Does membership of local Chambers of Commerce networks enhance rural SME performance?: An empirical analysis

Abstract

PurposeLocal Chambers of Commerce networks provide small- and medium-sized enterprises (SMEs) with an opportunity to access essential information and networking with other businesses, resulting in improved business performance. However, rural SMEs are less likely to participate in these networks and often possess lower performance. This paper aims to examine the relationship between being members of local Chambers of Commerce networks and rural SMEs’ performance by comparing business performance between rural SMEs who are members and non-members of local Chambers of Commerce networks. This paper also further explores difference in business growth plans between rural SMEs members and non-members.Design/methodology/approachThe empirical analysis draws on cross-sectional data of 3,769 rural SMEs in England and Wales from the UK's Government Longitudinal Small Business Survey 2015. Propensity score matching (PSM) is applied to control for selection bias and variations in business characteristics before comparing business performance, measured in terms of annual turnover, sale growth and profitability, between rural SMEs that are members and non-members of local Chambers of Commerce networks.FindingsOur results show that rural SME members of local Chambers of Commerce networks are more likely to grow their sales than non-members. However, they perform as good as non-members in terms of turnover and profitability. The results also emphasise that local Chambers of Commerce networks are crucial for rural SMEs to develop the skills of the workforce and leadership capability of managers, new product/service development and new working practices. Therefore, to enhance rural SMEs' performance, tailoring the services of local Chambers of Commerce to support rural businesses' needs and encouraging rural SMEs to make use of business networks are recommended.Practical implicationsThe paper unpacks the relationships between being local Chamber of Commerce membership and business performance, offering lessons for rural SMEs to boost their business performance and growth through participating in local business association networks.Originality/valueThis paper is the first study that explores the comparative analysis of business performance and growth plans between rural SMEs that are members and non-members of the local Chamber of Commerce networks. We provide an empirical evidence-based analysis to existing literature regarding the advantages of being local Chamber of Commerce memberships to enhance business performance in rural areas.

Organisational capabilities and small and medium sized firms’ attainment of innovation outcomes: the moderating roles of exports and formal business networks

“…On the other hand, SMEs can also acquire knowledge from participating in formal business networks (Schoonjans et al. , 2013; Tiwasing and Sawang, 2022). Formal business networks constitute a specific set of relationships compared to informal business networks that consist of flexible relationships (Idris and Saridakis, 2018).…”

“…and networking opportunities (e.g. knowledge exchange) that such business networks offer (Hurst, 2021; Idris and Saridakis, 2018; Tiwasing and Sawang, 2022).…”

“…More specifically, foreign customers may have essentially different tastes regarding product appearance and preferences about product functions (Love and Ganotakis, 2013;Salomon and Jin, 2010). As formal business networks are often domestic (or region) based (Hurst, 2021;Tiwasing and Sawang, 2022), their members will be more likely to share knowledge about customers that the SMEs already possess. This means that the marginal benefits of learning from participating in formal business networks are lower compared with obtaining market knowledge from exports.…”

“…On the other hand, SMEs can also acquire knowledge from their formal business networks (e.g. small business associations or network groups) (Idris and Saridakis, 2018; Tiwasing and Sawang, 2022). Although the prior work shows that SMEs can accumulate different kinds of knowledge from these two learning opportunities, it remains unknown how they interact with PEC and OIC to produce different innovation outcomes.…”

“…Next, we explore the contingency role of different learning opportunities in such relationships. Using insights from the organisational learning literature, particularly the works on learning-by-exporting (Love and Ganotakis, 2013; Salomon and Shaver, 2005) and learning via formal business networks (Idris and Saridakis, 2018; Tiwasing and Sawang, 2022), we explain how exports and formal business networks influence the effects of PEC or OIC on different innovation outcomes. We test our framework using a time-series data set about UK SMEs.…”