Download Research on Network Risk and Control Mechanism of SMB Clusters

Research on Network Risk and Control Mechanism of SMB Clusters
Xu Jun
School of Economy & Management, Henan Polytechnic University, P.R.China, 454000
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Abstract The development of the market economy promotes SMB clusters come into being gradually,
which keep every enterprise independent, have advantages of the whole competition and grow up theirs
particular characteristics. However, along with enterprise clusters network coming into being, more and
more obstacles and challenges are created to the development of enterprise clusters due to the network
risk, how to recognize enterprise clusters network risk and set up risk controlling mechanism are the key
to ensure enterprise cluster good development.
Keyword: enterprise clusters; cluster formation theory; cluster characteristics, network risk, controlling
mechanism
In recently several years, enterprise clusters of different industries appear at many places of our
country, which mainly are industry, centralizes of some interrelation enterprises and institution in
specific section, and form strong advantage of sustainable competition. Which have historical rootstock
of native industry, and often depends on the competitive and cooperative relations of native enterprise,
Cluster has already become survival way for SMB from their development trend in the future, which
may keep enterprise independent as well as has competitive predominance in the whole, such as exterior
scale economy, high specialization degree, low cost, production difference, region management and so
on.
The mode that turning inside workshop into outside independent industry, which achieves
collective operation by high degree profession and socialization division, not only make design, sale,
logistics socialization, but also make the production process including tens and hundreds of workshops
socialization, and form many comparatively independent SMB, A holistic and collectivize operation big
enterprise cluster network is formed through market interrelation between every SMB.
1. Exploring Formation Theory for SMB Cluster Network
Different economists have different viewpoints to the formation of enterprise clusters. Section
location theory was explained in industry section location theory of Weibo made clear that
centralized industry was from down to up and formed spontaneously because enterprises pursued the
benefit of centralizing. It must have four factors to form enterprise cluster: (1) The development of
technique equipment make the production process specialization, however, specialized production
departments require industrial centralizing even more. 2 High division of the labors requires perfect
and flexible labor organization which is benefit to taking place of centralizing. 3 Centralizing may
produce extensive market, batched buying and selling reduce production cost and improve efficiency.
4 Centralizing can make basic establishment share, such as coal gas, tap water pipe, street and so on ,
and it is possible that the whole basic establishment make single enterprise cheap, then recurrent
expenditure is reduced, as well as, the reduction also accelerates centralization.
Maxier had the same point with Weibo, considered the production of centralizing was from down
to up. he considered that the causes of industry centralization were attributed to six aspects basically:
1 the value concept system and cooperative and innovative circumstance were homologous with local
community; 2 the vertical links enterprise clusters, in which single enterprise was high specialization,
which always centralized one or several production phase (3) the best human resource collocation; 4
perfect market in industry section: imperfect competition market; 5 active competition with enterprise
and willing cooperation in enterprise inside industry section 6 The unique local credit system.
But according to growth theory, to the area that wants to achieve economy increasing, the key is to
set up a series of promoting industry, and push economy increasing through centralizing industry, and
the build of this kind of promoting industry can depend on country policy or area policy.
Similarly, section production equation theory of former Soviet considered that integrated
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construction was accomplished by nation investment, and the characteristic of centralization formed
from up to down was more obvious than growth theory.
2. Development Characteristics of Different Sorts of SMB Clusters in China
Type one: the SMB clusters built by market need
The typical representation of this type is private enterprise in Zhejiang Wenzhou. The model
mainly has following basic characteristics: 1 Market mechanism is very perfect, its growth and
evolvement are completed by interact of market and industry basically; 2 infection of exterior policy
to enterprise cluster is indirect and assistant, the government's regulatory role is mainly manifested after
clusters appear.
Type two the SMB clusters supported by government
Beijing “zhongguancun” is the mainly representation of this type cluster. This kind of enterprise
has following characteristics: 1 History of market economy is shorter, market mechanism is not very
perfect relatively, its growth and evolvement are finished by the government support. Cluster appearance
is from down to up, and formed through intervening and supporting policy of country and area; 2
government cooperates with market mechanism, which accelerates the development and formation of
enterprise clusters areas.
Type three: the SMB clusters transplanted from outside
Private enterprises in Zhujiang delta of Guangdong are the representation of this type. This type
enterprises mainly have following characteristics: 1 foreign capital investment is main part, domestic
investment account for a small proportion; 2 having favorable area and cost predominance.
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3. Analyzing the Risks Exiting in SMB Cluster Network in China
Network risks of our country SMB clusters mainly express in two aspects generally: the first is the
external risk of enterprise cluster, such as market risk, finance risk, policy risk, industry security risk and
so on; the second is the internal risk of enterprise cluster, symbiosis risk, capability risk, circulate
network risk and so on.
