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					Net benefits:
An assessment of a set of manufacturing
business networks and their impacts on
member companies


By

Doug Welch
Nexus Associates, Inc. Belmont, MA

Eric Oldsman
Nexus Associates, Inc., Belmont, MA

Philip Shapira
School of Public Policy, Georgia Institute of Technology, Atlanta, GA

Jan Youtie
Georgia Tech Economic Development Institute, Atlanta, GA

and

Julie Lee
Nexus Associates, Inc., Belmont, MA



A report prepared for USNet and Regional Technology Strategies, Inc.
Chapel Hill, NC

October 1997
EXECUTIVE SUMMARY

   Purpose of the study

   During the 1990s, a growing number of US companies became involved in
   collaborative interfirm partnerships, flexible business networks and other
   organized collaborative efforts to aid business performance. Drawing on survey
   data from industrial companies and network brokers in five US states, this study
   identifies and measures a range of hard and soft impacts on firms resulting from
   their participation in interfirm networks. The measures include effects on firms’
   activities, business strategy, relationships, trust, confidence, technology use,
   know-how, employment and economic benefits and costs.
   USNet - a federal-state initiative to strengthen interfirm collaboration, sponsored
   this study. The study is not an evaluation of USNet or its activities in promoting
   interfirm collaboration; rather, the study uses a sample of networks to probe the
   motivations and effects of networking on participating firms. The evaluation
   team for the study involved researchers from Georgia Institute of Technology
   and Nexus Associates, an independent consulting firm. USNet’s program
   administrator, Regional Technology Strategies, Inc. (RTS), assisted in the
   benchmark survey administration process.
   In order to assess the impacts of network participation on member companies,
   two types of surveys were administered at the beginning of 1997, the “1997
   National Benchmark Survey of Industrial Network Companies” and the “Survey
   of Network Presidents/Coordinators.” This study presents findings from
   descriptive and comparative analyses of data from these surveys.

   Summary of Findings
   A total of ninety-nine members of 13 separate business networks responded to
   the survey. In addition, the president or coordinator of each network responded
   to a second survey containing general questions about the network as a whole.
   Principal findings from this dual survey effort include the following:
   Most of the thirteen surveyed networks are young, urban organizations with
   limited staff resources. The typical (median) network had its first meeting
   between 1994 to 1996. It was initially organized by an external public or non-
   profit organization and currently has no legal status. The typical network has a
   total budget of around $100,000, including a small proportion of member fees.
   Most also receive non-financial support from an outside agency. Two-thirds of
   the networks support a very small staff and all have a network coordinator.
   With a few exceptions, the network members responding to the survey
   were small manufacturers. Half of responding companies had 40 or fewer
   employees and sales of under $4 million in 1996. Most of the surveyed
   companies were manufacturers with operations in a single state.
   The networks‟ most common primary objective is information sharing.
   Most (nine) of the network leaders report that “information sharing” is a primary
   network objective. The networks also have other objectives, such as improving
   quality or productivity, supply chain development, or direct cost reduction.


                                                                                         I
Companies of different sizes report different network activities. On
average, companies that “cooperate with others companies to develop common
procedures for suppliers” or “cooperate with other companies to meet the
procurement, design or quality requirements of larger companies” employ about
800 people. This is significantly more than the 100 or so workers employed by
firms that do not participate in such activities.
Overall, most respondents are satisfied with the networks. Thirty-one
percent of respondents are very satisfied with “the network’s organization and
activities” and additional 52 percent are satisfied. There was slightly less
enthusiasm concerning the participation of other member firms.
Most companies report positive effects to date and expect even larger
future effects. Twenty-eight of respondents said that the network has already
had a strong positive effect on their firm. Another 58 percent have experienced
some positive effect. Looking ahead, firms are even more optimistic with 46
percent expecting strong positive impacts within the next two years.
The average total net benefits per firm of network participation are
positive. The median net benefit of network participation to the firm is $10,000
to date; the average net benefit was $224,000, indicating that the lion’s share of
net benefits was accrued by relatively few companies.
On average, companies experienced a net increase in their employment
levels as a result of network participation. The averaged net employment
change as a result of network participation is 4.7 jobs per firm. However,
employment impacts are unevenly distributed. While almost one-fifth of firms
report a net job increase, the majority either did not experience or could not
estimate a net change in their employment levels as a result of network
participation. Looking to the future, the majority of respondents still do not
anticipate a net increase or decrease in the number of jobs, but the group as a
whole anticipates creating an average of 6.3 jobs per firm.
A few more „intensive‟ network activities are associated with stronger
overall impacts. Companies that report 1) visiting other companies, 2) sharing
special technical capacities with other firms, or 3) working with other firms to
develop common procedures for suppliers through the network are about three
times more likely to have experienced “strong positive impacts” than firms that
have not engaged in these activities.
Companies that share sales leads report higher net benefits of network
participation. The average company sharing leads for potential sales reports
significantly larger financial benefits from network participation -- about
$570,000, as compared to about $120,000 for firms that do not share leads.
Network participation improves skills of both employees and management.
Fifty-one and 38 percent of firms say network participation has enhanced the skills
of their management and employees, respectively. Respondents also cite modest
increases in business attitudes such as flexibility, trust, and partnership.
Companies that have been in networks longer are more likely to report
sharing technical capabilities with other network members. Reflecting the
notion that relationships develop progressively over time, companies that “share
special technical capabilities with other companies” tend to have been involved in
networks about four years longer than companies who do not share technical
capabilities.


