External Networks And Performance Of SMEs In China: A Study In A Transition Economy

A large body of evidence shows that SMEs are playing more and more important role in economy development, innovation-led growth and job creation. Since SMEs seem to be at a disadvantage for scale, capital, human resource and technology, which are considered as important factors for competitiveness, more and more economists began to focus on the operation and management of SMEs. At the same time, we notice that transition economies such as the former Soviet republics and China offer a fascinating context in which to explore the link between enterprises and environment. This study, therefore, under the settings of transition economies, examined the influence of SMEs' external networks on firm performance by using data from 57 SMEs in Sichuan Province.Firstly, the connotation of SMEs' external networks are discussed. Based on the concept of social capital, enterprise social capital, social networks, which have been widely accepted, the definition of enterprise external networks in this study is given. In order to deeply study the connotation of SMEs' external networks, we put forward that the relationships that form SMEs' external networks can be divided into two kinds of linkages: Partnership linkages and Sponsorship linkages.Secondly, the character of a transition economy is summarized and the differences of industrial conditions are analyzed. Using the Industrial Statistic Data, we find out that industrial conditions (ownership structure, market structure, industry growth rate, industrial profit uncertainty) differ among industries.Thirdly, following the viewpoint that the industrial conditions would influence the relationship between external networks and performance of SMEs, the hypotheses in this study are put forward. These hypothesizes can be divided into two kinds:...