SME Internationalisation: The Relationship Between Social Capital and Entry Mode
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SME Internationalisation: The Relationship Between Social Capital and Entry Mode Jane Menzies1 · Stuart Orr1 · Justin Paul2 Received: 8 February 2019 / Revised: 22 April 2020 / Accepted: 7 May 2020 © Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract The literature has assessed the social capital of internationalised SMEs, but not how SME social capital affects entry mode and the mechanisms involved in the effect. Case data from 35 SMEs which have internationalised to China were analysed to identify how SME social capital affected entry mode. Weak relational and structural social capital were found to provide network resources, information and entry mode opportunity identification which affected entry mode, but later became path dependent on the entry mode due to its effect on the context for the social capital. This internal and external context resulted from specialised organisational resources, institutional forces and market conditions and influenced the types of social capital. Political social capital was found to be weaker in its effect on entry mode than business social capital. Expectations of future social capital were influenced by initial social capital and some SMEs selected their entry mode to create a context that supported social capital. Several mechanisms of affect were identified, including using trust to support social capital development, a reduction in the resources required to maintain social capital over time due to intentional manipulation of context and a reduction in the focus on developing weak ties as part of social capital over time. Keywords Social capital · SMEs · Entry mode · China · Context · Trust · Path dependency · Temporal effects
* Jane Menzies [email protected] 1
Department of Management, Deakin University, Geelong, VIC, Australia
2
Graduate School of Business, University of Puerto Rico, San Juan, PR, USA
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1 Introduction The extant small to medium (SME) internationalisation literature is currently investigating the factors affecting the type, extent and process of SME internationalisation (Lindstrand and Hånell 2017; Presutti et al. 2016; Tian et al. 2018). The factors affecting entry mode are an important part of this investigation as entry mode is a major determinant of the demands placed upon scarce SME resources and can affect the long-term success of international SMEs (Game and Apfelthaler 2016; Gao et al. 2016; Tian et al. 2018). The literature, however, has not considered all of the important factors likely to affect SME entry modes (Game and Apfelthaler 2016). It has also given very limited consideration to their effect in the important context of psychically distant markets (Gao et al. 2016; Presutti et al. 2016), instead focusing primarily on psychically similar markets. In addition, SME entry modes are not usually fixed (Chetty and Agndal 2007; Clarke et al. 2016) and future changes in entry mode can influence other aspects of an SME’s internationalisation (Ciravegna et al. 2014
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