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...resources moving small business toward increased success and profitability. Covering the period from 1990 to 2002, this paper reviews the small business literature as it relates to the use of these external relationships (such as organizational partnerships, networks, and alliances). In response to both academic and practitioner demand for further research in this area, an exhaustive analysis of the relevant literature was conducted and three "meta" research questions representing the connections within this literature were formed. The resource-based view of the firm, resource dependency theory, and punctuated equilibrium theory are proposed as useful starting points for exploring these research questions and can give direction for moving forward in this research area.
Introduction
Although considerable debate exists regarding the risks and benefits of building relationships with other organizations for commercial purposes, few would disagree that forming and managing external relationships is an important strategy for small business development. According to a recent management research report commissioned by the commercial services division of a major North American bank (Anon. 2003), a significant source of sustainable small business success is accessibility to formal and informal business networks and markets.
The web of external relationships that surrounds any small business, whether referred to as a "strategic alliance" (for example, Miles, Preece, and Baetz 1999) or a "network" (for example, Curran et al. 1993), is capable of providing a wide variety of tangible and intangible benefits. What these benefits are, how they develop, and what factors facilitate or inhibit this development are all questions that have been individually studied for several years, yet the answers to these questions have not been reviewed in an inclusive and comprehensive manner. Consolidation and generalization of the results of this small business research uncovers not only what is generally understood about small business and external relationships, but also provides an important retrospective foundation for future research.
This paper applies McGrath's (1964) organizational systems framework to structure, analyze, and integrate the small business literature as it relates to external relationships. This review seeks to contribute to the field in three specific ways: by consolidating and integrating the different outcomes attributed to small business involvement in external relationships; by identifying the factors influencing these outcomes; and finally by outlining what appear to be the central questions in this area and proposing three potentially useful theoretical orientations which may hold promise in moving this research forward. This review also addresses a variety of calls for such research; BarNir and Smith (2002) recently stated that a better understanding of the factors of successful small business networks is required, whereas Kelley and Rice (2002) suggested that small business researchers should address questions involving the trade-offs in internal development versus external partnerships. This review represents a vital step forward in developing stronger theory in small business and external relationships research.
The paper proceeds in the following manner. The next section defines key terms and describes the review framework structure. The review methodology is then outlined, and the results of a comprehensive literature review are presented. A discussion of the research conducted to date is offered along with the proposal of three potentially useful theoretical perspectives for future research in the final section of this paper.
Framework Development
In this section we define our key terms: small business, external relationship, strategic alliance, and network. We will also introduce the review framework based on McGrath's (1964) organizational systems framework.
A variety of definitions exist for small business. For example, a small business is alternately defined in terms of structural characteristics such as the number of employees or number of functional divisions (Vinten 1999; Kohn 1997), performance characteristics such as amount of annual revenues or depth of the product line (Yap, Thong, and Raman 1994; Calof 1993), or both (Evans 1999; Dana 1998). Definitions also vary depending on factors such as industry type (c.f. Buick, Halcro, and Lynch 1998; Human and Provan 1996), or company age (Feindt, Jeffcoate, and Chappell 2002). We also observe that small business is a relative term that often refers to a firm that has fewer resources (for example, employees, revenue, or assets) when compared to others in its industry (Alvarez and Barney 2002). For the purposes of this review, and consistent with the use of the term in this literature, Small Business is defined as an independently owned and operated enterprise that is not dominant in its field or industry and which has relatively fewer resources than other companies in its market.
An external relationship is defined as a commercially oriented connection between a small business and other organizations. Two common types of external relationships are alliances and networks. An alliance is defined as "a close, collaborative relationship between two, or more, firms with the intent of accomplishing mutually compatible goals that would be difficult for each to accomplish alone" (Spekman, Isabella, and MacAvoy 2000, p. 37). A network is defined as a collection of relationships that binds a group of independent organizations together (Das and Teng 2002; Gulati 1998, 1995). Alliances and networks are instances of external relationships as they both involve commercially oriented interorganizational connections.