                                                                                     II
TABLE OF CONTENTS


EXECUTIVE SUMMARY ___________________________________________ i

1. INTRODUCTION ______________________________________________ 1
     1.1 Purpose of the study ..................................................................................................... 1
     1.2 Survey design and administration ................................................................................. 1
     1.3 Survey data analysis ..................................................................................................... 3

2. THE NETWORKS ______________________________________________ 5

3. NETWORK MEMBER COMPANIES _______________________________ 6

4. NETWORK INVESTMENTS AND RESOURCES ______________________ 9

5. NETWORK ACTIVITIES ________________________________________ 10

6. OVERALL IMPACTS ON MEMBER FIRMS ________________________ 12

7. MEMBER SATISFACTION ______________________________________ 13

8. IMPACTS ON COMPANIES AND THEIR STAFFS ___________________ 15

9. EMPLOYMENT IMPACTS ______________________________________ 19

10. COST-EFFECTIVENESS ______________________________________ 20

11. CONCLUSIONS _____________________________________________ 24

APPENDIX A: SURVEY OF NETWORK PRESIDENTS
            AND SUMMARY OF RESPONSES _____________________ 30

APPENDIX B: SURVEY OF NETWORK MEMBERS
            AND SUMMARY OF RESPONSES _____________________ 32




                                                                                                                                 III
1.   INTRODUCTION

     1.1      Purpose of the study

     In the 1990s, a growing number of US companies became involved in collaborative interfirm
     partnerships, flexible business networks and other collaborative efforts to aid business
     performance. Various policy and business initiatives have been promoted to encourage firms to
     collaborate in networks. A series of case studies have been conducted which generally
     suggest that firms participating in collaborative networks receive positive impacts. However, to
     date, there have been relatively few efforts to systematically quantify the range of impacts
     associated with interfirm collaboration.
     Drawing on survey data from industrial companies and network brokers in thirteen interfirm
     networks in five US states, this study identifies and measures a range of hard and soft impacts
     on firms resulting from their participation in interfirm networks. The measures include effects
     on activities undertaken, changes in business strategy, relationships, trust and confidence,
     economic benefits and costs, and effects on employment, technology and know-how.
     USNet - a federal-state initiative to strengthen interfirm collaboration, sponsored this study.
     The study is not an evaluation of USNet or its activities in promoting interfirm collaboration;
     rather, the study uses a sample of networks to probe the motivations and effects of networking
     on participating firms. The evaluation team for this study involved researchers from Georgia
     Institute of Technology and Nexus Associates, an independent consulting firm. In addition,
     USNet’s program administrator, Regional Technology Strategies, Inc. (RTS), assisted in the
     benchmark survey administration process.

     1.2      Survey design and administration
     In order to assess the impacts of network participation on member companies, two different
     mail surveys were developed:
          The “1997 National Benchmark Survey of Industrial Network Companies” was
           developed to obtain information about network participation, satisfaction, impacts, costs and
           benefits, and company characteristics from network member businesses.
          The “Survey of Network Presidents/Coordinators” was sent to network
           presidents/coordinators to gather descriptive information the organization, composition,
           operation and other background questions about the network. The coordinators’ survey
           was used to avoid asking for duplicative information describing the network from company
           participants

     Copies of both surveys, complete with summary data, are included in Appendix A and B.
     A pilot test of both surveys was undertaken by Nexus Associates in January 1996 involving
     networks and companies in Connecticut and Minnesota. A report was prepared which
     contained the findings from this survey, which were then incorporated into the final survey




                                                                                                       1
           design. Insights from a parallel study of the impacts of networking on companies in Ohio were
           also incorporated into the final USNet survey design.1
           Administration of the final surveys began with telephone calls in late 1996 to state contacts in
           eleven USNet member states to identify of names of active industrial networks and brokers. As
           a result of this process, six states with active industrial networks indicated that they were willing
           to participate in the benchmark survey effort: Connecticut, Delaware, Florida, Massachusetts,
           Minnesota, and North Carolina. Distribution of benchmark surveys to industrial network
           members was designed to be flexible and reflect the unique approach to organizing and
           delivering network services in each state, while at the same time ensuring respondent privacy
           and confidentiality. In all cases, after receiving surveys, respondents mailed completed forms
           directly to RTS using pre-paid envelopes.
           Within this framework, the following approaches were used in specific states:
              Connecticut: The USNet Benchmark Survey project team provided survey packages to the
               state director of network services, who then identified networks and distributed survey
               packages to the appropriate network coordinators to, in turn, distribute survey packages to
               industrial participants. Seven networks were initially identified, of which five networks
               subsequently participated in the survey. After receiving surveys, respondents mailed
               completed forms directly to RTS using pre-paid envelopes.
              Massachusetts: The state coordinator for network services provided a mailing list of
               industrial participants and network coordinators to the project team who then mailed survey
               packages directly to the industrial participants and network coordinators. After receiving
               surveys, respondents mailed completed forms directly to RTS using pre-paid envelopes.
              North Carolina: The network coordinator provided a mailing list of industrial participants and
               the USNet project team mailed survey packages directly to the industrial participants and
               the network coordinator. After receiving surveys, respondents mailed completed forms
               directly to RTS using pre-paid envelopes.
              The remaining states essentially had one active industrial network. The USNet project team
               sent a specified number of survey packages to the network coordinator who either mailed
               the surveys directly to the industrial participants (in the case of the Minnesota Defense
               Conversion Network), or handed them out at a network meeting (in the case of TeCMEN in
               Florida). After receiving surveys, respondents mailed completed forms directly to RTS using
               pre-paid envelopes. Survey packages were sent to the Delaware network, but that network
               became inactive and the surveys were not administered.
           The surveys were mailed in packages consisting of questionnaires customized with the name of
           the network at the top, a stamped, pre-addressed return envelope, and a generic cover letter,
           all enclosed in a pre-printed USNet National Survey Envelope. Survey packages distributed by
           coordinators in network meetings additionally included instructions for explaining the purpose of
           the survey, administering the survey and following-up with industrial network participants.
           Survey packages were mailed from February to April of 1997. Network coordinators and state
           directors were asked to follow-up with companies to encourage them to complete and mail in
           questionnaires. The project team also followed up with network coordinators and state
           directors in the spring and summer of 1997 to solicit further responses.


1
    Philip Shapira, Mary Ann Alabanza Akers, Eric Oldsman, Douglas Welch, and Raimund Grube, Collaborative Networking
     Projects Evaluation Study. An evaluation of flexible manufacturing networking projects in Ohio. Report prepared for the
     Joyce Foundation, Chicago, IL., October 1996.



                                                                                                                               2
A total of 400 survey packages were mailed to the thirteen networks that actively participated in
the study. Four surveys were returned from companies (with no forwarding address, suggesting
they were out of business); one survey was returned by an organization that participated in a
network but was not a company. The potential response base was thus 395. Ninety-nine
surveys were received, reflecting a 25 percent response rate. The rate of participation varied
across networks. Exhibit 1 presents information about participation by network.


