Empirical evidence how social capital effects the internationalisation process of SME in Zhejiang

Abstract

SMEs (small and medium-sized enterprises) are taking the similar way towards internationalisation as large MNCs (multinational corporations). The two participants have similar problems in the internationalisation process, but the conditions for SMEs are completely different due to their limited resources. Social capital is influencing the process and can be a compensation for the disadvantages SMEs are confronted with. This study shows how social capital affects the internationalisation speed and performance of SMEs in China. Using the existing research as a framework, this paper proposes hypotheses concerning various aspects of social capital in terms of networks or ties to key institutions and discusses their effects on the SME’s internationalisation. The hypotheses are tested on a representative sample of 99 SMEs located in Zhejiang (China) with the help of a regression analysis. The findings indicate that some aspects of social capital contribute to a superior performance and a faster internationalisation speed. The results of this study can help managers and founders choose proper business strategies or representatives of political institutions setting policies.

Keywords:

• China
• SME
• social capital
• internationalisation
• performance

Disclosure statement

The authors report no conflicts of interest. The authors alone are responsible for the content and writing of this article.

Funding

This work was funded by NSFC Project-No.: 71272060/G0204.

Notes on contributors

Meng Fanchen is a professor at the School of Management and Economics of the Beijing Institute of Technology. He is the Associate Dean of the School of Management and Economics. He graduated from the Guangzhou Institute of Foreign Studies, majored in German Studies (B.A.) and the Beijing Institute of Technology, majored in Management Science (M.Sc.) and the Technical University Cottbus in Germany (Dr. rer. pol.). In the past 20 years he has been a visiting scholar for several times, for example at the Technical University of Berlin, Bayreuth University and the University of Karlsruhe. He has published over 30 papers in domestic and international journals, authored and chief-edited books, and has been involved in many research projects. His research interests are international management, multinational M&A and industrial economics.

Jens Mathis Rieckmann is a Ph.D.-Student at the School of Management and Economics of the Beijing Institute of Technology (China). He graduated as Diplom-Kaufmann (master degree in business administration) from the Freie Universität Berlin (Germany) and as Diplom-Ingenieur (master degree in business administration and engineering) from the Brandenburgische Technische Universität Cottbus (Germany). From 2009 to 2012 he was working as a Research Assistant for the Technology Transfer Center of the Brandenburg University of Technology Cottbus. Nowadays, his personal research focus is the internationalisation process of SME and cross-border technology transfer.

Li Cheng graduated from the Beijing Institute of Technology, majored in Economics (B.Sc.). Afterwards he started to study in the U.S.A. His research interests are the internationalisation process of MNE and SME.