The relationship between networking practices and business excellence: a study of small to medium enterprises (SMEs)

Small to medium enterprises (SMEs) are often perceived as a fertile area for the formation of effective networks. However, research to date has focused primarily on large companies. There seems to be a lack of rigorous research reported in the literature that tests the relationship between networking practices and business excellence. Quantitative data was gathered from a stratified random sample of SME site managers in the Australian manufacturing industry. A total of 550 manufacturing sites were sent the questionnaire from which a response rate of 20 percent was achieved. Networking practices regression (NPR) models were developed in order to test the strength of the relationship between key components of networking practice and several dimensions of business excellence such as success rate of new products, reduction in waste, increased market opportunities, etc. The data was analyzed using techniques available on the statistical package for social sciences (SPSS) for Windows software package. The paper concludes that groupings of network practices are required to explain business excellence. This means that a single networking practice is not sufficient to explain business excellence significantly. The most significant networking practices were found to be: searching and incorporating diverse points of view; challenging the status quo; learning from failures; communicating with people outside the company, including experts; allocation of resources to support communication linkages. The main implication of the research results for SME managers is that a typical manufacturing SME is more likely to improve its chances of achieving business excellence with networking practices than without these practices.