The Effects of Network Agreements on Firms’ Performance

Abstract

In the current economic environment characterized by globalization, technological innovation, financial crisis, firms are facing a sharp drop in sales, production and number of employees. These changes require firms to formulate viable business responses to prevent market exit. One of the ways to strengthen the production system is represented by network agreement, according to which firms work together to achieve a common goal to be more competitive and to achieve what they themselves could not do because of the limitations inherent in the lack flexibility, expertise and lack of financial resources. The purpose of this paper is to evaluate the effectiveness of the network agreements implemented by firms operating in the industrial sector. The analysis is conducted on the Italian firms that, from 2009, have started collaborative relationships through the network contract introduced by the Italian law n. 33 of 9th April 2009. The paper is structured as follows. The first part examines the main contributions in the literature concerning the topics related to networks and the firms' competitiveness and also the reasons influencing the formation and development of alliances between firms. The second part, instead, is focused on the evaluation of the effectiveness of the network contracts by observing the performance of firms before and after their join the network. In terms of competitiveness has been observed sales while, with regard to profitability was observed the return on investment (ROI). The findings show significant results in relation to both the turnover and profitability.