Are cooperative firms more agile? A contingency perspective on small and medium-sized enterprises in agglomerations and peripheral areas

Abstract

Abstract In this study of small and medium-sized enterprises (SMEs) operating in German key technology industries, we investigate whether cooperating with others is an effective strategy for SMEs to enhance their organizational agility. Taking a contingency perspective, we are specifically interested in whether this effect depends on the firm’s location in an agglomerated or a peripheral area. Results show that a greater number of cooperative relationships with others is positively associated with SMEs’ organizational agility. This effect is stronger for agglomerated than for peripheral firms, suggesting that agglomerated SMEs can seize the abundant opportunities to cooperate in order to counter agglomeration diseconomies such as organizational inertia and mimetic behavior. This finding highlights the importance of absorbing external knowledge gained in cooperative relationships for SMEs’ organizational agility. Thereby, the study offers a novel perspective on how agglomerated SMEs can actively prevent being negatively affected by the downsides of agglomerations.

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