ABSTRACT. A policy innovation that has achieved wide-
spread diffusion across national and sub-national governments
in industrialized countries is the promotion of networks among
small manufacturers as a means of promoting competitiveness.
However, research and evaluations of formal networks formed
in response to policy initiatives tend not account for the
informal networks that small manufacturers routinely use in
gathering information and business resources. This study
examines the use of informal networks by 50 small manufac-
turing firms in rural and urban regions of northern Florida.
The analysis is inductive and designed to provide a point of
comparison to the growing literature on formal small manu-
facturing networks. Unlike formal networks, the links that
comprise informal networks tend to be geographically and
socially mixed. Small firms use informal networks to gather
information on a mix of issues. Urban and rural firms have
similar patterns of network use on issues affecting product
development and competitiveness. But they have different
patters of network usage for issues associated with exporting
and labor problems. Informal networks draw upon local and
non-local information resources that do not require significant
amounts of interpersonal contact across actors. Proximity is
not a factor in the effective use of informal networks for infor-
mation purposes. Rather the emphasis is upon locating “tried-
and-true” solutions that solve the business needs. There is little
evidence suggesting that the informal networks that these
small manufacturers use are gravitating towards or seeking the
development of formal networks. Thus, policy prescriptions
identifying barriers to networking among small manufacturers
are borne out in this study.
Networks have become well established during the
past decade as a form of industrial organization
located between market and hierarchies, but being
neither one (Perrow, 1992; Powell, 1990; Thorelli,
1986). The importance of networks to small firms,
in particular, is well-documented (Julien, 1995;
Malecki and Tootle, 1996). The evidence has been
sufficiently compelling to convince governments
across the globe at the national and sub-national
levels to expend resources towards the creation,
support and maintenance of networks amongst
small firms with an emphasis on the competitive-
ness of small manufacturers (Pyke, 1994).
While policy and praxis have rushed to use
this new tool of economic development, our
methods of evaluation confront limitations. There
have been remarkable advances in the study of
networks over the past several years. Social
network analysis has provided an array of methods
and measures for describing the structure of a
network through a language of relational variables
(Wasserman and Faust, 1994). Similarly, eco-
nomics and management studies have used game
theory, transactions cost analysis and cultural
analysis to reveal the nature of exchanges within
a network (Osborn and Hagedoorn, 1997). But all
of this work begins with
a priori specification of
a network by a researcher or policy maker.
This starting point may be problematic for
assessing policies designed to stimulate networks.
What we would like to know are (1) factors that
lead to the creation and evolution of a network,
and (2) whether these networks are achieving good
results for an acceptable number of participants.
When evaluators or public officials define the
existence and boundaries of a network a priori we
may obfuscate important social relationships that
underlie the network and threaten the validity of
research findings (Laumann et al., 1989).
In this paper, we explore the nature of this
Networking for Competitiveness
Small Business Economics 23: 71–84, 2004.
2004 Kluwer Academic Publishers. Printed in the Netherlands.
Final version accepted on April 4, 2002
School of Public Policy
Atlanta, GA 30332-0345
Edward J. Malecki
Department of Geography
1036 Derby Hall, 154 North Oval Mall
The Ohio State University
Columbus, OH 43210-1361
Edward J. Malecki