Horizontal and Vertical Relationships in Developing Economies: Implications for SMEs' Access to Global Markets

We integrate resource-based-view, transaction-cost economics, and institutional theory to model how collaboration efforts among SMEs immersed in weak infrastructure and institutional environments help them achieve a host of collective efficiencies and greater access to global markets. Using a survey database from 232 Argentine furniture SMEs, we find that while vertical ties yield manufacturing productivity along the supply chain, horizontal ties enable the access to collective resources and joint product innovation. These collective efficiencies, in turn, serve as competitive currencies for SMEs to access global markets. We discuss implications for theory and practice.

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