External Networks, Competitiveness, and Performance Relations: A Study on SMEs Operating in Creative Industries in Istanbul

The transformation of the global industrial landscape has elevated the significance of creativity and creative industries (CI), yet empirical studies examining competitiveness and performance among small and medium-sized enterprises (SMEs) within CI remain limited. This study addresses this gap by exploring the relationships between external networks, competitiveness, and performance of CI-focused SMEs in Istanbul. Utilizing data from 97 Istanbul-based SMEs, the study employs the Partial Least Squares (PLS) method to analyze these relationships. Results indicate that external networks positively impact both innovation-oriented and cost-oriented competitiveness. However, only cost-oriented competitiveness shows a significant effect on firm performance, challenging traditional perspectives that associate innovation with improved performance. These findings underscore the need for a more nuanced understanding of competitiveness within the CI sector. Contrary to widespread assumptions, innovation-driven competitiveness does not appear to influence firm performance within Istanbul’s CI context. This study contributes to the literature by highlighting the distinct role of cost competitiveness over innovation, providing valuable insights for policymakers and business leaders aiming to foster SME growth in creative sectors. The results suggest that CI firms in Istanbul may prioritize tested innovations, adapted to the local market, over novel developments, underlining a practical approach to sustaining competitiveness. These insights call for further investigation into the contextual factors influencing competitiveness in in creative sectors, guiding policymakers and bussiness leaders in developing targeted strategies to support sustainable growth in the industry.