The effect of social networks and dynamic internationalization capabilities on international performance

This article explores the relationship between social networks and dynamic internationalization capabilities (DICs), and their impact on the international performance of small and medium-sized firms (SMEs) in low-tech industries. We distinguish between exploitative DICs (threshold and consolidation capabilities) and explorative DICs (value-adding and disruption capabilities). Our results, which are based on a sample of small and medium-sized Portuguese exporters, indicate that social networks are a relevant antecedent of exploitative and explorative DICs, and that consolidation and disruption capabilities positively affect international performance. Multiple mediation analysis confirms these relationships. The article concludes with a discussion of implications for research and practice.     

Assessing the needs of international markets against an emerging market company's capabilities: A tool for internationalization

Senior managers in emerging markets often strive to ensure that their companies develop sufficient capabilities to confront the needs they encounter in international markets. However, extant research and practice remain unclear as to how senior managers in emerging market companies can approach assessing the needs of their international markets against their own company's capabilities, to aim for a balance between both. This article offers an innovative approach for assessing the needs of international markets against an emerging market company's capabilities. Based on the assessments of 100 senior managers leading emerging market companies, we explain how this approach can provide two key insights. First, evidence of a balance between the needs of international markets and an emerging market company's capabilities, that indicates the company's competitive position is focused; or evidence of an imbalance between the needs of international markets and an emerging market company's capabilities, that indicates the company's competitive position is either vulnerable or overqualified. Second, an understanding of where the gaps between the needs of international markets and an emerging market company's capabilities are, that enables improving the company's competitive position by closing these gaps. Drawing on this approach, we offer an open access tool that allows senior managers in emerging markets to identify and improve their own company's competitive position for internationalization. Using this tool, senior managers can lead their emerging market companies toward a focused competitive position in international markets, providing better chances of successfully capturing potential benefits.     

Understanding cross‐border mergers and acquisitions of African firms: The role of dynamic capabilities in enabling competitiveness amidst contextual constraints

This article builds on existing international business literature that examines the drivers of cross‐border mergers and acquisitions (M&As) within emerging and developing economy contexts, theoretically exploring how dynamic capabilities (DCs) are connected to these drivers, and how African emerging multinational enterprises (EMNEs) can pursue them to achieve competitiveness. The article's contribution is the development of a DC framework and testable propositions for African EMNEs' cross‐border M&As. The theoretical framework shows the division of DC dimensions—sensing, seizing, and transforming—and establishes explanations for their linkage with institutional and resource drivers for African EMNEs' cross‐border M&A competitiveness. In addition, the article outlines managerial implications to this effect. Overall, the article contributes to the emerging literature on the international expansion of African EMNEs through cross‐border M&As by underscoring the role of DCs.     

Post-entry internationalization speed of SMEs: The role of relational mechanisms and foreign market knowledge

Prior research shows that small and medium-sized enterprises (SMEs) can utilize domestic networks with internationally experienced partners to accelerate their internationalization process. Yet, there is a lack of clarity and limited empirical evidence regarding the role of relational mechanisms within these networks in driving post-entry internationalization speed (PIS) of SMEs. To address this gap, this study examines the relational mechanisms-PIS relationship by drawing insights from the relational view to argue that foreign market knowledge mediates the relationship between relational mechanisms and PIS. The hypothesized study model is tested using a structural equation modelling (SEM) technique on a sample of 394 UK based manufacturing SMEs. Our results show that foreign market knowledge acquisition from domestic networks fully mediates the relationship between relational mechanisms and PIS. Additionally, the linkage between foreign market knowledge acquisition and PIS is moderated by domestic environmental hostility, such that the relationship is strengthened when domestic environmental hostility increases. We discuss the contributions and implications of our results and suggest opportunities for future research.     

