Claves del derecho de redes empresariales. AAVV

first issue is whether networks are able to provide enterprises with better opportunities for investment financing or, on the contrary, they constitute an additional obstacle¹⁷⁹. This issue will be analyzed without regard to types of networks whose specific function consists in providing credit services or financial guaranties to members, as it is the case for credit cooperatives or mutual guarantee consortia, for instance¹⁸⁰.

      Secondly, the paper will consider different types of network, mainly distinguishing between contractual and organizational networks. Are there types of networks that, more than others, increase enterprises’ financial opportunities? Which elements of the network structure are particularly important?

      While making some concluding remarks, a regulatory issue will be raised in questioning whether a specific legal framework on inter-firm networks is needed in order to enable their role of innovation drivers within a financially constrained environment.

      Within these perspectives some preliminary issues deserve consideration in order to develop the analysis.

      See Regulation (EU) No 575/2013, 26 June 2013, on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012, art. 4 (Definition): “(38) ‘close links’ means a situation in which two or more natural or legal persons are linked in any of the following ways:

2. DO INTER-FIRM NETWORKS MAKE ENTERPRISES’ ACCESS TO FINANCE HARDER?

      Rejecting the assumption that single-handed and stand-alone firms represent the sole reference model for corporate finance and lending decisions, economic literature shows different views on the impact of firms’ conglomerates, grouping and networks on access to finance.

      Mostly referring to multi-divisional firms and business groups rather than to infer-firm networks, as strictly intended, this literature shows the advantages and drawbacks of financing mechanisms taking place within the group or network (internal financing) as well as the impact determined by the formation of groups/networks on external financing, particularly bank financing¹⁸¹.

      With respect to internal financing the concept of an “internal capital market” is considered in order to describe cross-financing, changes in resource allocation and similar practices occurring among the different units of an integrated firm or affiliates within a business group or, in a different and less common perspective, among distinct entities that are members of an alliance¹⁸². The potential of an “internal capital market” is shown as having regard to the informational advantages of members (if compared with potential external financiers), lower monitoring costs, higher monitoring incentives, higher flexibility in structuring the financial relation and taking measures against poor or lack of performance¹⁸³.

      Therefore, at least to some extent, the “internal capital market approach” could help to identify some of the advantages of internal financing practices among members of a given network. Indeed, once the network setting is specifically taken into account, then the financial impact of collaborative practices could be considered with regard to, for example, free services allowances or co-sharing of costs and investments. These practices could determine a reduction in the demand for external finance for participating firms and could provide more adequate incentives to engage in specific projects that are more difficult to support within a stand-alone firm¹⁸⁴.

      Moving from a different perspective, law and Economics scholars also explain that switching capital allocation among affiliate corporations is significantly more costly than switching such allocation within a firm¹⁸⁵. It is possible that not only transaction costs may increase if different managers or board of directors should agree on a given switch, but also that legislation tends to impose restrictions on these decisions through corporate, securities, secured transaction, bankruptcy, and tax law. Managerial discretion is therefore limited. For these reasons the practice of asset partitioning of an integrated firm into a business group with separate affiliates may be seen as a way to reduce agency costs linked with switching resource allocation by managers. A trade-off between flexibility advantages and agency costs arises, shedding light on the relation between resource allocation and corporate governance¹⁸⁶.

      Having specific regard to business networks, the previous analysis could help to predict that the collaborative setting developed by networks may reduce the transaction costs and information asymmetries normally characterizing “external capital market” transactions, so enabling some level of flexibility in partial accordance with the “internal capital market” hypothesis. Depending on the material structure of the network, agency costs and/ or free riding practices, respectively, may well reduce the efficiency of internal financing strategies. Again, network design and governance seems pivotal in both scenarios, so adding value to the choice of legal form and contractual/organizational models¹⁸⁷. As is demonstrated below, the distinction between contractual and organizational networks may be relevant under this perspective, also (though not only) with reference to the different impact of contract v. organizational law on flexibility of capital allocation practices¹⁸⁸.

      Consequently, the potential of networks with respect to internal financing should not be valued in absolute terms but rather in having regard to a network’s contractual or organizational design¹⁸⁹.

      The issue concerning the impact of networks on external financing (mainly bank financing) is even more controversial than the one just discussed. Indeed, part of the economic literature shows the advantages of networks in producing and signaling useful information for potential external financiers, or in providing explicit or implicit guaranty. Networks could also endow members with bargaining power in their relation with potential lenders on the basis of a reputation effect linked with the network’s functioning¹⁹⁰. However, counter-effects should be taken into account: network’s reputation may be negative and could in principle increase, rather than decrease, the level of opaqueness as regards relevant information for its members’ credit assessment¹⁹¹. Following the predictions of some scholars, this complexity might call for a preference of bank credit over different types of credit (e.g. non-professional financiers, non-qualified investors and the like) being banks more skilled in screening and monitoring¹⁹².

      A further element that should be considered concerns the external financiers’ monitoring over networks and the risk of “contagion effects” within the network¹⁹³. Indeed, the increase in monitoring costs is particularly linked with the interdependence that networks incorporate into collaborative practices¹⁹⁴. Network cooperation is often based on the coordinated use of complementary resources, mainly immaterial ones, often individually possessed by single participants and open to pooled use¹⁹⁵. Investments made by one of the members are relevant for connected transactions put into force by other participants and common interest projects do have success if (and often only if) all participants duly perform. Though being the means for a network’s success, such interdependence also contributes to creating vulnerability in cases in which an individual breach is not adequately monitored or external factors negatively affecting a single participant create a burden for the whole project and network. For example severe distress for a participant’s major client can in fact cause distress for the participant himself, in addition to having an impact upon the network¹⁹⁶.

      Under these circumstances, a bank’s monitoring of a client’s ability to perform (return capital and pay interests) becomes quite costly and might require a greater need for more collateral and guaranties.

      The regulatory framework reinforces this expectation.

      Pursuant to the European Regulation n. 575/2013, which implements the Basel II/III Accords into European legislation, banks are due to take measures against risk concentration within their credit portfolio¹⁹⁷. The concept of risk concentration is linked with that of “connected clients”, which, under some circumstances, could describe the type of relations typical of network participants¹⁹⁸. More particularly, Article 108 of the Directive provides thresholds for risk concentration (including the one generated by groups of connected clients), defining large exposures and prohibited ones¹⁹⁹. In the perspective of the Basel III Accords, the more recent Proposal for a new Directive on the access to the activity of credit institutions and the