that a significantly high proportion of successful businesses located in the remote area
simultaneously access vertical and horizontal networks while in the less remote area
successful businesses access mainly vertical networks. It is argued that policy initiatives
towards the support of business networks as a tool of regional development policies
should have a strong territorial and spatial perspective.
1. Introduction
A network is a structure in which a number of nodes are related to each other by
specific threads (Hâkansson and Ford, 2002). Both threads and nodes are rich in
resources, knowledge and understanding as a result of complex interactions, adaptations
and investments within and among firms over time. Business networking is also a social
structure that exists only so far as the individual understands and uses a network
(Johannisson, 1995; Monsted, 1995; Chell and Baines, 1998). Other definitions of
business networks and networking tend to focus on the issue of relationships created
among businesses. In that sense, business networks are defined as ‘an integrated and co-
ordinated set of ongoing economic and non-economic relations embedded within,
among and outside business firms’ (Yeung, 1994). Several researchers (Aldrich et al.,
1987; 1989; Sanders and Nee, 1996) argue that networks and their surroundings
(resources, actions, support) are useful when it comes to starting new firms, and thus,
social networks motivate entrepreneurship.
It is acknowledged that especially for SMEs, which are the dominant form of enterprise
in rural lagging and peripheral areas, firms can overcome some of the assumed
disadvantages of limited size through accessing and utilizing external resources in the
network (Havnes and Senneseth, 2001). A number of studies indicate that highly
networked small businesses outperform other small businesses (Ostgaard and Birley,
1996; Barkham et al., 1996), and facilitate foreign market development (Johnsen and
Johnsen, 1999) and innovation (Dickson and Hadjimanolis, 1998; Freel, 2000). Littunen
(2000) found that networks internal to a firm create competitive advantages, innovation
and efficiency, and networking contributes to the firm’s survival. Thus, networking
serves or sustains long-term business objectives. Contrary to this position, other studies
have failed to reveal any relationship between networking characteristics and business
performance (Johannisson, 1995). Havnes and Senneseth (2001) suggest that