Business Networks and Performance: A Spatial Approach



outlets, relationships with external buyers, processors, institutions, etc. and are
fundamental to the long term success of a marginal (peripheral) region.

On the other hand, horizontal networks provide relationships with locally based
producers, institutions, and consumers.

> Horizontal: The thread (contact) is with businesses (business) in the same location
as the business under consideration. Kneafsey et al (2001) argue that strong horizontal
networks may be characterized by local market outlets, trust-based relationships
between local producers, consumers and institutions, knowledge flows and use of place-
based promotional schemes.

> Mixed or Commodity networks: The threads include both of the previous types, i.e.,
horizontal and vertical.

According to O’Neil and Whatmore(2000), commodity networks are a special variant of
networks putting the focus on webs of interdependence that exist among different actors
in the rural economy. Commodity networks integrate vertical and horizontal dimensions
of commodity movement overcoming problems associated with supply chains and
circuits (Whatmore &Thorne,1997, Murdoch,2000) and therefore can be seen as a
fusion of ideas from commodity chains and geographies of consumption (Hughes,2000,
Stathopoulou, Psaltopoulos, Skuras 2002).

2.3 Type of Contact/ Intensity - (How are relations maintained?)

This is the main focus of network study within the discipline of industrial economics.

There are two main sources of information gathering:
> Formal contacts

> Informal contacts (friends, family, personal relationships e.t.c.)

Formal networks (‘organizational network perspective’) are composed of business
entrepreneurs, banks, accountants, creditors, legal representatives and trade associations
(Littunen, 2000a). Business interaction based on previous agreement or contracts
(written or verbal) with another business (businesses) which, originally, when the
contact started, were not either friends or family members (Jenssen, Koeing,2002). A
network consisting of formal relationships gives the mental and social support that is
necessary to promote entrepreneurial action (Johannisson,1988; Jenssen and Koeing,
2002) A network consisting of formal networks will usually be conformed and
information usually flow through informal networks.



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