Turning strategic network resources into performance: The mediating role of network identity of small‐ and medium‐sized enterprises

• Author: Jukka Partanen,Olli‐Pekka Kauppila,Mika Gabrielsson,Fabian Sepulveda
• Date: 01 June 2020
• DOI: http://doi.org/10.1002/sej.1296
• Published date: 01 June 2020

RESEARCH ARTICLE

Turning strategic network resources into

performance: The mediating role of network

identity of small- and medium-sized enterprises

Jukka Partanen

1

| Olli-Pekka Kauppila

2

| Fabian Sepulveda

3

|

Mika Gabrielsson

4

1

Department of Management, University of

Vaasa, Helsinki, Finland

2

Department of Management Studies, Aalto

University, School of Business, Helsinki,

Finland

3

Courage Ventures Funds, Espoo, Finland

4

Department of Business, University of

Eastern Finland, Espoo, Finland

Correspondence

Jukka Partanen, Department of Management,

University of Vaasa, Arkadiankatu 28, 4th

Floor, 00100 Helsinki, Finland.

Email: jukka.partanen@uwasa.fi

Funding information

Finnish Funding Agency for Technology and

Innovation (Tekes), Grant/Award Number:

40082/09; Academy of Finland, Grant/Award

Number: 258372

Research Summary: This article examines the relationship between

strategic network resources; the network identity (i.e., the self-

perceived attractiveness as a partner based on the firm's existing and

prior relationships); and firm performance among established small-

and medium-sized enterprises (SMEs). We test our hypotheses within

the sampleof 199 internationalizedSMEs in Finland.We contributeto

the discussion on the performance effects of network resources among

small firms by demonstrating that: (a) networks can become a source of

strategic resources for SMEs, which enhance fir m performance; and

(b) such concrete strategic resource exchange builds evidence-based

identity, which helps entice and convince customers and other partners

to invest in the collaboration so that strategic resources can be trans-

ferred to sustain firm performance beyond the early stages.

Managerial Summary: The purpose of this article is to investigate

how an SME’s strategic collaborationand its attractiveness as a part-

ner enhance firm performance. The key message for practitioners is

twofold. First, the conventional view suggests that strategic

resources should be kept in-house and that too much dependency

on partners may lead to a vulnerable power position. Yet, we dem-

onstrate that SMEscan also enhance their performance by acquiring

strategic resources from their partners. Second, while weak affilia-

tions with prestigiouspartners may help build credibility in the early

stages of firm development, it is the strategic collaboration and con-

crete resource exchange that seem to attract other customers and

business partners to commit to, and invest in, the collaboration

which, in turn, enhancesperformance beyond the earlystages.

Received: 8 June 2016 Revised: 14 March 2018 Accepted: 28 May 2018 Published on: 2 August 2018

DOI: 10.1002/sej.1296

This is an open access article under the termsof the Creative Commons Attribution-NonCommercial License, which permits use,distribution and

reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes.

© 2018 The Authors. Strategic Entrepreneurship Journal published by Strategic Management Society.

178 wileyonlinelibrary.com/journal/sej Strategic Entrepreneurship Journal. 2020;14:178–197.

KEYWORDS

network identity, network resources, performance, reputation,

small and medium-sized firms

1|INTRODUCTION

Small- and medium-sized enterprises (SMEs) are key actors in sustaining economic development (Bridge,

O'Neill, & Cromie, 1998) and contributing to the welfare of our society (Penrose, 1959; Storey, 1994). To overcome their

well-known resource scarcity and to acquire external resources, such firms typically rely on networks (Jarillo, 1989; Stu-

art & Sorenson, 2007; Witt, 2004), that is, the set of actors and relationships that link them (Hoang & Antoncic, 2003;

Zhao & Aram, 1995). Indeed, the research domain on small firm networks has become a fairly well-mined field (Patel &

Terjesen, 2011; Slotte-Kock & Coviello, 2010) by suggesting that networks provide access to resources such as capital

(Kwon & Arenius, 2010; Mäkelä & Maula, 2006; Shane & Cable, 2002), new business opportunities (Batjargal, 2010; Gran-

ovetter, ; Neergaard, 2005), flexibility (Alvarez & Barney, 2001), market knowledge (Musteen, Datta, & Butts, 2014; Yli-

Renko, Autio, & Sapienza, 2001), and access to new markets (Coviello, 2006). But while these studies unquestionably

advance the theory in the field, most of them tend to focus on specific types of network resources.

What, then, do we know about the performance implications of utilizing external network resources? There seems to

be a consensus among academics that networks yield performance benefits for small firms (Greve & Salaff, 2003; Hite,

2005; Larson, 1991; Larson & Starr, 1993; Rickne, 2006; Semrau & Sigmund, 2012; Sorenson, Folker, & Brigham, 2008;

Watson, 2007). However, while recent meta-analytic studies by Stam, Arzlanian, and Elfring (2014) and Rauch, Rosen-

busch, Unger, and Frese (2016) clearly confirm such positive relationship between small firm networks and firm perfor-

mance, the extant empirical evidence is inconclusive due to the conflicting perspectives about specific network properties

that constitute performance, such as the strength of network relationships (McEvily & Zaheer, 1999; Patel & Terjesen,

2011) and network structure (Stam, ), and the inconsistent results regarding how temporal (Elfring & Hulsink, 2007; Hite &

Hesterly, 2001) and contextual (Batjargal, 2010) contingencies influence the network- performance relationship. In brief,

we build on Stam et al. (2014, pp. 167–169), who conclude that “Future research may benefit from further developing

fine-grained measures of network content”and that “The current focus on relational and structural network properties in

extant literature must be complemented with research that directly considers the quality of resources held by entrepre-

neurs’network contacts and the mechanisms through which they can be accessed and leveraged.”

The purpose of this article is to address this research gap by investigating the following research question: How

are strategic network resources associated with SME performance, and what is the role of network identity (i.e., the firms'

attractiveness as a partner based on its existing relationships)in this relationship? More specifically, to locate our study

within the theoretical field and to avoid confusion (cf. Stam et al., 2014), we draw on the resource-based view (RBV)

and focus on strategic network resources—that is, valuable, rare, inimitable, non-substitutable resources acquired

from the firm's closest network partners (cf. Hernández-Carrión, Camarero-Izquierdo, & Gutiérrez-Cillán, 2017)—

because the prior studies suggest that it is the specific role of strong relationships to mobilize and transfer such com-

plex resources (Batjargal, 2003; Hansen, 1999). We pay special attention to the role of SMEs' attractiveness, or net-

work identity, since prior studies seem to agree that prestigious network and alliance partners provide legitimacy and

consequent performance benefits for small firms (Elfring & Hulsink, 2003; Gulati & Higgins, 2003; Hoenig & Henkel,

2015; Rauch et al., 2016; Reuber & Fischer, 2007; Stuart, 2000). This study contributes to the discussion of the per-

formance effects of network resources among small firms in two specific ways. First, we show that networks not only

help alleviate firms' acute, early-stage resource shortages, but that they also can become a source of strategic

PARTANEN ET AL.179