Exploring the role of internationalization knowledge in fostering strategic renewal: A dynamic capabilities perspective

Internationalization knowledge (IK) is important to successfully enter and develop competitive strategies abroad. Yet, how IK is advanced and improved across the multinational enterprise (MNE), and how this contributes to the MNE’s strategic renewal is less understood. This analysis is based on an in-depth case study of Microsoft International to explore how IK is advanced, improved, and integrated across the enterprise. Our findings suggest that IK plays a critical role in fostering strategic renewal of an MNE. More specifically, sensing, seizing, and transforming capabilities jointly provide the necessary basis that enable IK to facilitate strategic renewal. We contribute to the literature by (1) explicating three categories of IK and their hierarchical relationship; (2) reveal how three distinct capabilities required by MNEs capture and integrate the three categories of IK across the enterprise; and, (3) offering that strategic renewal is triggered by routines based on the development and integration of IK.     

The role of spirituality in Islamic business networks: The case of internationalizing Turkish SMEs

This paper sets out to investigate the role of religion and spirituality in a business network context, with an empirical focus on the international business development of Turkish SMEs. By drawing on the concept of homophily and tie strength, we argue that, while religion can act as a bridge and thus create a multitude of weak ties within a business network, spirituality can deepen these ties and make them stronger through increased emotional intensity, intimacy and reciprocal service. The data were collected from participants in two Islamic business associations in Turkey. The results suggest that spirituality indeed drives members’ commitment to the network and the presence of spirituality has a distinctive effect on members’ contributions to and demands on the network. More specifically, members who treat their network membership as an extension of their spiritual practice tend to mainly benefit from intangible resources, while members who view their shared religion as an entry point into the network seem to benefit from both tangible and intangible network resources. The findings have several theoretical and practical implications, including the introduction of the spirituality concept into the discussion of homophily and tie strength in business networks, and the role of home networks in the internationalization of SMEs.     

A case study on the internationalization process of a ‘born-global’ fashion retailer

This case study on Zara elucidates the expansion strategies used by both born-global and gradual global fast-fashion retailers based on theories of internationalization. Aspects related to knowledge sharing, resource-based theory, and psychic distance are overlaid with Zara's internationalization strategies to advance understanding of the role fashion plays in dynamic internationalization. Zara employs a high-risk, high-reward model of internationalization to defend its unique merchandise and retail position by remaining completely vertical. Zara's born-global expansion strategy engendered a psychic distance paradox in that it was very successful in distant markets early on. It is proposed that fashion retailers may take note of Zara's success through the proposed ‘dynamic strategic planning process’ for expansion in international markets. Researchers can test the proposed framework empirically to investigate the theoretical constructs for both gradual- and born-global firms.     

Firms' use of organizational,personal, and intermediary networks to gain access to resources for internationalization

This study explores which networks are beneficial for gaining resources for firms' internationalization. Little is known about firms' use of organizational, personal, and intermediary networks to gain access to resources for internationalization. Firms are seeking resources through their organization's relationships (organizational networks) and individuals' personal contacts (personal networks). Governmental and industry actors are implementing networks to promote international growth and act as an intermediary between business actors (intermediary networks). We conduct in‐depth interviews with firms and representatives for intermediary networks complemented with a survey. The findings reveal which resources are accessed through the different networks. We find organizational networks provide considerable access to most resources (except financial resources) that are beneficial for internationalization, whereas intermediary networks provide access to reputational, human, and market resources. Personal networks primarily provide access to human resources. This study contributes to theory by giving a more fine‐grained understanding of how different types of networks give access to different resources valuable for internationalization.     

Latin American franchise internationalization: The impact of institutional environment

We analyze the internationalization of Brazilian franchise chains in Latin America. A total of 119 observations verify international commitment in each country in relation to institutional environment factors and how they are moderated by chain size and industry. The results show that despite all institutional aspects having a significant effect, their explanatory power depends on chain size. Larger franchise chains usually choose countries with better institutional aspects in terms of contract compliance and business freedom, even if the efficiency of business conditions in these countries are not the best in Latin America. In this study, were used public data from international organizations that report on the ease of doing business, level of corruption, political risk, and legal regulations. Specifically, it contributes by using institutional theory in franchising in order to understand the process of chain internationalization originating from emerging markets. Our results, in part, contradict the idea that the origin disadvantage is always an advantage of internationalization.     

