Small business activity and knowledge exchange in informal interfirm networks

This article explores knowledge search strategies of technology-based small firms (TBSFs) and the role that informal and proximate relationships play in the development of knowledge networks, through which knowledge exchange occurs. Drawing on interfirm relationship and social network theory, we contend that TBSFs participate in informal networks to exchange technology, market and managerial knowledge, to the extent that these knowledge configurations facilitate acquisition of external knowledge critical for their learning processes by TBSFs. Results indicate that a firm's engagement in the exchange of various sources of knowledge is directly related to its economic activity and strategic knowledge priorities, which shape the structural dimensions of interfirm informal networks. While informal networks remain informal, certain TBSFs formalize their participation as they obtain and combine knowledge resources that are important for their activity. In examining how different interests and roles impact participation in informal interfirm networks, this study contributes to the literature on small firms and collaborative relationships.