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Paper info: INTERNATIONALIZATION, EXPANDED NETWORKING AND PERFORMANCE: THE CASE OF HUNGARIAN SMEs

Title


INTERNATIONALIZATION, EXPANDED NETWORKING AND PERFORMANCE: THE CASE OF HUNGARIAN SMEs

Authors


Houcine Akrout, Gàbor Nagy and Jozsef Beracs

Place of Publication


The paper was published at the 32nd IMP-conference in Poznan, Poland in 2016.

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Abstract


In the rapid changing global marketplaces, small and medium enterprises (SMEs)–the backbone of Europe's economy–have been struggling to improve their competitiveness. It is particularly the case for SEMs from transition economies which face resources scarcity of local markets (Ács & Szerb, 2006: Li et al., 2008). To overcome these obstacles they may look for international growth opportunities to boost their performance via internationalization (David et al., 1998: Zhou et al., 2007: Guillén & García-Canal, 2009: Narula, 2012). Prior studies argue that international market entrepreneurship (IME, hereafter) (McDougall & Oviatt, 2000), international market orientation capabilities (IMOC, hereafter) (Knight and Cavusgil, 2004) and the relational paradigm impelled by the IMP group work (Håkansson, 1982: Walter et al., 2006, Johanson & Mattsson 1988) are shown to be the fundamental pre-requisite for SMEs to internationalize successfully. However, the literature is inconsistent regarding the relative value and the nature of networks in relation to performance and to the scale of internationalization (Guillén & García-Canal, 2009: Narula, 2012: Contractor, 2007). Purpose of the paper. This paper has a twofold objective: 1) to develop and test a framework for examining the antecedents of international market performance and financial performance of Hungarian SMEs and 2) to analysis the moderating effects of three different networks (business, political, and local communities networks) with respect to the scale of internationalization. Data and methods. Data was collected from Hungarian export oriented SMEs between September and October, 2015. Out of 1,357 electronic questionnaires sent out, 51 fully completed questionnaires were returned . Variables were subjected to an exploratory factor analysis in SPSS. The resulting factor structure was subjected to an internal consistency analysis (Cronbach ?=0.858?0.966: Churchill, 1979) and discriminant validity test. For testing moderation, the database was divided into two subgroups based on the mean value of total foreign sales/total sales turnover. The structural model was analysed with SmartPLS 2.0 (Ringle, Wende & Will, 2005). Findings. International market orientation capabilities has a negative effect on international market performance. The relationship of international market orientation capabilities and international financial performance is non-significant. International market entrepreneurship has a positive effect on market performance. Moreover, the impact of international market entrepreneurship on international financial performance is non-significant. And finally, international market performance has a positive effect on international financial performance. Moderation effects. For SMEs with low and moderate scale of internationalization local communities network ties moderates the relationship of IMOC and international financial performance. Political network ties moderates the relationship of IMOC and international market performance, and IME and international market performance, respectively. For SMEs with high scale of internationalization business network ties moderate the IME-international market performance relationship, and IME-international financial performance relationship, respectively. Contribution. This study simultaneously addresses the effect of IME and IMOC on performance and three types of networks in the case of SEMs from transition economies. The study reveals the relevance of each type of network with respect to the scale of internationalization. In our view, the study adds instructively to the understanding of internationalization strategy of SMEs.