The Role of Interfirm Relationships in Improving SME Training Capabilities: Evidence from Australia

To examine the role of inter-firm relationships in improving the learning and training capabilities of three sized categories of manufacturing small-to medium-sized enterprises in Australia. The data employed in this research are drawn from the Business Longitudinal Survey (BLS) conducted by the Australian Bureau of Statistics. The results show the proportion of SMEs participating in interfirm relationships (other than normal supplier-customer relationships) to increase their business performance range from 8.3% of micro-enterprises to 13.1% of medium sized firms. For those firms that do participate in business links, relationships are more likely to be based on informal understanding than formal agreement. Moreover, the purpose of relationships is not to increase SMEs' training capabilities, with only two, three, and eight micro, small and medium-sized firms-less than 1% of SMEs-cooperating with other businesses to increase their firm's training performance. The study also shows there is a statistically significant correlation between training provided by equipment suppliers and firm size, with 7%, 22% and 39% of micro, small, and medium-sized enterprises using equipment suppliers to provide training. Taken together, the results indicate that all three sized SMEs are more likely to engage in cooperative training arrangements as part of normal supplier-customer relationships. The finding that interfirm relationships (apart from normal supplier-customer relationships) are not part of SMEs' training efforts may indicate opportunities for interventions designed to facilitate training in SMEs. Moreover, the substantially higher proportion of SMEs in all three categories that participate in cooperative training as a result of normal supplier-customer relationships, suggest interventions should be targeted at building on existing training relationships. However, the finding that the majority of small and micro businesses do not provide formal training, or informal training in the case of micro businesses, highlights the challenges of increasing training in very small firms.