Strategic Linkages and Competitive Advantage: Action Research on Small Enterprise Networks in India
The paper emphasizes the need for strong and vibrant micro and small enterprise (MSE) sector in a country like India for poverty reduction and employment generation. The author enumerates the various risks faced by MSEs due to liberalization and presents the case for strategic cooperation and networking by MSEs. The paper enumerates the advantages that can be achieved through networking:
- Overcoming the limitations of size through inter-firm networking.
- Generating management economies.
- Enabling MSEs to achieve scale economies and productivity growth by reducing the risk of specialization.
- Creating economies of scope by reconfiguring enterprise value chains.
The paper identifies the limitation of traditional business development services (BDS) delivery model as it focuses intently on the individual firm. Individual service delivery is expensive and makes inefficient use of scarce resources, thus networking MSEs provides an alternative cost efficient model for BDS providers.The paper presents a framework for networking MSEs. It concludes by providing preliminary network project design guidelines and emphasizes the need to change business culture. It also addresses the human resources issues in networking of SMEs.