1.3    Survey data analysis
Descriptive and tabular analyses were conducted to describe underlying distributions on critical
variables concerning the networks and their member companies. (In addition to the text, these
data are summarized in the Appendices.) All percentages reported below are based on the
total sample of 13 responding networks and 99 responding companies, respectively.
Comparative analyses were performed to determine key relationships between specific
variables. Appropriate hypothesis tests were conducted to determine differences between
various groups using a 95% confidence level (5% chance of erroneous conclusion of difference
between groups when none is actually present). All references in the text to “statistically
significant” differences between groups indicate statistical significance at this level.
Conclusive comparisons based on factors concerning individual networks -- or firm-level
characteristics highly related to specific networks -- proved difficult. Because many key network
descriptors are correlated with one another (or perfectly correlated with one of the 13 specific
networks), root causes for variation observed could not be determined. For example,
observations of high job growth in a network of large plastics companies could not be attributed
conclusively to industry, company size, or membership in that particular network because all of
these factors are interrelated.
Logit and ordered-logit regression analyses were performed in an attempt to determine the
relative strength of different variables in explaining variance in key network outcomes. As a
result of the problem above, however, many of these analyses suffered unavoidable
“collinearity” problems among key independent variables and were therefore inconclusive.




                                                                                                3
Exhibit 1: Summary of survey effort and results
                                                  Surveys   Surveys
Network Name                         State
                                                   Mailed   Received
Value Systems                         NC            69         13
TecMEN                                FL            31        11
Tenergy                               CT            5          1
Startech                              CT            5          1
Naugatuck Valley Screw Machine        CT            20         4
Network
Connecticut Product Development       CT            20        11
Network
ISO 9000 Network                      CT            20         6
Minnesota Consortium for Defense      MN            69        24
Conversion
Northeast Business Environmental      MA            35         5
Network
Western Mass. Chapter, National       MA            51         5
Tooling and Machining Assoc.
Massachusetts Ocean Technology        MA            18         6
Network
Berkshire Plastics Network            MA            36        10
Merrimack Valley Plastics Network     MA            21         2
TOTAL                                              400        99
Non-useable surveys                                 5          -
ADJUSTED SURVEY BASE                               395        99




                                                                       4
2.   THE NETWORKS

     In order to gain an overall sense of the networks and how they are organized, network leaders
     were asked to provide descriptive information concerning the 13 networks they lead.

     2.1     Most of the thirteen surveyed networks are young, urban organizations.
     Eight of the 13 networks had their first official meeting between 1994 to 1996, while three had
     their first official meeting between 1991 and 1993. Despite their youth, the typical (median)
     network reports a membership of 31 companies.
     The typical network is located in an urban area. However, given that the typical network’s two
     most distant companies are about 50 miles apart, most network memberships appear to extend
     beyond the boundaries of individual cities.

     2.2   Most networks were initiated by outside organizations and half have no
     formal legal status.
     Nine of the 13 surveyed networks were initially organized by external public or non-profit
     organizations. Individual network brokers initially organized the remaining four. Six of
     responding networks were informal and had no corporate legal status.

     2.3     The primary objective of most networks is information sharing.
     Most (nine) of the network leaders report that “information sharing” is a primary network
     objective. This is in line with the descriptions provided by the network members. Encouraging
     business contacts ranks second (five networks); human resource development, marketing and
     sales expansion and quality, productivity, or supplier development are each reported by four of
     the responding network leaders. Only one or two networks report sharing facilities or
     addressing local community needs (such as educational, environmental, and infrastructure
     needs) as a primary objective.



     Exhibit 2: Primary objectives of the network, according to network leaders
     (n=13)
      Primary objectives of the network              Number of networks
                                                      citing as a primary
                                                           objective
      Information sharing                                       9
      Business contacts                                         5
      Quality, productivity or supplier development             4
      Human resource development                                4
      Marketing and sales                                       4
      Direct cost reduction                                     3
      Product or process development                            3
      Community needs                                           2
      Facilities sharing                                        1
     NOTE: Total exceeds 13 because respondents could indicate multiple objectives.




                                                                                                       5
     2.4   All 13 networks have a coordinator who arranges meetings and outside
     resources.
     While many networks have no dedicated full-time staff, all report having a network coordinator
     or president. Ten of these network coordinators provide technical or managerial assistance,
     eight arrange plant tours, and seven provide technical assistance based on their own
     experiences.


     Exhibit 3. Primary roles of network coordinators (n=13)
      Network coordinator role                                              Number of
                                                                            networks
      Facilitate meetings                                                       13
      Arrange to bring in outside resources                                       13
      Provide technical or managerial assistance                                  10
      Arrange plant tours                                                         8
      Provide technical assistance based on own expertise                         7
      Develop new markets                                                         4
      Mediate conflicts among members                                             4
      NOTE: Total exceeds 13 because respondents could indicate multiple roles.



     2.5     Company membership in the networks appears fairly consistent.
     Twelve of the network presidents indicated that 60 percent or more of the companies attending
     one network meeting return to a second meeting. All networks responded that 64 percent or
     more of their membership renews every year. However, there is still room for network growth.
     Half of the surveyed network presidents believe that between 100 and 200 eligible companies
     exist in their respective areas that are not network members.




3.   NETWORK MEMBER COMPANIES

     Like the network presidents, members were asked to describe their businesses. The results
     are summarized below.

     3.1   With a few exceptions, network member companies responding to the
     survey were small or mid-sized.
     Of the 87 companies reporting their employment size, 80 (or 92 percent) had fewer than 500
     employees - the common definition for a small or mid-sized US manufacturer. The average
     number of employees exceeded 300. However, there was a wide employment size range


                                                                                                      6
        across member companies. Half of the responding companies were very small, with 40 or
        fewer employees. Seven firms (8 percent) had 500 or more employees, of which the largest
                                  1
        firm had 9,000 employees.

        3.2  Company sales levels are varied; most sales are for products or
        manufacturing processes described as non-distinct.
        Half of the respondent companies had annual sales of under $4 million in 1996. Sales levels
        were varied, however, ranging in from $0 up to $900 million for the largest network company.
        These sales were for products relatively undifferentiated from those of their competitors. Half
        of the firms report charging a premium for “distinctive” products or productive capacities on 20
        percent or less of their sales in 1996. Only a small percentage of these sales was defense or
        military-related (under 10 percent on average).

        3.3      The network companies reflect a range of industries
        While some of the networks are explicitly oriented toward specific industries, others are not. As
        a result, the network companies represent a range of industries, as summarized in Exhibit 4.
        Well over half of the companies are in the textiles, rubber and plastics, fabricated metals or
        industrial machinery industries.

