Business networks: assisting knowledge management and competence acquisition within UK manufacturing firms

In both literature and policy documents, small and medium‐size enterprises (SMEs) are being advised to form networks as a route for acquiring the knowledge required to survive in rapidly changing and/or highly competitive markets. There is, however, only limited anecdotal evidence of the positive contribution that networks are a way of upgrading organisational learning and thereby enhancing the performance of small firms. Additionally, there appears to be minimal guidance available on how small firms might exploit networks as a route for improving their capabilities to acquire and utilise knowledge to enhance future performance. To acquire additional empirical data on these issues, a survey was undertaken to examine the learning style of small UK manufacturing firms participating in some form of cooperative relationship with other members of their market supply chain. Learning style in the survey was measured by seeking response to a scale which permits assessment of the degree to which the respondent firm is exhibiting a single‐ versus double‐loop learning style. A survey of small firms advisers to gain their view of the organisational competency was measured using a scale that identifies those areas of capability that have significant impact on the performance of small firms. Results indicate that firms involved in networks tend to adopt a double‐loop (or higher‐order) learning style, whereas non‐network firms mainly appear to be autonomous single‐loop learners. When compared with non‐network firms, respondent organisations who participate in networks tend to have a better developed, more formalised knowledge management system. Furthermore, small firm advisers perceive that the creation of a formalised knowledge management system is reflected by such firms exhibiting a higher level of organisational competence across some of the areas of marketing, HRM and information management. The implications of these findings are discussed in relation to how small firms might be assisted in becoming involved in learning networks as a path for improving their knowledge management capabilities. Some qualitative, illustrative examples of small business learning networks are provided. Additionally, proposals are presented on the need for further research.