Financing is a critical bottleneck problem in the development process of SMEs. SMEs� business activities\nare more closely embedded in the network, because the geographical location closeness\nfacilitates the exchange of information and the diffusion of knowledge. We try to explore how the\ncluster network relations affect the efficiency of SMEs external financing efficiency. This paper\ntakes a close look at firm financing patterns and factors that influence external financing performance\nof SMEs in clusters. However, our results suggest that financing from bank is the main financing\npattern. We also find inter-firm trust is positively related with external financing efficiency\nand this positive relationship is moderated by the level of Guanxi. Theoretical and managerial\nimplications are discussed.
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