The internationalization of small to medium-sized enterprises: do all levels in international networking matter?

Abstract

<jats:sec><jats:title content-type="abstract-subheading">Purpose</jats:title><jats:p>The purpose of this study was to investigate whether each level in international networking (network extension, network penetration and network integration) matters in the internationalization of small to medium-sized enterprises (SMEs).</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title><jats:p>The study adopted a cross-sectional and correlational research design. The data were collected through a questionnaire survey of 206 exporting SMEs in Uganda. The study employed a structural equation modelling (SEM) technique using partial least square (PLS) to test the hypothesis.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Findings</jats:title><jats:p>The findings revealed that network extension and network integration do matter in SMEs’ internationalization, while network penetration does not.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Practical implications</jats:title><jats:p>SMEs in developing countries need to concentrate on network extension and network integration levels to successfully internationalize their operations.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Originality/value</jats:title><jats:p>The study provides initial evidence on whether network extension, network penetration and network integration matter in SMEs’ internationalization in developing countries like Uganda.</jats:p></jats:sec>

The Role of Network Ties on SMEs Internationalization Process in the Developing Countries Emerging Markets: A Comparison between Mongolia, China, and Malaysia

“…Oviatt and McDougall (1994) pointed out that these types of firms are called International New Venture (INVs), also known as Born Global firms (BG), which progress is skipping the stage theory of internationalization, the Uppsala model, from the initial stage. The main focal point of the INVs model is age, and it proposes the INVs to gain significant comparative advantages from the beginning of establishment by utilizing their resources and the sale of products in several different markets (Senik et al, 2010;Lin et al, 2016;Ahimbisibwe et al, 2020). BG/INVs skip stages of incremental internationalization when doing business and are involved in the international activities within the first year of establishment or a few years from inception (Senik et al, 2010;Bowen, 2019).…”

“…Afsharghasemi et al (2013) concurred that firms' relationships could be either form of collaborative associations with competitors or a voluntary agreement between firms. Previous research largely agreed that with the help of networking, all actors engaged in the market could benefit from their internationalization process; thereby, it is not an individual or sole effort that needs to be taken (Afsharghasemi et al, 2013;Ahimbisibwe et al, 2020). Musteen et al (2010) argue that SMEs have several different characteristics because of their limited resources and market power, compared to the multinational enterprises (MNEs) when they track the new opportunities in the international market.…”

“…In this theory, Johanson and Mattsson (1988) stated that the full internationalization process comes about because of three interdependent stages of establishing network posture within the foreign market: the first stage, also known as the network extension stage. The second stage is network penetration, which means those relationships in the networks are to be developed and coordinated in different countries, named the network integration stage (Ahimbisibwe et al, 2020).…”

“…Therefore, internationalization appears to be a solution for the SMEs in developing countries, particularly countries with small domestic markets and exist in the region easy to enter for other MNEs, growth, and survival (Jeong, 2016;Costa et al, 2017;Ahimbisibwe et al, 2020). Lis et al (2012) pointed out that internationalization is the outward process of entering into a new geographical location and expanding their operations in the international field.…”

“…It also helps reveal their capabilities and develop an entrepreneurial orientation for the owner-managers to enhance their competitive advantage in a rapidly changing environment and be competent enough for aggressive competition (He et al, 2020). Ahimbisibwe et al (2020) specified that compared SMEs in developing countries to MNEs possess a limited resource, market knowledge, and skills. Thus, SMEs in developing countries will promote their international participation by enabling their network with other foreign market actors.…”