A capabilities perspective on the joint effects of internationalization time,speed, geographic scope and managers’ competencies on SME survival

This study examines the effect of key internationalization contingencies on SME survival. We argue early internationalization increases the probability of firm failure, while international experience reduces it. However, the survival odds among international new ventures may be improved by their post-entry international expansion scope and speed, and by managers’ competencies. These internationalization facets provide firms with opportunities to develop and exploit their resources and capabilities, and thus enhance their survival chances. Drawing on a sample of 271 manufacturers followed between 2005 and 2014, we find results that provide support to most of our arguments, and hold theoretical and managerial relevance.     

Selecting the country in which to start internationalization: The non-sequential internationalization model

The paper analyses the selection of the country in which a firm starts internationalization. It proposes that some firms strategically choose a non-sequential internationalization, that is, they select a country that is dissimilar to their country of origin for their first foreign expansion. The reason for this is that some firms develop, in their home country, three types of knowledge that are useful to overcome foreign expansion difficulties: knowledge to manage complexity, developed by having multiple operations at home; knowledge to manage differences in competitive conditions, developed by operating in business-to-business industries, and knowledge to manage differences in institutional environments, developed by allying to a foreign firm at home.     

The effect of institutional isomorphic pressure on the internationalization of firms in an emerging economy: evidence from China

This study uses institutional theory to explore the driving force for internationalization of firms in emerging economies. It posits that the internationalization practices of firms are driven not only by efficiency consideration, but also by the desire to conform to institutional isomorphic pressures exerted by the social environment. The impact of three types of institutional isomorphic pressures – coercive pressure, mimetic pressure and normative pressure – on the intensity of internationalization is investigated. Analysis using survey data collected from 174 Chinese firms shows that all three institutional pressures have positive and significant effects on the intensity of internationalization. We also examine the interaction between institutional pressure and firm capability. Results suggest that firm capabilities enhance the effect of coercive pressure on internationalization, and weaken the effect of normative pressure on internationalization.     

Strategic decision-making processes,international environmental munificence and the accelerated internationalization of SMEs

Motivated by the paucity of studies examining the effects of strategic decision-making processes on accelerated internationalization, this study draws on the organizational information processing theory and the resource-based view of the firm to argue that procedural rationality and politicization have a negative effect on accelerated internationalization of SMEs. Using a sample of 176 internationalized Greek SMEs, the study finds that the procedural rationality and politicization of SMEs reduce the probability of accelerated internationalization. These relationships are more pronounced in munificent international environments, indicating that when accelerated internationalization is constrained by strategic decision-making processes, SMEs may miss opportunities in attractive international markets. The study contributes to the organizational information processing theory, to the literature on the speed of decisionmaking in SMEs, and to the literature on accelerated SME internationalization.     

The internationalization of knowledge-intensive business services: the effect of collaboration and the mediating role of innovation

This study theoretically and empirically analyzes the mediating role of innovation on the relation between collaboration and internationalization strategies in knowledge-intensive business services (KIBS). The work also considers the impact of foreign-based partners and examines the potential direct and indirect effects via innovation of cross-border collaboration on the internationalization of KIBS. The empirical analysis uses a wide sample of Spanish KIBS for the period 2003–2005. The study finds that collaboration positively affects the internationalization of KIBS via innovation. The results related to cross-border collaboration indicate the existence of direct and indirect effects via innovation on internationalization.     

Innovation performance: The effect of knowledge-based dynamic capabilities in cross-country innovation ecosystems

This study operationalizes the knowledge-based dynamic capabilities (KBDC) that act as drivers of innovation performance in innovation ecosystems, across different market economies. Innovation ecosystems facilitate the flow of resources to transform ideas into reality. In turn, KBDC provide a means to create and share expertise, which contributes to the diversification of the economy, and allow businesses to reach beyond their own boundaries to create value for customers in new ways. Employing partial least squares path analysis, four constructs, namely knowledge creation, knowledge diffusion, knowledge absorption and knowledge impact, are comparatively analyzed. Across all four constructs, knowledge creation is the biggest driver of innovation performance, and the strongest predictor of innovation performance in developed and developing market economies. Knowledge absorption is the strongest predictor of innovation performance in transition economies. A KBDC-centered innovation ecosystem framework is proposed to highlight the innovation performance and competitive advantage inherent in each knowledge-related capability.     