        Exhibit 4: Network member companies by industry (n=99)
        Industry                                   Percent
        Rubber/plastics                               21
        Textiles                                      16
        Fabricated metals                             14
        Industrial machinery                          14
        Transportation equipment                      9
        Electronics                                   7
        Business services                             6
        Measurement instruments                       3
        Miscellaneous manufacturing                   3
        Primary metals                                2
        Air transportation                            1
        Communications                                1
        Engineering, research                         1
        Wholesale trade: durable goods                1
        Total                                        100
        Note: Does not exactly total 100% due to rounding.


        3.4  Most respondents have production facilities in only one state but are not
        home-based operations.
        Most of the responding network companies are small, one-site establishments. Seventy-one
        percent of respondents have production facilities limited to one state. While the network
        member firms are small, however, most are not home-based micro-enterprises. Eighty-five


1
    Six of the seven large firms are in one network: the Value Systems network in North Carolina.



                                                                                                           7
percent of respondents operate their business from a business facility separate from their
home.

3.5   Many member companies have received assistance from other sources
outside the network
Most member companies have received assistance from somewhere outside the network,
suggesting that even without the network they do not operate in isolation. In the past two years,
48 percent of respondents have received technical assistance outside network activities from
private consultants. Thirty-six percent of respondents received assistance from an industry or
business association. Sixteen percent had received assistance from a manufacturing extension
program and 27 percent had received assistance from another public or nonprofit agency.




                                                                                               8
4.   NETWORK INVESTMENTS AND RESOURCES

     The networks have access to a range of resources that enable them to operate. These include
     both cash and staff time commitments from affiliated agencies and member companies.

     4.1    The networks receive external funding and membership fees but have
     limited staff resources.
     Of the seven networks providing this information, the typical (median) network has a total
     annual budget of $102,000, including membership dues. The main funding sources for the
     networks are state and local sources, federal government, and membership fees. Funds from
     state government comprise the largest portion, with the typical network receiving about
     $60,000. The typical network collects member fees totaling $6,150.
     At many networks, the budget supports a small staff dedicated to network activities. Three-
     quarters of the networks have two or fewer full-time employee equivalents working on their
     behalf; one-third have no staff resources.
     In addition, most networks receive non-financial outside assistance from public or non-profit
     programs (75 percent) and manufacturing extension programs (50 percent) including
     management, technical, marketing, or other assistance.

     4.2 Investments in networks are made not only by outside sources, but by their
     members too.
     Members provide fee revenues as well as contributions of their time to network activities. Half
     of the surveyed companies report total network-associated costs to date (including time and
     personnel costs) of at least $10,000. The average firm has invested just over $103,000. This
     large discrepancy suggests that a relatively few companies estimate the total cost of network
     participation as being very high.

            Exhibit 5: Summary of network resources
                                                             Mean         Median
             Investment reported by network (annual)
                Total annual funds (n=7)                    $179,178     $102,000
                Full-time employees (n=13)                       1.3           1.0
             Investment reported by company (to date)
                Total costs of network involvement (n=58)   $103,098      $10,000
                Years of network participation (n=95)            3.0           4.6




                                                                                                       9
5.   NETWORK ACTIVITIES

     Different networks play a wide variety of roles for their members. Some hold formal meetings
     with specific agendas; some organize business and/or social engagements where relationships
     develop; some focus on specific business deals and partnership-building without holding large
     meetings. As a result, the specific activities undertaken by member companies vary
     considerably.

     5.1    Networks provide valuable opportunities for firms to interact with other
     firms that would not occur without the network.
     Network members were asked to indicate whether they engaged in a variety of activities before
     joining the network, and whether they currently engage in such activities through the network.
     It is important to identify activities firms currently engage as a part of participating in their
     networks. However, to identify the impacts of networks themselves, it is more valuable to
     isolate network-related activities in which firms currently engage but in which they did not
     engage prior to joining the network. These results are summarized in Exhibit 6.
     While a variety of possible activities were described in the survey, the most common responses
     concerned increased interaction and information sharing with other companies. More than half
     of the companies held informal discussions with other companies through the network but did
     not do so before joining the network. Similarly, 36 percent attend seminars, and 35 percent
     make visits to other plants but did not do so before joining the network. In short, networks
     provide valuable opportunities for firms to interact with other firms that did not occur prior to
     their involvement with the network.

     5.2   Some companies move beyond information sharing and develop more
     involved relationships
     Network leaders report that the relationships of their members often follow a path of increasing
     intensity. This path may start with introductions and move progressively to mutual trust,
     information sharing (such as advice and leads), or even legal business relationships.
     As shown on Exhibit 6, some companies report cooperative activities such as work to develop
     standards for suppliers, joint marketing, and sharing sales leads. A few companies cite even
     more intensive business relationships through the network, such as group purchasing of
     materials, joint bidding, and collaborative R&D. These sorts of activities may have greater
     potential rewards than information-sharing, but may also have higher risks which may explain
     why they occur less frequently.




                                                                                                    10
Exhibit 6: Summary table of network activities (n=99)
 Network-related activities                      Percentage of       Percentage of
                                                   firms that        all firms that
 (In rank order of responses indicating firms
 currently do the activity but did not do so      currently do        currently do
 before joining the network)                      but never did        as part of
                                                 before network         network
 Hold informal discussions with other                    53                76
 companies (at meals or meetings)
 Attend seminars with invited speakers                   36                68
 Visit plants of other companies                         35                64
 Share special technical capabilities with               28                46
 other companies
 Cooperate with other companies to develop               28                34
 common procedures, including standards
 and certification, for suppliers
 Prepare joint marketing materials for                   27                31
 products or share the cost of trade shows
 with other companies
 Share leads for potential sales with other              26                39
 companies
 Cooperate in training programs                          26                37
 Cooperate with other companies in meeting               24                32
 the procurement, design or quality
 requirements of larger customers
 Purchase raw materials and services on a                17                19
 group basis
 Bid on contracts with other companies                   16                21
 Cooperate with other companies in                       16                24
 collaborative product research, product
 development, or product design




5.3    Companies of different sizes report different network activities
One might expect different network activities to be associated with different characteristics of
member companies and different networking impacts. Such relationships were tested in order
to determine the causes and consequences of different network activities.
On average, companies that “cooperate with other companies to develop common procedures
for suppliers” employ 873 people, which is significantly more than the 100 people employed by
firms that do not participate in such activities. This may reflect a tendency of larger companies
to have more supplier relationships. Similarly, firms that “cooperate with other companies to



                                                                                               11
     meet the procurement, design or quality requirements of larger companies” employ an average
     of 800 people. This is significantly more than the 164 people employed by firms that do not.

