Critical Events and Process Gaps in the Danish Technological Institute SME Structured Networking Model

Abstract

DR. IAN CHASTON IS DIRECTOR OF THE Management Research Centre, University of Plymouth, Devon, England. Researchers have proposed that networking represents an alternative organisational structure which assists Western firm survival in an increasingly competitive world. In the late 1980s, the Danish Technological Institute received funding to determine if structured networking might offer a concept for promoting survival and growth among SME sector firms. Most existing networking models assume a large firm will act as the hub or 'broker' orchestrating collaboration between member organisations. To overcome the frequent absence of a large firm hub in the SME sector, the institute evolved a five-phase model in which n independent individual external to the potential network assumes the role of broker and is responsible for guiding the interfirm co-operation process. Recognition of the impact of the concept has caused governments elsewhere in the world to seek assistance from the institute to introduce small firm structured networking as an economic regeneration tool into their respective countries. Early observations of the initiative in the United Kingdom determined that six critical events exist within the process management model. Plymouth Business School, in collaboration with the institute's UK subsidiary, Business Net, undertook a study to gain further understanding of these events with the aim of identifying if the management methodology contained any process gaps. Two potential gaps were identified: namely, the ability of the brokers to determine (i) market opportunities in relation to capability of participant firms, and (ii) owner/manager perceptions of the benefits to be gained from entering into formal co-operative relationships. Two new tools, a Directional Network Policy Matrix and a Network Opportunity Assessment Matrix are described. A preliminary qualitative evaluation of these new techniques indicates they have significant potential for enhancing the role of the broker in ensuring effective management of the institute's five-phase network formation model.

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