Business Networks and Performance: A Spatial Approach

provided by Research Papers in Economics

43^nd European Regional Science Association Congress
“Peripheries, Centres, and Spatial Development in the New Europe”
University of Jyvaskyla, Finland, August 27^th -30^th 2003

Business Networks and Performance: A Spatial Approach
by

Efthalia Dimara, Alexandra Goudis, Dimitris Skuras and Kyriaki Tsegenidi
Department of Economics, University of Patras

University Campus - Rio, P.O. BOX 1391
Patras 26500, Greece

Fax: + 30610996161, Email: [email protected]

Abstract

Business networks are associated to increased business performance and are regarded
as a major factor influencing the development of rural and lagging areas. It is
assumed that businesses access many networks in order to pursue their short and long
term entrepreneurial objectives. The most important spatial features of this business-
network relationship are firstly the spatial coverage of the network and secondly the
location of the business in relation to its markets. As concerns the spatial coverage of
the networks we distinguish between vertical and horizontal business networks.
Vertical networks allow local enterprises to forge alliances with externally located
consumers, suppliers, distributors, retailers and institutions, while horizontal
networks provide relationships with locally based producers, institutions, and
consumers. As concerns the location of the business in relation to its markets we
distinguish between firms located in accessible locations and firms located in less
accessible and peripheral locations in relation to their output markets.

A survey of 100 businesses in the manufacturing and services sectors in two areas of
Greece (one remote and one more accessible) is used to test empirically the effects of
the spatial features of the business-network relationship on firm performance. Business
performance is approximated through a series of measures capturing conventional firm
growth and other less conventional managerial objectives. The analysis demonstrates

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