Brokerage in a SME network across Design and High-Tech Industries

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1 across Design and High-Tech Industries Article of drs.yvonne Kirkels and prof. dr. Geert Duijsters Eindhoven University of Technology Faculty of Industrial Engineering & Innovation Sciences & Fontys Hogeschool Business Management and Engineering

2 PhD Study Brokers are important for SMEs who want to explore Waardecreatie komt in de industrie in toenemende mate voor rekening van design en andere niet-materiële bestanddelen van het product. Voor de toekomst van het industrieel complex in zuid-oost Nederland wordt deze and zogenaamde creatieve industrie Which exploit opportunities factors van veel belang geacht voor het productievolume; daarbij betreft het zowel de beyond their own sector. vestiging van nieuwe bedrijven als de groei van bestaande bedrijven. Vooral contribute de interactie tussen de creatieve bedrijvigheid to met the de industrieel vraagt om aandacht. Het onderzoek beoogt vooral de studie van best practices, het implementeren in de regio en het capacity of brokers? ontwerpen van nieuwe vormen van interactie die groeibevorderend zijn voor de economische activiteiten in de regio Zuid-Nederland. Integrate individual creativity of multiple actors and codevelop new business.

3 PhD Study Factors that contribute to the capacity of brokers It s a Small World: Efficiency in a SME across Design and Technology What are structural characteristics at and subgroup level? Brokerage in a SME Are there main brokers? Broker Are specific characteristics associated with brokers? Firm A Firm B Intrinsic Qualities of Brokers Broker strategies

4 Brokerage in a SME ; Research Design and Methodology Design and High-Tech Industries Survey (snowball technique): Which Dutch partner had an important contribution to their business performance in the last 5 years Sample seed: 33 people in involved in design as well as in technology; owners of Sole Proprietorships as well as (managing) directors of Ltd. 104 useful responses were obtained: 25,7% of the invited people. Results paper based on main component: 440 names, 584 relations based on 93 respondents

5 Brokerage Theory Intermediaries & theory Social Capital theory (Coleman. 1988; Walker et all., 1997) Structural Holes theory (Burt, 1992; Walker et all., 1997) Tertius Iungens (those who unite) orientation (Obstfeld, 2005) Discussion regarding brokers has changed from whether or not brokerage is (more) valuable to How structural holes are being spanned? (Hargadon and Sutton, 1997)

6 Brokerage Theory & SMEs In SME context Intermediaries have emerged to assist entrepreneurs in coping with challenges (Morrison, 2008; Sapsed et al. 2007; Kaufmann and Tödtling, 2002; Major and Cordey-Hayes, 2000) however Lack of understanding third parties in SME ing structures There are mixed results on how to reach a balance between the two forms of social capital (Hoang and Antoncic, 2003) Little quantitative research has been done within SME s (Klerkx and Leeuwis, 2008; Ter Wal and Boschma, 2008; Shaw, 2006; Pittaway et al., 2004; Hanna and Walsh, 2002; Burt, 2000) Support instruments in programs unfortunately do not increase the interaction between SMEs and knowledge providers from outside the business sector (Kaufman and Tödtling, 2002) How structural holes are being spanned? In SME context?

7 Brokerage concepts Ways in which brokers span structural holes? Detecting brokers Measures of brokerage capacity Structural Holes theory (Burt, 1992) Brokerage Roles (Gould and Fernandez, 1989) Coordinator Gatekeeper Representative Consultant Liaison = broker capacity = dependent count variable

8 Results Are there main brokers? Table 2 standardized global raw brokerage scores Coordinator Representative Gatekeeper Consultant Liaison Total Scores -0,593 3,987*** 5,019*** 1,055 3,056** 3,087** β **p<0.01 ***p<0.001 yes

9 Broker Characteristics Ways in which brokers span structural holes? Broker characteristics Seeing and creating brokerage opportunities depends on characteristics of people and surroundings (Burt, 2005, Ritter and Gemünden, 2003; Brüderl, Preisendörfer and Ziegler, 1992; Gould and Fernandez, 1989) Affiliation Kind of relations Kind of information kind of goals / interests brokerage capacity

10 Results specific characteristics? Model 1 controls Model 2 all variables Model 3 substantives Variable Coef. P>IzI Coef. P>IzI Coef. P>IzI gender education years branch 1 years branch years branch ** * ** nonprofit science * profit customer consultant co-supplier yes non-profit consultant * supplier knowledge supplier competitor distributor informal innovation *** finance * marketing * management *** *** operation ** person constant *** * log likelihood

11 Results & Implications Nonprofit & Science Independent and (more) objective (Winch and Courtney, 2007) Cognitive and socio-political legitimacy: knowledge of accepted rules and standards (Elfring and Hulsink, 2007; Aldrich and Fiol, 1994) Big science (Vermeulen, 2009) Implication SME should get involved in projects with these sectors

12 Results & Implications Nonprofit Consultants Brokers in nonprofit and science sector have important relations with others in the nonprofit sector closely related partners like customers and suppliers may evolve around day-to-day business information and exploitation of information. Interaction with nonprofit consultants may be concerned with exploration of knowledge. Implication Nonprofit consultants do contribute How?

13 Results & Implications Network information, innovation, finance, marketing and operations Brokers fulfill many brokerage roles (Howells, 2006) and thus discus a variety of information with relations Finance related initiatives not key aspect of support toward new companies. Focus should possible be on development of business s (Totterman and Sten, 2005) Being positioned at the crossroads of a has the advantage of occupying a wider diversity of information (Burt, in Lin et al., 2001) Years in Branch Brokers are in branch more than 20 years (in questionnaire asked for important business partner last 5 years)

14 Results & Implications Implications Experience and broad knowledge base is valuable regarding brokerage; A well balanced mix of personnel will influence the balance of bonding and bridging capital in organizations Effectiveness of government expenditures. Measurement at individual level gives a profound picture of actual contributions

15 Limitations and Future Research Little information about representativeness of our sample The represents a across design and high-tech industries in the Southeast Netherlands, with all its particular structures. At a certain point in time. (However reflects the past.) Exclusion of foreign subsidiaries in the Future research: focus on brokerage differentials of different structure Future research: it is not yet possible to measure the tertius iungens orientation described by Obstfeld (2005) Future research: taking an in-depth look at what brokers actually do