Diffusing Innovation: the role of personal relationships in a SMEs network

Networks have been hailed as a third organizational form, between markets and hierarchies. One of the main characteristics of networks is the coexistence of personal and professional relationships. This coexistence modifies the development of economic activities; it is known that strategic decisions are largely influenced by the presence of trust between network members. The present paper investigates the role played by personal relationships within networks, addressing the following research questions: How do different types of relationships existing in a network of SMEs favor the development of economic activities? And do personal relationships play a role in supporting innovative activities? Based on an analysis of interviews with managers of SMEs in a consortium of Italian firms, we conclude that the interaction between personal and professional relationships shapes a unique context that alters the usual dynamics of innovation diffusion.