3.1 External risks of enterprise cluster
(1) Market risk. One aspect is that many enterprises share the benefit of exterior overflow of
innovation, and the interests of the enterprise leading innovation are damaged, thus spillover effect risk
is reduced. The other aspect is that the majorities of our clusters are flat, the whole specialization degree
is low, and extension of industry chain lack. Because enterprise clusters lack vertically integration, many
industrial chains are affected by the inherent limitations.
(2) Finance risk. Enterprise capital mainly comes from endogenous and exogenous capital funds.
Endogenous capital funds mainly include depreciation, enterprise subsistence, not distributed profit and
shareholder adding capital, exogenous capital funds include bank loans, financial subsidies, commercial
credit, taxation, financing, venture capital, private lending. Nowadays, for enhancing competition of
cluster, a great deal of money need to be invested in promoting new products and developing new
technologies, endogenous capital funds can not meet the needs, and finance risk of exogenous capital
funds is enhancing by and by .
In general, finance risks of exogenous capital funds include:
informal finance risks. Including
partnership investment, concur fund, private credit and so on, finance risks that are created by
nonstandard of existing informal finance confine the support to SMB clusters. Unlawful and
nonstandard phenomenon such as financing in private in small enterprise, providing a loan each other
between private enterprises pose significant threat to survival and development of clusters and easy to
produce domino effect;
risk investment. government dominance, low market degree, small scale,
single capital structure, inadequate government supporting, therefore which will bring prodigious risk to
SMB clusters;
bank credit risk. SMB clusters have phenomena such as small scale, lacking
efficiency asset, intellect structure nonstandard, low credit degrade, distempered finance system, which
has great distance to the requested credit condition of our country bank, management goal, business
principle, cost restrict and so on, so it is easy to produce finance risk to SMB clusters.
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(3) Political risks. Which mainly includes:
policy risks. Due to government law, rule of law,
policy, government mechanism, changing of layout, tax rate, change of benefit tax rate or industry
specific rectification and so on;
government intervention, It means that government adopts direct
measures to interfere business of each enterprise in clusters. Market mechanism is not perfect, there is
market failure, which need government intervention. But government intervention is not almighty and
also can fail;
public goods risk. Inadequate supply of public goods, lack of associate industry and
sustain industry, socialization intermediary services is still not formed, which have brought negative
effects to further development of enterprise clusters.
(4) Industrial safety risk. Because enterprise clusters have external scale economy effect, cheap
labor, low production cost and obvious advantages in export prices, enterprise clusters in our country
will face pressure of anti-dump, major SMB clusters are weak and lack experience and personnel, so in
general they don’t take other measures or do not actively complaints, they will take escape, as a result,
SMB have to quit the market because technique bulwark or high anti-dumping duties, TBT impede the
export of labor-intensive products of our enterprise clusters, intellectual property protection is more and
more strict, the pressure of technological innovation clusters will be greater for our clusters, more and
more foreign enterprises enter our country, competition in domestic markets will be greatly intensified,
and bring the impact on industrial clusters in many respects.
3.2 Internal risks of enterprise clusters
(1) Ability risks. Include:
Quality risks. The typical representation is the formation of “lemon
market” enterprise clusters, the phenomena that whole cluster product quality and credit are descendant
are caused by enterprise short period behavior, which will bring destructive result to cluster
development; personnel risk. Most of enterprise clusters have the problem of lacking personnel,
professional and technical personnel and management personnel are very few in the cluster, the staff
quality is relatively low;
innovation risk. Most of SMB clusters are labor-intensive processing
industries, technical level and technology are low, the barriers to entry are not high, and product
structure is single, long locked in low-end products market. Some clusters have season problem of
production and sale in different degree. It is easy to be attacked by the other cluster because of low
technology and simple structure, so market risk is very great. Technology and equipment is relatively
backward, cluster upgrade will be restricted; brand risk. The cluster will become a collective brand
when it up to the reputation, which will become collective product in the cluster, and all SMB in the
cluster can use the brand, it will result in cluster decay or shunting once clusters appear technique
problem and external nature resource diathesis.
(2) Cooperation risks. Cooperation risks mainly indicate that the incomplete cooperation between
enterprises in clusters and the resulting loss. Include:
trust t risk. The trust between different
enterprises in clusters is built in civil circumstance of the same root and the nation, which is the base of
cooperation and realizing knowledge share between SMB in clusters, so people have high trusting and
consent each other and a kind of flexible and efficient symbiosis is formed among enterprises. But if
some enterprise in enterprise clusters breach “promising ”and losing “trusting” will lead to enterprises in
the enterprise clusters lose trusting; exceed competition risk. The relation between enterprises in SMB
clusters in our country is mainly given priority to equal market deal mostly, each manufacturer
sometimes lack core enterprise conformity power during the course of production which leads to
correspond ability weak in clusters, causes no order competition in a low price between enterprises,
imitation and jerry-build happen, if this situation is difficult to avoid in the course of the formation or at
the beginning of the case, there will be a price war.
