Food SME networks: Process and governance - The case of Parma ham

Networking between firms has received much attention over the last two decades; in this context the study of inter-firm co-ordination has prompted a multidisciplinary approach. This paper briefly reviews the Interaction Approach (IA) to networking and applies it to a Small and Medium-sized Enterprise (SME) network. A case study methodology was used to investigate the establishment, evolution and operation of the Parma Ham network. The networking process was found to be influenced by member goal congruence, the level and type/content of interaction and, in particular, the relevance of network services to members' needs and expectations. The Parma Ham network was also found to co-ordinate a series of transaction-transformation chains that enhanced member competitiveness. However, from an enterprise perspective such competitiveness is to a large extent based on external collectively owned competencies. While the network relied on procedural type governance mechanisms (e.g. inspection, rules, procedures), there was also evidence of strong ties among producers, and these ties influenced behaviour and acted as relational and social governance mechanisms.