     5.4   Companies that have been in networks longer are more likely to report
     sharing technical capabilities
     In keeping with the notion that relationships develop progressively over time, network activities
     were analyzed according to the duration of a company’s membership in the network. On
     average, companies that “share special technical capabilities with other companies” have
     participated in networks since 1990 -- three years longer than firms that do not share technical
     capabilities. This suggests that sharing technical information is more likely to occur only after a
     substantial relationship has had time to develop between the firms.


6.   OVERALL IMPACTS ON MEMBER FIRMS

     In an effort to summarize the total impact that networks have on their members, the survey
     asked companies to describe the overall impact of network participation on their firm. Because
     many networks are relatively new, the question was posed both in terms of total impacts to date
     and the impact anticipated over the next two years.

     6.1   Most companies report positive effects on their firms to date and expect
     even larger effects in the future
     Results concerning the overall impacts of network participation on their members are
     summarized in Exhibit 7.


     Exhibit 7

                       Overall effects of network on business to date and expected
                                                  (n=99)


            70%
            60%
                                                                                 To date
            50%
                                                                                 Expected in next 2 yrs.
            40%
            30%
            20%
            10%
             0%
                  Strong positive Some positive   No effect   Some negative Strong negative Unable to say /
                      effect         effect                      effect          effect      didn’t answer




                                                                                                              12
         Twenty-eight percent of respondents indicated that the network has already had a strong
         positive effect on the company. An additional 58 percent have experienced some positive
         effect to date.
         Looking ahead, nearly half of the respondents (46 percent) believe there will be a strong
         positive effect over the next two years. Thus companies tend to be more optimistic about future
         impacts than impacts to date. Given the youth of many of the networks, this optimistic trend is
         not surprising.

         6.2  Overall effects are stronger if the company participates in more intensive
         network activities.
         In an effort to explain the level of overall network impacts reported and expected, a number of
         comparative analyses were performed
         Companies were significantly more likely to respond that participation in the network has had
         “strong positive effects” if their network activities include 1) visiting plants of other companies,
         2) sharing special technical capabilities with other companies, or 3) cooperating with other
         companies to develop common procedures.
         In fact, the statistical odds that a firm has experienced “strong positive effects” are 3.3 times
         greater for firms visiting other plants than for firms not visiting other plants, 2.5 times greater for
         firms sharing leads than firms not sharing leads and 3.9 times greater for firms developing
         common procedures than firms not developing common procedures.1
         These activities reflect some of the more intensive relationships network companies enter (and,
         as reported above, are also affiliated with firms that have participated in the networks the
         longest). It is therefore not surprising that these activities are related to the strongest overall
         impacts.
         One might expect to find trends in company responses based on other company or network
         characteristics as well. However, no statistically significant differences were evident across
         characteristics at the company level, such as company size (employees or sales), or years in
         the network. Similarly, key network characteristics proved insignificant, including the network’s
         revenues, size, objective, age, and staffing.2




7.       MEMBER SATISFACTION

         Network success is largely a function of give-and-take between member companies. Thus, in
         addition to the effectiveness of the network coordinator or president, member satisfaction
         depends on the involvement of other firms in the network.



1
  Relative statistical odds are calculated as follows: The probability of firms engaged in the activity reporting a “strong positive
   impact” is divided by their probability of not reporting such an impact (1 - prob.), producing their statistical odds of reporting
   that impact. The same odds are calculated for firms that did not engage in the activity. Finally, the odds for the firms
   engaged in the activity are divided by the odds for the firms not engaged in the activity to produce the relative odds.
2
  This is not too surprising, however, due to the fact that most firms responded in one of only two ways -- “some” or “strong
   positive impact” -- which provides little statistical variance for analysis.



                                                                                                                                 13
7.1   Overall, most respondents are satisfied with the networks and their
brokers.
Thirty-one percent of respondents are very satisfied with “the network’s organization and
activities” and additional 52 percent are satisfied. There a similar level of enthusiasm
concerning the performance of the network’s coordinating staff and brokers. One third of
respondents are very satisfied and an additional 45 percent are satisfied.
Companies are less pleased with the level of participation of other companies in the network,
however. Only 11 percent are very satisfied, 40 percent are satisfied and 33 percent are
neutral. This may suggest that some firms have expectations of other members that go
unfulfilled.

Exhibit 8

                Percentage of companies reporting satisfaction with different
                               aspects of the network (n=99)
        60                                   The network’s organization and activities
        50                                   The performance of network’s coordination and staff
                                             The level of participation by other companies
        40
        30
        20
        10
         0
             Very satisfied   Satisfied   Neutral     Dis-satisfied    Very dis-       Did not
                                                                       satisfied       answer



7.2   Satisfaction does not significantly vary by network size, age, staffing level,
or network resources.
A number of possible factors contributing to member satisfaction were explored but found to be
statistically insignificant. Network size (membership), age and staff resources were all
expected to be possible factors in member satisfaction. But again there was no statistically
significant relationship between these factors and the member satisfaction.
Comparative analyses also found that different network budgets were not statistically linked to
key network outcomes. Network budgets are not associated with higher expectations of the
network by its members or with larger impacts. (In fact, networks with larger budgets have
lower levels of member satisfaction, although these differences are not statistically significant.)

7.3  Satisfaction with the participation of other network members is higher
among new members.
Only one statistically significant trend was observed in member satisfaction. Companies that
had joined networks more recently are more satisfied with the level of participation of other
network members than companies who have participated in the networks longer. This trend
may appear somewhat counterintuitive in that one might expect dissatisfied members to leave
the network. On the other hand, some dissatisfied but inactive network members may have
been included in the survey. In addition, it may be that new members have lower expectations
of other companies or that expectations of what other members should do increase with length
of membership regardless of whether they are fully satisfied.



                                                                                                   14
8.   IMPACTS ON COMPANIES AND THEIR STAFFS

     It is often difficult for managers to quantify or place a dollar value on the impacts to their
     companies of diffuse influences such as network participation. Therefore, in order to document
     the occurrence of such impacts, the survey asked companies to indicate (yes or no) whether
     they had occurred or were expected to occur on their companies as a result of their involvement
     in the network.

