Paper info

The Evolution of Network Capability in an SME Context

Catherine Sutton-Brady , Helen McGrath and Thomas O'Toole

The paper was published at the 27th IMP-conference in Glasgow, Scotland in 2011.

ABSTRACT
This paper charts the evolution of network capability among small-to-medium-sized
enterprise (SME) through the application of an SME pre-network capability construct. The
theoretical conceptualization accommodates the inherent characteristics of SMEs and
recognizes that SMEs can lack the techniques essential for gaining advantages through
network action. Attaining pre-network capability translates into SMEs having awareness and
knowledge of their networks and being able to act within them to progress from a dyadic
level to enable network action and the emergence of network capabilities.
This empirical research entailed interviews and participatory action research over 8 months,
which allowed for the analysis of the evolutionary nature of SME network capability
throughout the study. Interventions and measures were devised around each dimension of
SME pre-network capability prior to the field research to enhance replicability through
modeling how the effect can be reproduced. The three interventions necessitated six 3-hour
group participatory action learning sessions. The sessions entailed an in-depth group
discussion of pre-network capability and the description of an intervention that necessitated
individual SME activity over the following month. At the follow-up action learning session,
the participants discussed, shared, and reflected on each individual intervention action
experience. Post-intervention interviews with each SME allowed for a more in-depth
discussion of knowledge of issues mentioned in the sessions and clarification of those issues.
Based on the network pictures literature (Ford, Gadde, Håkansson, and Snehota, 2003; Ford
and Redwood, 2005), the awareness intervention involved network mapping. This was used
to allow the SMEs discuss their networks in terms of connections within and around the value
chain. The rationale for the use of network mapping was to enhance the SMEs’ awareness of
networks in an industrial sense exclusive of connections based purely on friendship and
kinship ties. Key qualitative measures focused on the composition of the SMEs’ networks,
the average length of relationships, the diversity of relationships, and the SMEs’ perceptions
of networks.
Findings show that by implementing the SME pre-network capability framework and the
three interventions, the SMEs started to use their networks as a means to enhance their
activities. Attaining the foundation dimension of the construct, awareness, facilitated this
enhanced activity. Throughout the course of the study, the SMEs’ perception of networks
changed, and their focus shifted from a social view of networks as comprising predominantly
family and friends to an industrial view of networks comprising academic institutes,
government agencies, suppliers, distributors, customers, competitors, and other actors. Upon
completing the study, the SMEs acknowledged that they could now focus strategically on
their networks of relationships and strive to fit actors within their strategy. Initially, the
participants perceived their networks as having a supporting, background role. However, 8
months later their view had shifted to more closely mirror the market-as-network approach,
and SMEs could clearly see the benefits of decisively utilizing networks in their strategic
activity.
Given that SMEs must acquire firm-specific capabilities prior to network capabilities, this
paper contributes to the literature by developing a framework to conceptualize and explore in
action pre-network capability as a prerequisite to network capability. The SME pre-network
capability framework focuses on content and process, or the how of SME pre-network
capability evolution.
Keywords: SME, Networks, Pre-network capability, Network Pictures, Action Research.