Does size still matter? How micro firms and SMEs vary in network learning

ABSTRACT

How can geographically constrained Micro firms and SMEs in emerging markets upgrade their products? How might firm size affect the benefits from accessing diverse knowledge and from participating in different learning relationships? Although access to diverse knowledge can be vital to innovation, smaller firms have a limited understanding about which new knowledge is most relevant to their context and how they may convert their capabilities into a more innovative organization. These latter aspects, we argue, come largely from relationships embedded in interfirm networks and certain types of non-market institutions that act as knowledge bridges and provide tutelage. Such institutions appear to benefit Micro firms in processing diverse knowledge. In contrast, product upgrading for SMEs improves more from their inter-firm networks, but these networks do not aid with managing diverse knowledge. We argue that differences in complementary capacities explain these variations. We use unique survey data from the Argentine wine industry.