     8.1   The most common impacts on the firm concern improving product quality
     and supply chain enhancement.
     Members were asked about a variety of possible immediate, intermediate and longer-term
     impacts on their firms. They were asked whether these impacts had occurred already and also
     whether these impacts could be expected within the next two years. Responses are
     summarized in Exhibit 9.
     As a result of network activities, 38 percent of respondents say they improved the quality of
     their own products. In addition, many note changes in their customer and supplier bases.
     Thirty-eight percent of companies have found new customers outside of the network; 36
     percent found new suppliers inside the network and 32 percent found suppliers outside the
     network. Development of new products, companies, and export sales were the impacts least
     frequently cited.




                                                                                                     15
Exhibit 9: Business impacts on firms resulted or expected to result from involvement in
the network (n=99)
                                             Percentage of      Percentage of
(Ranked by frequency of occurrence)            all firms       all firms where
                                             reporting the      the impact is
                                              impact has       expected in the
                                               resulted          next 2 years
                                                                 but has not
                                                                occurred yet
 Improved the quality of your own                 38                   28
 products
 Found new customers outside the                  38                  23
 network
 Found new suppliers inside the network           36                  20
 Found new suppliers outside the network          32                  25
 Increased sales in the U.S.                      31                  27
 Increased profitability                          30                  36
 Improved an existing manufacturing               30                  22
 process
 Improved relationships with major                27                  19
 customers
 Adopted new technologies or new                  25                  28
 manufacturing practices
 Realized an improvement in supplier              24                  26
 quality
 Saved money by group purchasing,                 24                  22
 marketing or equipment sharing
 Found new customers inside the network           23                  25
 Developed a new product or service               19                  23
 Increased export sales outside the U.S.          7                   27
 Established a new company or business            4                   14
 venture



8.2    Network participation improves skills of both employees and management.
In addition to impacts on the firm as a whole, respondents cited a number of impacts on their
staffs. Fifty-one percent of respondents say network participation has improved management /
owners’ skills and know-how. Forty-five percent improved employee skills and know-how, and
38 percent experienced a greater use of computers in the company as a result of network
participation (See Exhibit 10).




                                                                                           16
Exhibit 10: Staff impacts resulted or expected to result from involvement in the network
(n=99)
                                             Percentage of     Percentage of
 (Ranked by frequency of occurrence)           all firms       all firms where
                                             reporting the      the impact is
                                              impact has      expected in the
                                               resulted          next 2 years
                                                                 but has not
                                                                occurred yet
 Improved management/owners’ skills               51                   19
 and know-how
 Improved employee skills and know-how            45                   27
 Greater use of computers in the                  38                   18
 company
 Greater flexibility and/or team orientation      31                   28
 of employees
 Increased labor productivity                     21                   36
 Increased in employee wages                      15                   26
 Increase in management/owners’                   15                   35
 personal earnings


8.3   Companies also experience some positive change in business attitudes as
a result of participating in networks.
Qualitative research leading up to the USNet survey suggested that a company’s degree of
involvement in a network depends on a certain level of comfort on the part of a company in
working with and trusting other member companies. That is, companies may need to develop a
degree of comfort and camaraderie with their peers before they will be willing to share mutually
valuable information, resources, or risks.
In an effort to define and measure possible attitudinal precursors to working with others, a
number of measures were developed.
   Flexibility: “Confidence in your own company’s ability to deal with changing market
    needs.”
   Trust: “Belief in the integrity of other firms and your ability to rely on them.”
   Partnership: “Willingness to work with other firms on projects or activities of mutual
    interest.”
   Community: “Willingness to work with other local organizations.”


The survey asked member companies to indicate whether they had experienced a change in
any of these attitudes. Exhibit 11 summarizes their responses.




                                                                                               17
Exhibit 11



                   Percentage of companies noting changes in business
                             attitudes or relationships (n=99)
        60
        50                                                                      Flexibility
        40                                                                      Trust
        30                                                                      Partnership
        20                                                                      Community
        10
         0
              Strong      Some     No change    Some       Strong    (Did not
             increase   increase               decrease   decrease   answer)




Respondents were more likely to recognize modest (“some”) increases or no change in these
attitudes than strong increases. Perhaps contrary to expectations that trust is a precursor to
partnership, more companies experienced increases in their feelings of partnership than trust.
(On the other hand, it could be argued that individuals joining networks may already tend to
trust other companies.)

8.4   Members in product and process development networks are more likely to
adopt new technologies.
Sixty-four percent of firms that participate in one of the three networks engaged in product or
process development expect to adopt new technologies and procedures. By comparison,
twenty-nine percent of firms that are not in these networks expect this impact to occur. This
difference, which is statistically significant, may reflect the fact that firms developing new
products tend to adopt new technologies in order to develop new products. (However, as with
other variables at the level of the network, the possibility that other factors are ultimately
responsible for this difference cannot be ruled out.)

8.5    A few impacts vary by company size and duration of network membership.
A wide variety of relationships were tested between company and network characteristics and
the impacts companies experience through the network. Only a few statistically significant
trends emerged. First, the typical company finding customers outside the network employed 37
people, while companies not finding customers outside the network employed, on average, 540
workers. Second, companies that reported improving supplier quality or saving money through
group purchasing employed about 750 people, as compared to companies not experiencing
such impacts, which employed around 190 workers. Third, firms reporting an increase in
employee wages or an improvement in supplier quality had been members of networks longer
than firms not experiencing these impacts by 6 and 3 years, respectively.




                                                                                              18
9.   EMPLOYMENT IMPACTS


     An explicit or implicit goal of virtually all economic development initiatives is to increase the
     number of (high-paying) jobs available in a particular region. Network members were asked to
     indicate whether they had created additional jobs, saved existing jobs that would otherwise
     have been eliminated, or reduced employment levels as a result of participating in the networks.
     They were also asked whether they expected to do so in the next two years.

     9.1    On average, companies experienced a net increase in their employment
     levels as a result of network participation.
     Although networks are not explicitly designed by business participants to create jobs, program
     sponsors and policymakers are interested in the employment effects of networks. To the extent
     that network activities lead to significant sales growth, new customers, or product innovations, it
     is reasonable to assume that will be some associated new job impacts. Existing jobs can also
     be saved or eliminated as a result of network activities. It is, therefore, most relevant to assess
     net job impact figures.
     Based on the survey responses, the average net employment change as a result of network
     participation is 4.7 jobs per firm. However, employment impacts are unevenly distributed and
     net job growth is concentrated in a small number of firms. While almost one-fifth of firms report
     a net job increase, the typical (median) company has not created any new jobs to date as a
     result of being in a network. The majority of firms either did not experience or could not
     estimate a net change in their employment levels as a result of network participation (see
     Exhibit 12).


