SME Networks and International Performance: Unveiling the Significance of Foreign Market Entry Mode

Abstract

This study investigates the relevance of interorganizational networks for the international performance of small and medium‐sized enterprises (SMEs) in relation to the foreign market entry mode (FMEM) selected. We distinguish two groups of internationalized SMEs: exporting firms and micromultinational enterprises (mMNEs). Drawing on insights from the network theory, our study accounts for the role of intermediate outcomes (innovative behavior and foreign market knowledge). Structural equation modeling is conducted in a sample of U.K.‐based internationalized SMEs. Our findings suggest that interorganizational networks have an indirect influence on international performance but differences are found among the two groups of internationalized SMEs.

Notes

14. FMEM represents the firm‐level arrangement through which firms service a single foreign market with their value‐adding activities (Young et al. 1989).

15. According to Dimitratos et al. (2003): Constellation and investment (C&I) modes of foreign market servicing include licensing, franchising, joint ventures, strategic alliances and subsidiaries.

16. An SME is defined by the European Commission as an enterprise that employs fewer than 250 persons and whose annual turnover does not exceed EUR 50 million, and/or whose annual balance sheet total does not exceed EUR 43 million (European Commission 2003).

Additional information

Notes on contributors

Maria‐cristina Stoian

Maria‐Cristina Stoian is a lecturer in International Business at Brunel Business School, College of Business, Arts and Social Sciences of Brunel University London, UK.

Josep Rialp

Josep Rialp is associate professor of Marketing and Market Research in the Department of Business at the Autonomous University of Barcelona, Spain.

Pavlos Dimitratos

Pavlos Dimitratos is professor of International Business at the Adam Smith Business School of the University of Glasgow, UK.