Business networks in an auto-component cluster: an exploratory study

Pages323-340
Published date02 January 2020
DOIhttps://doi.org/10.1108/JABS-02-2018-0066
Date02 January 2020
AuthorDinesh Rawat
Subject MatterStrategy,International business
Business networks in an auto-component
cluster: an exploratory study
Dinesh Rawat
Abstract
Purpose The purpose of this paper is to find out the different types of business networks formed by
firms with the stakeholders present in a cluster, i.e. how firms in a cluster interact with the cluster
stakeholders?
Design/methodology/approach To answer the research question, this study uses an exploratory
research design, which is carried out in two stages, Stage 1 involves use of primary data, which was
collected through semi-structured personal face-to-face interview mode and Stage 2 involves survey
research method where data was collected through a survey questionnaire. Data for interviews and
questionnaireswere collected from managersand owners of firms operating in the clusterat their offices.
Findings The study has identifiedfour types of business networks between a firmand its buyers, only
one type of business networkwith the suppliers and educational institutes, finallytwo types of business
networks with governmentagencies and local associations. However, with respectto network with other
stakeholderssuch as research institutes and competitors, the study showsthat the interaction between a
firm and thesestakeholders is not strong i.e. the linkages betweenthem remain largely unfilled.
Research limitations/implications The study has beenlimited to only one cluster thus it might not be
appropriate to generalise the findings. Further research in this area needs to be done by taking other
clustersto generalise the findings.
Originality/value The study has tried to answer the research gap of lack of literature on types of
business networks formed by firms with the stakeholders present in an industrial cluster, and thus,
contributed to the existing literature of business networks. The identified business networks provide a
much deeper understanding of how firms connect with its buyers, its suppliers, government agencies
and educationalinstitutes operating in an auto-componentcluster.
Keywords Clusters, Business networks, Auto-component cluster, Cluster stakeholders
Paper type Research paper
1. Introduction
Business networks within and between organisations are the basis for today’s business
(Connell et al., 2014). Business networks refer to a group of firms that cooperate to achieve
collective efficiency, penetrate and conquer markets and overcome common problems
beyond their individual reach (Ceglie and Dini, 1999; UNIDO, 2001). Business networks
imply inter-connections with industry associations, input suppliers, R&D organisations,
business development service providers, relevant government and inter-government
bodies and trading agencies (Das, 2008). Lei and Huang (2014) define the business
network as a multi-facet concept where different firms display a different degree of
involvement. Web of dense and overlapping ties where knowledge rapidlydefuses is known
as a network of relationships among firms(Exp
osito-Langa et al., 2015).
Ceglie and Dini (1999) stated that collaborative actions involving enterprises, suppliers of
inputs, business servicesproviders, local and regional governments and local policymakers
help in improving their competitive position. Networking with other firms helps SMEs to
address their problems and improve their competitive position by improving their efficiency
Dinesh Rawat is based at
the Department of
Management, Guru Gobind
Singh Indraprastha
University, New Delhi,
India.
Received 28 February 2018
Revised 6 May 2019
Accepted 2 August 2019
DOI 10.1108/JABS-02-2018-0066 VOL. 14 NO. 3 2020, pp. 323-340, ©Emerald Publishing Limited, ISSN 1558-7894 jJOURNAL OF ASIA BUSINESS STUDIES jPAGE 323
in production and capacity for learning and innovation (UNIDO, 2001). The gradual
formation of networks of relationships among enterprises influences their collaboration
activities (Felzensztein et al.,2012). Ba
´ez and Schenatto (2017) suggested that the
competitiveness of SMEs is directlyaffected by a limited capacity for innovation, low level of
specialisation, integrationand cooperation of clusters of small and medium enterprises.
A particular element, which characterises a cluster and allows enterprises to create value
and competitive advantage is the interconnectedness or the linkages between the firms
(Connell et al.,2014). Inter-firm collaboration and networks with supportive institutions and
government are important determinants for firm’s innovativeness (Niu, 2010b). Firms in the
cluster should focus on building a strong vertical inter-firm relationship to improve their
marketing performance (Lamprinopoulou and Tregear, 2011). Martinez et al. (2012)
suggested that inter-firm linkages help in maintaining the long term competitiveness of
firms. The networking approachadopted by micro, small and medium enterprises (MSMEs)
in India has helped them to overcome barriers such as global competition, technological
obsolescence and investment shortages (IBEF, 2013). There exist a positive and strong
relationship between firm performance and factors such as proximity to companies and the
business environment (Singh and Shrivastava, 2013). Networks developed with firms within
a cluster strengthen the firm’s competitive advantage and firms possess different degrees
of networks, which make theircompetitive advantages different from others (Lei and Huang,
2014). Firms’ relationship with agents (business service providers), which helps cluster in
connecting with external networks plays an important role in firm innovativeness and also
the networking intensity, which provides systematic resources to firms in the cluster is an
important determinant of firm innovativeness (Exp
osito-Langa et al., 2015). Breznik (2016)
demonstrated that social network analysis can be applied to find innovation clusters among
a large number of collaborative institutions. Zhang and Warner (2017) suggested that
cluster strategies strengthen the quality of life and thefoundation for community well-being.
Despite this significance of business networks formed by firms in a cluster, there are some
research gaps, which remain relatively unexplored. Zhao et al. (2010) suggested that the
main concern is how firms in clusters interact with other firms. There is a need to highlight
the difference between the kind of relationship among firms and the stakeholders in a
cluster (Lamprinopoulou and Tregear, 2011). Industrial clusters differ with regard to
networks i.e. structure of networks is different in different clusters (Mar
´nez et al.,2012).
Therefore, there exists a needto focus and provide a better understanding of different types
of business networks, which a firm forms with the stakeholders in a cluster, i.e. in what way
firms interact with various stakeholders. Based on the above research gaps, this study aims
to answer the research question i.e. what are the different types of business networks,
which can be observed between firms andstakeholders in a cluster?
This paper consists of seven sections. Section 1 is the introduction. Section 2 consists of a
literature review related to clusters and business networks ina cluster. Sections 3 and 4 are
about research methodology and research results, respectively. Section 5 is related to the
discussion and conclusion of the study. Section 6 discusses some theoretical and practical
implications. Finally, Section 7 talks about the limitations of this study and also offers some
suggestions for future research.
2. Literature review
2.1 Cluster concept
The underlying concept of cluster dates back to 1890 in the work of Alfred Marshal. Alfred
Marshall is among the first who examined the clustering phenomenon in industrial
organisations. Alfred Marshall (1920) in 1920 explained why a particular specialised
industry concentrates in particular locality through Industrial districts. As per Marshall
industrial districts where the concentration of specialised industries of similar kind in a
PAGE 324 jJOURNAL OF ASIA BUSINESS STUDIES jVOL. 14 NO. 3 2020

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