Trust, control and knowledge transfer in small business networks

The ability to transfer knowledge effectively in the networks of small and medium-sized enterprises (SMEs) is paramount for supporting firms’ competitiveness. The present research takes a qualitative approach, employing a theory-informed multiple-case study of six Italian networks of SMEs. The paper analyses the joint impact of two different ethically based trustworthiness factors – namely benevolence and integrity – and the levers of control (LOCs) – namely, belief, boundary, diagnostic and interactive LOCs – on the knowledge transfer between SMEs in networks. We find that trust and control can be antithetical or synergistic in supporting inter-firm knowledge transfer in networks – depending on the interaction partners’ level of ethical reasoning. We also pinpoint contextual conditions for the identified effects. These insights not only provide a rich foundation for follow-up research, but also inform SME managers about how to increase the effectiveness and efficiency of knowledge transfer with their network partners.