Authors: Bridget Kenny
ABSTRACT
Research on business networks to date has focused on antecedents of network formation and relationships or relational content among firms rather than outcomes or consequences of such relationships and networks. Several researchers have thus suggested that there is an increasing need for business research to shift a focus from traditional dyadic relationships to a larger business context of network relationships in order to understand firms’ behaviour and performance.
Small firms are the focus of this study as they are a key economic sector in Ireland. SMEs constitute 97% of enterprises and contribute to the flexibility and resilience of the economy as well being active in international markets. This study draws on research from SMEs in the telecommunications and internet sectors in Ireland. Although there is no single agreed definition of High Tech SMEs (HTSMEs), these are generally characterised by small and medium-sized firms with advanced knowledge and capabilities in technology, an educated workforce, and the ability to adapt quickly to fast changing environments.
The research question for this study was to investigate how network theory contributes to our understanding of the internationalisation process of SMEs and to measure the effect of network capability on performance in international trade. The specific focus was on performance in international trade as opposed to the actual process of internationalisation. The dependent variable therefore was performance as measured through conventional means such as market, financial and customer satisfaction performance. The independent variables include factors that make up a firms network capability and comprise network characteristics, network operation and network resources.
The specific objectives of this research were: to offer new insights into the international market development activities through application of a network theory perspective; to gain a deeper understanding of networking capability; and to determine the impact of networking capability on the international performance of SME’s.
During the mail survey a useable response rate of 33.64 % (154 firms) was obtained. Nine hypotheses were analysed using structural equations modelling using LISREL. The hypothesis stating that stronger ties are more influential on international performance than weak ties was supported. Similarly, network coordination and human capital resources were found to be positively and significantly associated with international performance. Strong ties, trust, network initiation and synergy sensitive resources were all positively associated with international performance, but non-significant. Weak ties, relational capability, network learning and information sharing were negatively associated with international performance.
Major contributions of this study includes providing evidence of a collaboration-performance relationship for the international business literature, contributions to the dynamic capabilities, trust and international entrepreneurship literature, as well as advancing a re-conceptualised model of network internationalisation.
Publish Year: 2010