Business Networks and Performance: A Spatial Approach



confusion in the business networks terminology as certain literature
(Aldrich&Zimmer,1986, Granovetter,1974, Jenssen &Koeing,2002) uses the term weak
and strong ties to describe informal networks in which there are relationships based on
trust. Usually, trust is involved in strong relationships such as ties with family, friends
and relatives (Chell and Baines,2000).

The Length of a network measures the scope of the network by counting how many
intermediaries are contacted to indirectly link the entrepreneur to someone else.
(Aldrich&Zimmer,1986, Amit,Gloster,Muller,1993). Short: One or two contacts before
the product is sold to the consumer (and not to the final customer). Long: More than two
contacts before the product is sold to the consumer (and not to the final customer).

> Strong: A significant and vital part of the business’s exchange (in trade, capital,
information) is carried out through the contact. People expecting to deal with each other
frequently, over an extended period, develop trust predictability and voice rather than
exit.

> Weak: A not very important part of the business’s exchange (in trade, capital,
information) is carried out through the contact. Strong ties can, however, offset risks
including untrustworthy partners or employees and limit the circulation of information,
leading to the reproduction and distribution of the same information while reducing
their internal capacities to innovate and develop competitive advantage. Weak ties or
even more distant ties in the socio-economic hierarchy may be of short duration and
frequency but they enable the individual to access networks with new information,
advice, assistance or other resources.

3. Business Economic Activity and Local Development

3.1 A Simple Multiplier Framework

In the framework of a simple regional multiplier model, the operation of a new
enterprise creates additional regional income due to its regional exporting activity
(Xr),
which may be considered as the first round of impacts. In a second round, the additional
expenditures of the firm in the local economy will create
Xr(cF - mF)(1 - tF) where cF
is the firm’s marginal propensity to ‘consume’ i.e., to use inputs, mF is the firm’s
marginal propensity to ‘consume’ imported inputs and
tF is the firm’s tax rate. This



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