     Exhibit 12: Net employment change* to date and future (n=99)

                                            Net change that has             Net change expected
         (percent responding)                     resulted                        in future

       1 job eliminated                                           1                                0
       0 job impact                                              37                               22
       1-20 jobs created                                         14                               15
       21-40 jobs created                                         0                                1
       41-60 jobs created                                         2                                2
       >60 jobs created                                           2                                0
       (cannot calculate)                                        43                               59
       TOTAL                                                    100                              100
     * Net employment change = jobs created + jobs saved - jobs eliminated. Excludes respondents not providing all three
     pieces of information (most of whom did not report any job creation to date or expected).




     9.2    On average, companies expect a further increase in their employment
     levels in the future as a result of the networks.
     Looking to the future, the typical company expects to create 3 jobs in the next two years.
     (Because of few extreme responses, however, the companies on average expect to create 31


                                                                                                                           19
      more jobs in the next two years.) But again it is more important to assess net job impact
      figures.
      On average, as shown in Exhibit 12, the firms anticipate a net increase of 6.3 jobs as a result of
      participation in the network. Again, however, the majority of respondents do not anticipate a net
      increase or decrease in their employment levels as a result of the network.

      9.3  Changes in employment were not significantly related to any particular
      network or firm characteristic.
      A variety of possible relationships between reported changes in employment as a result of
      network activities were tested. None proved statistically significant.




10.   COST-EFFECTIVENESS

      All network members were asked to estimate the total benefits and costs they had experienced
      as a result of participating in the networks to date. In addition, benefits were broken out in
      terms of “sales benefits” versus cost savings; costs were broken out in terms of personnel
      (time) costs versus technology, training and R&D costs.
      A summary of total benefits, total costs, and net benefits, calculated from the estimates
      provided by each company, is given in Exhibit 13. Note that there are large differences (for
      both total benefits and total costs) between the mean and median measures, indicating that a
      few companies have rather large benefits and costs.


      Exhibit 13. Summary measures of benefits, costs, and net benefits resulting from
      company participation in networks (per company)
       Per Company                 Last 12 months            Total since start
                                                                of network
                                                                membership
       Mean (Average)
         Total Benefits             $118,445 (n=47)            $334,553 (n=45)
         Total Costs                 $14,359 (n=58)            $103,099 (n=58)
         Net Benefits               $106,220 (n=45)            $224,085 (n=43)

       Median
        Total Benefits                    $15,000 (n=47)                $30,000 (n=45)
        Total Costs                        $3,000 (n=58)                $10,000 (n=58)
        Net Benefits                       $9,300 (n=45)                $10,000 (n=43)

      10.1   The average net benefits per firm of network participation are positive.
      For those respondents reporting both total benefits and costs to date, the median net benefit
      (subtracting total cost from benefit for each respondent) since the start of network participation
      was $10,000; the average net benefit was $224,000. This indicates that the lion’s share of net
      benefits accrued to a few companies.



                                                                                                      20
10.2 The distributions of both benefits and costs of network participation are
highly skewed.
Some respondents experience much greater benefits (and some experience much greater
costs). Average (and median) total benefits per firm to date exceeded average (and median)
costs per firm to date. However, the benefits of network participation accrue far more to some
firms than others. This is reflected in the ten-fold disparity between average versus median of
total benefits to date -- $334,553 versus $30,000, respectively.
The magnitude of costs of network participation are also highly skewed. Some firms report
higher costs than others, which is again reflected in a ten-fold disparity between the average
total costs per firm to date of $103,098 versus $10,000, respectively. The distributions of
benefits and costs of network participation to date are illustrated in Exhibit 14.




                                                                                                 21
         Exhibit 14:

                                                            Total costs and benefits to companies of network participation
                                30
          Number of responses


                                25                                                                                                                                                      total costs
                                20
                                                                                                                                                                                        total benefits
                                15

                                10

                                5

                                0
                                     0   1-10   11-   21-   31-   41-   51-   61-   71-   81-   91- 101- 111- 121- 131- 141- 151- 161- 171- 181- 191- 201- 211- 221- 231- 241- 251- 261- 271- 281- 291- 301- 401- >500
                                                20    30    40    50    60    70    80    90    100 110 120 130 140 150 160 170 180 190 200 210 220 230 240 250 260 270 280 290 300 400 500



                                                                                                                  Thousands of dollars




          10.3 The benefits of network participation are roughly split between increased
         sales and cost savings.
         Sales benefits comprised an average of 55 percent of total benefits to date across all firms.
                                                                           1
         Cost savings made up an average of 47 percent of total benefits. Thus the proportions of
         benefits due to increased sales and cost saving are fairly balanced.

         10.4 Companies that share leads report significantly higher net benefits from
         network participation
         On average, the 26 companies that have shared leads for potential sales with other companies
         report net benefits to date of $567,438. Companies that do not share leads report average net
         benefits of only $119,433. This difference is statistically significant.

         10.5                            Costs of network participation are primarily personnel-related.
         Personnel costs are a large portion of the total cost of network participation, comprising an
         average of 85 percent of total costs described to date. Thirty-five percent of costs were
                                                                                   2
         attributed to technology, training and R&D related to network activities.

         10.6 Costs and benefits of network participation correspond with few network
         and firm characteristics.
         Most network characteristics, such as network age and staff resources, have no statistically
         significant effect on the costs and benefits of network participation.
         One exception is that the average personnel costs for firms in product/process development
         networks are $47,583, which is significantly higher than the $10,307 of firms in non-
         product/process development networks. This could reflect that such efforts consume
         considerably more time than other network-related activities.

1
  Each firm indicating some amount of total benefits and sales benefits was assigned a value for the proportion of sales
   benefits to total benefits for that firm. Similarly, each firm indicating some amount of total benefits and cost savings was
   assigned another value for the proportion of cost savings to total benefits. The averages of these proportions across
   companies do not add to 100 percent because they were calculated independently.
2
  The above footnote also applies to the relative proportions of total reported costs represented by “Technology, training, and
   R&D” versus “personnel costs”.



                                                                                                                                                                                                                         22
           10.7 Net benefits of network participation are related to certain types of impacts
           on member companies.
           A few significant patterns were observed between the level of net benefits experienced by a
           company and the types of impacts that managers report the network has had on their firms.
           Net benefits were around twenty times larger for firms that 1) found customers in the networks,
           2) increased US sales, or 3) increased employee computer use as compared to firms that did
           not experience these impacts.1 While these findings are impressive, further work and
           information is necessary to interpret the policy significance of this result.