(3) Network operating risks. Mainly include:
information sharing risk. Because enterprise
technique is the same structure, make the opportunity to learn and collaborate be greatly reduced
between enterprises, lead to the division effects in clusters weaken, limit overall advantages into play, so
the whole cluster will be degenerated; root planted risk. Many enterprises interlace to network
through root planted relation, in which the powers to hold cluster system not only include economy
benefit and deal, but also include private relation among entrepreneurs, so it will increase the cost of
external enterprise entering the cluster and internal enterprise quitting the cluster. Though the kind of
root planted character can accelerate information communion and reduce cost and so on, cluster will
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become another introverted system if root planted is too strong, so it will be a risk: the root planted
character that create cluster life also can reduce the adaptive ability of an organizational; institutional
gap risk. The SMB clusters that built on the base of family relation and common area culture
background are unfavorable to build modern enterprise mechanisms, the traditional family business
operation has been increasingly unable to meet the demands of large-scale production in modern society,
along with productivity ceaseless advanced and production relation profound transforming. In a relative
closed enterprise clusters, due to restricted by area tradition and business habit, the enterprise is apt to
reject to outside tempt and maintain inherent manufacture and management mode, setting up modern
enterprise mechanism will face biggish inside obstacle.
4. on Enterprise Cluster Network Risk Control Mechanism
4.1 Adjusting industry policy, optimizing the industry structure and creating favorable innovation
environment for enterprise clusters
Firstly, government need to make special policy for enterprise clusters and give policy support in
many aspects such as technique innovation, soil management, decision-making consultation, financing
assuring, training personnel, international market explored and so on. Secondly, optimizing industry
structure of cluster and making it transit from labor denseness to innovation, technique, characteristic, at
the same time, carrying though commonality goods constructing and diffusing of cluster. Thirdly, risk
protection mechanism and dispute settlement mechanism are introduced. Finally, encouraging
specialization personnel and labor transfer in different regions, and running all kinds of talent market, at
the same time, promoting cooperation between different enterprises, between enterprises and institutions
of higher learning, and scientific research institutions, and intermediaries.
4.2 Giving policy supporting at the aspects such as soil, capital, introducing personnel, revenue
and information service to technology innovation of SMB clusters
Encouraging enterprises to introduce foreign professionals, particularly personnel returning from
abroad, promoting the cooperation between enterprises and correlation scientific research institution,
and university, promoting various enterprises jointly develop new products, new technologies. Moreover,
public technological platform should be built for enterprises in the cluster, the market to transfer
scientific and technological achievements should be built, accelerating science and technique
achievement transferring and industrialization course. At the same time, continuing and stable
mechanism of science and technique innovation investing and science and technique financial budget
should be set up.
4.3 Choosing and cultivating emphases industry, strengthening industry association, cultivating
“technique biology chain”
One side, Adhering to the cooperation and the principle of local industrial to distribute networks, to
the new entering enterprises, to be oriented industrial clusters, and make great efforts to form dividing
the work and cooperation network system. On the other side, for enhancing the enterprise root planted
characteristic, it can encourage big and middle high-mew technique enterprise to adopt industry
separation or science and technique person and enterpriser separating from matrix to do enterprises
aiming at industry affiliated establishment faintish actuality in cluster.
4.4 Strengthening the establishment of society network and intermediary organization, decreasing
enterprise cost waste and information imperfection
Supporting and encouraging building information service organization and network, providing all
kinds of information service for enterprise, decreasing enterprise cost waste and information
imperfection because of searching. At the same time , strengthening the commonality construction that
is favor of manufacture and market acting each other, encouraging enterprise to cooperate with
university and research institutions, supporting to offer technique training for producer, technique
supporting and local institution commonality of market information.
4.5 Fostering and consummating local industry affiliated system
Strengthening inter-firm linkages, developing industry chain economy in great effort and fostering
and consummating local industry affiliated system encircling the dominant industry. At the same time,
accelerating the construction of transport network, receding enterprise business cost in effective through
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building local industry affiliated system. Improving anti-jamming ability of enterprise so as to accelerate
foreign capital to take root in clusters, and driving area economy to tend towards to crisis, avoiding
foreign capital enterprise clusters to move towards outside because of area condition changing.
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