Innovation and internationalization as growth strategies: The role of technological capabilities and appropriability

Firms grow either by launching new products (innovation) or by attracting new customers (internationalization) or by using a mixed strategy. An interesting question is whether innovation and internationalization activities are complementary or substitutive. The paper discusses the connections between technological capabilities, their appropriability, innovation activities, and internationalization, and derives hypotheses from the knowledge-based view of the firm. The hypotheses are empirically analyzed using survey data from 300 Finnish firms clustered as follows: (i) domestic replicators, (ii) domestic innovators, (iii) international replicators, and (iv) international innovators. The performance of the clusters is empirically analyzed, the success criteria being actual growth rate and profitability. We conclude that a profitable firm needs to have unused technological capabilities in order to exploit economies of scope through innovation. A strong appropriability regime strengthens growth. Internationalization and innovation combined is the most advisable option when domestic markets are limited.     

The influence of political risk on the scope of internationalization of regulated companies: Insights from a Spanish sample

Political risk not only constitutes a threat for multinational enterprises but can also be a source of opportunities. Exposure to and accumulated experience dealing with political risk allows firms to better implement a wide set of political actions such as negotiation of entry conditions, lobbying, litigation, campaign contributions and coalition formation, leading to preferential conditions, reduced environmental uncertainty, reduced transaction costs and increased long-term sustainability to the firm. These advantages facilitate investments in countries with higher and more diverse levels of risk and make political risk to be positively associated with the firm's scope of internationalization. This effect is not homogeneous across firms. Drawing from a sample of 164 Spanish companies with investments in 119 countries, we find that the impact is greater for companies in industrial sectors that are the object of greater governmental regulation than it is for firms in non-regulated manufacturing or service sectors, with less frequent interactions with home and host-country institutions.     

Me,myself and I: The role of CEO narcissism in internationalization decisions

Internationalization decisions represent major objects of international business research; in this context, the respective role of decision-makers, i.e., strategic actors has been under study for now nearly 50 years. However, some important individual characteristics of strategic actors, which seem to influence individual decision-making in a significant way, have been – in contrast to general management research – widely disregarded. Among those characteristics, narcissism plays a decisive role. Trying to provide a first attempt to fill this research gap our paper aims at theorizing on as well as empirically analyzing potential relationships between narcissistic tendencies of CEOs and their internationalization decisions. The empirical study of major German manufacturing firms over the period 2004–2013 shows that CEOs with a high degree of narcissism tend to intensify business activities abroad in general while the expected effect on intensified activities in markets with a high psychic distance cannot be identified. These research results help to better understand the drivers of firms’ internationalization, stress the importance of recognizing managerial decision-making in the context of analyzing business activities abroad, and improve the prediction of CEOs’ decision-making behavior in general.     

Export Barrier Perceptions in Tanzania: The Influence of Social Networks

In this article, the author empirically examines export barriers Tanzanian firms encounter in attempting to initiate and/or expand export activities and the strategies they use for overcoming these barriers. Based on a social network perspective, the research hypothesizes that firms exploiting diverse networks should normally encounter fewer export barriers. Using a survey dataset collected from 122 manufacturing firms, the findings support the notion that networking reduces export barriers. More specifically, exploiting a large number of strong ties relative to weak ties, and a large number of institutional ties relative to business ties, can substantially enhance firms’ capabilities of overcoming barriers to exporting. In light of these findings, implications for policy, research, and practices are discussed.     

The influence of international networks on internationalization speed and performance: A study of Czech SMEs

Drawing on social capital theory and the international entrepreneurship literature, we develop hypotheses relating the structural, cognitive and relational aspects of the international network of SME CEOs to two internationalization outcomes – speed and performance. The study is based on a sample of 155 Czech SMEs covering a broad range of manufacturing industries. Our findings indicate that firms sharing a common language with their international ties are able to internationalize faster than firms that do not share a common language. Moreover, we observe that geographically diverse networks contribute to superior performance. Extensive reliance on personal contacts hinders the performance of the first international venture.