The Contribution of Business Associations to SMEs

Abstract

This article assesses the motives for membership of associations by established SMEs with one or more employee. The article concludes that membership motives span a complex ‘bundle’ of services, ranging from individual supports to collective lobbying. Bundling gives advantages of scale and scope to specialist providers, but also combines individual and collective benefits in order to mitigate the effects of free riding. Established SMEs also seem to look on associations, as a whole, as a bundle, belonging to an average of 1.85 associations per firm. There is some size segmentation of the association market, but, in general, size variation appears less important than the target markets which associations cover: the sector (trade and professional bodies), the locality (chambers of commerce), the specificness of the SME (such as FSB, FPB), or the role of the SME owner as director (such as IoD).

Towards a new framework for SMEs success: a literature review

“…Business networks have a strong effect on firm performance and are generally accepted as an important strategy to help small businesses survive and prosper and to promote regional economic development (Bennett and Ramsden, 2007;Corolleur and Courlet, 2003;Flatten et al, 2011;Greve and Salaff, 2003;Huggins, 2000;Islam et al, 2011;Lee, 2007;Phillipson et al, 2006;Witt, 2004). Karaev et al (2007), in their review of the effect of a cluster approach on SMEs (based on 250 articles and 50 conference papers), also conclude that entering into cooperative relations with other SMEs and related partner institutions has a positive effect on competitiveness.…”

Social Capital in Selected Business Associations of Food Processing SMEs in Tanzania and Rwanda: A Synthetic Based Approach

“…Bowles and Gintis (2002) further propose that groups lower uncertainty and reduce transaction costs, thereby fostering economic activity at the micro level, while at the same time providing a new analytical tool to explain some macro phenomena. Bennett and Ramsden (2007) argues that associations enable access to private information unavailable to markets, monitor members" behaviour and punish individual members who go against the social norms. According to Mwangi and Ouma (2012) sharing information among members reduces transactions costs, increases the sense of belonging that facilitates collective decision making while the solidarity and reciprocity that emerge from the networks diminish opportunistic behaviour.…”

Entrepreneurial decisions: Insights into the use of support services for new business creation

“…They can enhance a new firm's strategic decision-making (Bennett & Ramsden, 2007), improve a firm's strategy implementation (Van den Ven et al, 1984;Roper & Hewitt-Dundas, 2001), or resolve organizational issues (Chrisman & Leslie, 1989;Chrisman & McMullan, 2000). Among other advantages, BSS contribute to building a firm's capabilities (Mole & Keogh, 2009).…”