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Establishing and maintaining strong networks is vital for businesses of all sizes, including SMEs. Given their limited resources and increased competition, strong networks are essential for SMEs to thrive. Our study of 146 small companies revealed that networks are crucial for driving their future readiness.
WHAT DOES NETWORKS MEAN FOR SMEs?
These networks can take on diverse forms, including information exchange with peers, nurturing relationships with resource providers, engagement with governmental bodies and policymakers, as well as affiliations with international organizations. Networks play a crucial role in bolstering SMEs' adaptive capacity. By forging connections with fellow businesses, policymakers, and customers, SMEs gather priceless insights and collaboration opportunities, which in turn enable them to tap into new markets. During times of crisis or uncertainty, networks also play a crucial role in providing SMEs with access to expertise and resources. This was evident during the COVID-19 pandemic, where SMEs turned to their networks for support. For example, businesses collaborated with others to produce essential goods, while others shifted their business models to e-commerce to continue serving their customers.
HOW SMEs BENEFIT FROM STRONG NETWORKS?
Through close collaboration with suppliers and partners, SMEs can pool knowledge and resources, equipping them to mitigate potential risks and seize emerging opportunities. For instance, an SME heavily reliant on a single supplier for a critical input faces vulnerability if that supplier experiences disruptions. However, by teaming up with alternative suppliers, the SME can reduce its dependence on a single source, effectively lowering its exposure to risk. Moreover, networks empower small companies to make a societal impact and access funding opportunities aligned with their Environmental, Social, and Governance (ESG) objectives. While SMEs primarily focused on survival may not prioritize sustainable business strategies and eco-innovation, these endeavors are increasingly linked with funding avenues provided by private investors.
The ability to quickly adapt and respond to new challenges and opportunities is critical to the survival and growth of any business, and a strong network is an essential tool for achieving this agility and resilience. To succeed in the modern business world, SMEs must recognize the immense value of strong networks and actively work to cultivate and maintain them.
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