Dalarna University's logo and link to the university's website

Aim: The purpose of this master's thesis is to investigate how the presence of a large industrial company in mill towns affects the innovation and business development of SMEs. The study intends to gain a deeper understanding of the business networks dynamics at the local level and to investigate what opportunities and barriers arise for SMEs operating within networks shaped by dominant actors.

Method: The study is based on a qualitative research method and a thematic template analysis of 10 semi-structured interviews. The criteria set for participat ingrespondents were that they need to hold a leading position within the company in a mill town and be people with insight into the company ́s local collaborations and innovation initiatives. A convenience sample were used initially with a combination of snowball sampling. The interviews were conducted in person with with representatives of both the large industrial company and SMEs from one mill town.

Results: The results show that business networks in mill towns are characterized by personal relationships, local identity and long-term ties. The relationship between the SME and the dominant industrial company is characterized by both historical ties, trust, asymmetry and dependence. Innovation mainly occurs informally and there are not often formal joint development projects. The local structures are perceived to provide stability, trust and facilitate knowledge exchange, however, this structures create barriers to network becoming closed.

Conclusion: SMEs development in mill town is influenced by informal relationships, trust-based cooperation and dependence on dominant actors. This type of network in mill town with a dominant actor increases informal learning and knowledge sharing among SMEs, however, through indications of network closure, development and innovation can be limited for SMEs. The study contributes to an increased understanding of local networks and SMEs' development and innovation opportunities in them.