ABSTRACT:
This paper aims to answer two research questions: first, what are the different types of business networks formed by firms with the stakeholders present in a cluster and second, to explain the relationship between business networks and the performance of firms. To answer the first research question, this study uses an exploratory research design which involves survey research method where data was collected through survey questionnaire. Data for questionnaire was collected from managers and owners of firms operating in the cluster at their offices. To answer the second question, this study uses a descriptive research design which makes use of survey research method to examine the relationship among business networks and firm performance by collecting data through survey questionnaire. With respect to exploration of different types of business networks, the study has identified two types of business networks with local associations and government agencies, only one type of business network with the educational institutes and suppliers, and lastly four different types of business networks between a firm and its buyers. However, with respect to network with other stakeholders like financial institutes (banks), research institutes, and competitors, the study shows that the interaction between a firm and these stakeholders is weak. With respect to impact of business networks on firm performance, the study suggested that majority of the formed business networks are significantly and positively related to firm performance. The business networks identified in the study provide a much deeper understanding of how firms connect with its suppliers, its buyers, government agencies, and educational institutes operating in an auto-component cluster.