Analytical Framework Development
The purpose of this paper is to synthesize the small business and external relationships research and to identify and categorize variables studied and links between these categories so that the results are useful as a starting point for future small business research. However, this is no easy task as the small business literature involving external relationships covers a broad range of theoretical perspectives, levels of analysis, and research methodologies. Three criteria were used to select a suitable review framework: a theoretical framework should be independent of a specific theoretical perspective (facilitates synthesis), should be capable of logically integrating disparate results (facilitates identification and categorization), and should be comprehensive in that it allows us to include as many papers on the topic as possible (facilitates synthesis and identification).
Although several frameworks were considered (for example, Scott and Bruce's 1987 framework for small business development stages), McGrath's (1964) organizational systems framework best fits our criteria. When the framework was applied to a handful of papers as a preliminary test, it was found that the results could easily be categorized despite significant differences between the papers selected. Other authors have also taken advantage of the adaptability of an organizational systems framework, using it as the basis for reviews on a wide variety of organizational topics (for example, Feindt, Jeffcoate, and Chappell 2002; Gioia, Schultz, and Corley 2000; Schilling 2000; Ford 1996; Cordes and Dougherty 1993).
[FIGURE 1 OMITTED]
McGrath's (1964) framework consists of inputs, processes, outputs, and the associations between them. Link "A" in Figure 1 represents the effect of antecedents on a process. For example, small business research suggests that environmental characteristics, such as industry (Beecham and Cordey-Hayes 1998) or geographic location (Buick, Halcro, and Lynch 1998), have an effect on external relationships and relationship formation.
The link denoted by "B" in Figure 1 refers to relationship activities and their associated outcomes, such as engaging in a collaboration process with a foreign partner to increase sales and market shares (Kai Ming Au and Enderwick 1994). Link "C" refers to direct relationships between antecedents and outcomes ("black box" approach) such as those drawn between a small business characteristic (for example, ownership of a key resource) and certain outcomes (for example, enhanced competitive position) (Meyer, Alvarez, and Blasick 1997).
Prior experience with external partners, whether successful or unsuccessful, has been found to have an effect on future partnership outcomes (Das and Teng 1998), suggesting a reciprocal, or feedback, condition. This feedback relationship is represented by link "D" in Figure 1. The methodology used to review this literature is described in the following section.
Methodology
The literature review was conducted during the summer of 2002. It was estimated that collecting papers published from 1990 to 2002 would provide a manageable number of papers while still reflecting the most recent research efforts. We followed the search method advocated by Webster and Watson (2002), which describes a multistage iterative process designed to provide maximum coverage of a topic. (1)
Papers were rejected during these stages because (1) they did not clearly deal with both small business and external relationships, (2) they had been identified in previous stages, or, (3) in the case of conference papers or working papers, they were clearly published as a subsequent journal paper. In total, 218 papers were collected, covering the period from 1990 to 2002. Research papers were distributed between journal papers (160) and unique conference proceedings (49), with manuscripts, working papers, and book chapters making up the remainder of the sample (9).
Key information (for example, research question, key definitions, variables, methodology, results) was captured from each paper. (2) Thirty-four additional papers were rejected at this point because (1) they did not meet the review criteria upon closer inspection, or (2) they were judged as having insufficient information to be of practical value. The papers were then coded according to the review methodology framework. An additional 44 papers were removed during this step: 30 papers were removed because they did not clearly describe key relationships (e.g., only presented descriptive data), whereas a further 14 papers were too ambiguous to code. (3) The antecedent, process, and outcome variables were then independently classified into conceptual groups (for example, "Characteristics of the Entrepreneur," "Performance and Success") by us using Krippendorff's (1980) content analysis strategy. Differences between the two sets of classifications were discussed until we were satisfied that each grouping was as distinct and orthogonal as possible. The next section reports the results of this analysis.
Results
During the content coding and analysis, four antecedent categories, two process categories, and three outcome categories emerged. Figure 2 displays the categories that emerged, arranged according to the McGrath (1964) framework. Individual variables within each category are also listed. The authors and dates of research that falls under each category are listed in Table 1 for antecedents, Table 2 for processes, and Table 3 for outcomes. The following section explores each category, outlining the variables studied within the category and gives representative examples of results found.
[FIGURE 2 OMITTED]
Antecedents to the External Relationship Process
Four antecedent...
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