Do relationships facilitate growth in small technology firms?

Abstract

Prior literature argues that business relationships provide firms with competitive advantage. However, there is a need for more empirical evidence on whether and how they influence the growth of small technology firms. Through a statistical analysis of 90 small technology firms in Finland, we explore whether the scope and scale of customer relationships and the level of networking with partners can be associated with the financial growth of a firm. The results show that the growth of operating income in small technology firms is linked with their scale of customer relationships; i.e., growth firms employ a broader scale of customer relationships compared to non-growth firms. Hence, we suggest that focusing on deeper relationships with few customers may hamper the firm's financial growth, and entrepreneurs and managers of small technology firms should aim at a broader customer base even in niche markets.