Contribution Decisions That Affect Social Capital In An Association," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 819-834, April.
    19. Jean-Marc Callois & Bertrand Schmitt, 2009. "The role of social capital components on local economic growth: Local cohesion and openness in French rural areas," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 90(3), pages 257-286.
    20. Fidrmuc, Jan & Gërxhani, Klarita, 2008. "Mind the gap! Social capital, East and West," Journal of Comparative Economics, Elsevier, vol. 36(2), pages 264-286, June.
    21. Fabio, Sabatini, 2005. "The empirics of social capital and economic development: a critical perspective," MPRA Paper 2366, University Library of Munich, Germany, revised Mar 2007.

    More about this item

    Keywords

    economic and social networks; social capital; business supporting services; enforcement mechanism; value creation.;
    All these keywords.

    JEL classification:

    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
    • P30 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - General
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:ttu:wpaper:129. 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: Urve Venesaar (email available below). General contact details of provider: https://edirc.repec.org/data/fettuee.html .

    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.