1
    Total net benefits for firms that found customers outside the network averaged $456,194, while net benefits for firms not
     experiencing these benefits averaged $22,252. Total net benefits for the average firm reporting increased US sales was
     $567,336, while net benefits for firms that did not increase domestic sales averaged $22,252. Firms increasing computer
     use averaged $459,287 in net benefits, while firms not increasing computer use netted an average of $19,563.



                                                                                                                            23
11.   CONCLUSIONS

      This study has investigated a variety of collaborative partnerships, flexible business networks,
      and other organized collaborative efforts to aid business performance that are affiliated with the
      USNet initiative. The study explored characteristics and activities of 99 firms and the 13
      networks in which they participate. The study also described the impacts of these activities on
      participating firms and explored possible causes for different impacts. The study reached the
      following conclusions.

      Most of the thirteen surveyed networks are young, urban organizations with limited staff
      resources. Most of the networks are located in urban areas. The typical network had its first
      official meeting between 1994 to 1996. Most were initially organized by external public or non-
      profit organizations and currently have no legal status. The typical network has a total budget
      of $102,000 including a small proportion of member fees. Most also receive non-financial
      support from an outside agency. Two-thirds of the networks support a very small staff but all
      have a network coordinator
      A primary objective of most networks is information sharing. Most (nine) of the network
      leaders report that “information sharing” is a primary network objective. The networks also
      have other primary objectives that are more diversified.
      With a few exceptions, the network members responding to the survey were small
      manufacturers. Half of responding companies had 40 or fewer employees. Half had sales of
      under $4 million in 1996. The network companies represent a range of industries, but most are
      manufacturers. Businesses operations are limited to single states but are not home-based
      enterprises.
      Networks provide valuable opportunities for firms to interact that would not occur in
      their absence. In addition to other network-specific activities, most networks provide their
      members with opportunities to interact that the members report they did not have prior to joining
      the network.
      Some companies move beyond information sharing and develop more intensive
      relationships. Some companies report cooperative activities such as work to develop
      standards for suppliers, joint marketing, sharing sales leads, and group purchasing of materials.
      A few companies cite even stronger ties including joint bidding and collaborative R&D.
      Companies of different sizes report different network activities. On average, companies
      that “cooperate with others companies to develop common procedures for suppliers” or
      “cooperate with other companies to meet the procurement, design or quality requirements of
      larger companies” employ significantly more people than firms that do not participate in such
      activities.
      Companies that have been in networks longer are more likely to report sharing technical
      capabilities. Reflecting the notion that relationships develop progressively over time,
      companies that “share special technical capabilities with other companies” tend to be involved
      in networks four years longer than companies who do not share technical capabilities.
      Companies that share leads report higher net benefits of network participation. The
      average company sharing leads for potential sales reports significantly larger financial benefits



                                                                                                      24
from network participation. The typical company sharing sales leads nets $567,438 from
network participation, as compared to the $119,433 averaged by firms not sharing leads.
Most companies report positive effects on their firms to date and expect even larger
effects in the future. When asked to summarize the network’s impacts to date, twenty-eight
percent of respondents indicated that the network has already had a strong positive effect on
the company. An additional 58 percent have experienced some positive effect. Looking
ahead, firms are even more optimistic for the next two years.
A few more „intensive‟ network activities are associated with stronger overall impacts.
Companies that report 1) visiting other companies, 2) sharing special technical capacities with
other firms, and 3) working with other firms to develop common procedures for suppliers
through the network have experienced significantly more positive overall effects from network
participation to date than other firms. The odds that a firm has experienced a “strong positive
impact” is 3.3 times greater for firms visiting other plants than for firms not visiting other plants,
2.5 times greater for firms sharing leads than firms not sharing leads and 3.9 times greater for
firms developing common procedures than firms not developing common procedures.
Overall, most respondents are satisfied with the networks and their brokers. Thirty-one
percent of respondents are very satisfied with “the network’s organization and activities” and
additional 52 percent are satisfied. There was slightly less enthusiasm concerning the
participation of other member firms.
Satisfaction with the participation of other network members is higher among new
members. Companies that had joined networks more recently are more satisfied with the level
of participation of other network members than companies who have participated in the
networks longer.
The most common firm-level impacts cited concern improving product quality and
supply chain enhancement. As a result of network activities, 38 percent of respondents say
they improved the quality of their own products. In addition, many note improvements in their
customer and supplier bases.
Network participation improves skills of both employees and management. Fifty-one and
38 percent of respondents say network participation has enhanced the skills of their
management and employees, respectively.
Companies also experience some positive change in business attitudes as a result of
participating in networks. Respondents cited modest increases in business attitudes including
flexibility, trust, and partnership.
Members in product and process development networks are more likely to adopt new
technologies. Sixty-four percent of firms in one of the three networks engaged in product or
process development expect to adopt new technologies and procedures, compared to only 29%
of companies in other types of networks.
There are some trends between characteristics of firms and the impacts they experience.
Smaller companies tend to have found customers outside the network; larger companies are
more likely to have improved supplier quality or saved money through group purchasing. In
addition, the longer a firm is in a network, the more likely a firm will experience an increase in
employee wages, and an increase in supplier quality.
On average, companies experienced a net increase in their employment levels as a result
of network participation. Although the majority of respondents did not experience a net
change in their companies’ employment levels as a result of network participation, on average



                                                                                                    25
respondents reported a net increase of 4.7 jobs per firm. Looking to the future, the majority of
respondents still do not anticipate a net increase or decrease in the number of jobs, but the
group as a whole anticipates creating an average of 6.3 jobs per firm.
The benefits of network participation are roughly split between increased sales and cost
savings. Sales benefits comprised an average of 55 percent of total benefits to date. Cost
savings made up an average of 47 percent of total benefits.
Costs of network participation are primarily personnel-related. Personnel costs are a
large portion of the total cost of network participation, comprising an average of 85 percent of
total costs described to date. Thirty-five percent of costs were attributed to technology, training
and R&D related to network activities.
The average total net benefits per firm of network participation are positive. The median
net benefit of network participation to the firm is $10,000 to date; the average net benefit was
$224,000, indicating that the lion’s share of net benefits was accrued by a relative few
companies.




                                                                                                 26

				
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