Enhancing Innovation Capacity in SMEs through Early Network Relationships

Abstract

Networks can offer SMEs a number of advantages, especially in terms of providing greater opportunities for knowledge activities that support innovation, but there is little in the literature to suggest how firms develop their innovation capacity through network participation. In this paper, we present an in‐depth longitudinal case study of a small entrepreneurial firm within the mobile‐commerce industry. A principal finding from the study is that network relationships formed during the earliest stages of the firm's life cycle played a critical role in developing the SME's capacity for sustained innovation. Further, the study contributes to network theory by calling into question the weak and strong tie dichotomy, as relationships critical to the SME's innovation capacity possessed characteristics of both types of ties. The paper also contributes to managerial practice by emphasizing the importance of establishing strong relationships in the earliest stages of network formation.