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Paper info: Does The Size Matter? How Do Small And Large Firms Differ In Developing Business Relationships?

Title


Does The Size Matter? How Do Small And Large Firms Differ In Developing Business Relationships?

Authors


Maja Makovec Brencic, Vesna Virant and Vesna Zabkar

Place of Publication


The paper was published at the 19th IMP-conference in Lugano, Switzerland in 2003.

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Abstract


SME theory raised a question about specifics of SME and the applicability of approved business concepts and methods, prevailingly developed for the large firms. Our research is focused on the question about differences in business relationships between small and large firms. The research was conducted in electrical and optical equipment industry in Slovenia in May 2002. Out of 322 firms in this industry, 103 firms responded to the mailed questionnaire. Research showed that smaller companies, operating in highly dynamic markets, believe more in interpersonal trustworthiness. Furthermore, small companies with the high level of complementary capabilities co-operate more intensively with their suppliers in order to develop competitive advantages. The research results also show that the higher the idiosyncratic investments in relationships, the higher the level of trust in long-term orientation of small firms. In the case of large firms the results show that complementary capabilities are positively related to idiosyncratic investments and that principal components of relationships (trust, commitment, co-operation) are positively correlated with long-term profitability. Research revealed that small and large firms in this particular industry do use business relationships in order to improve their strategic outcomes. This research finding indicates that firms are aware of the importance of relationships for the purpose of gaining better performance in markets. It is interesting to note that small firms implement business relationships to a higher degree than large firms although they seem to gain less out of these relationships in terms of long-term profitability. The diversity of research results also shows that some theoretical indications considering SMEs or large firms should not be generally accepted but selectively used in the context in which firms are analyze