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acquires by establishing close relationships with customers, suppliers, the industry, distributors,
regulatory and public agencies as well as other market actors.
Networking capabilities are network characteristics, which consist of strong ties, building relationships
and trust between partners. Network orientation is about initiation, coordination and learning, and
network resources are about human resources, synergy sensitive and information sharing.
It has been noted that SME owner-managers’ network relations with friends and family members are
crucial to its development of internationalisation. For instance, there is abundant evidence of the
positive impact of the role of informal networking relations on an SME’s internationalisation
development (e.g. Coviello and Munro, 1997; Meyer and Skak, 2002; Rutashobya and Jaensson,
2004).
Network structures can include vertical and horizontal relationships involving people, institutions and
markets in various contexts, as Table 1.3 shows. In terms of the benefits of networking and their
positive impact on SME export, it can be argued that if the export of SMEs from developed and other
developing countries is facilitated, it seems plausible to argue that similar firms in developing
countries will benefit even more from the impact of network relations on their internationalisation
behaviour.
Table 1.3. : The Structure of Network Relations
Business ties/economic
exchange/contractual
Social ties/
non-economic exchange/
non-contractual
Vertical Present contacts: suppliers, agents
and intermediaries, ancillary
supplier of the firm
Former contacts: previous
suppliers in the industry and
previous operators in the
ancillary support firms (i.e.
packaging, R&D)
International/
domestic
Horizontal State support agencies and export
promotion agencies, sector trade
associations, advisor/consultants,
joint ventures, partner and other
alliances
Competitor, community
organisation, friends,
acquaintances, family
members
International/
domestic
Source: Adapted from Evers and O’Gorman (2008, p. 40).
As regards the strengths and weaknesses of network theory in the light of SME internationalisation,
numerous researchers (e.g. Coviello and Munro, 1997; Chetty and Holm, 2000; Gemser et al., 2004;
Ruzzier and Antoncic, 2007) have contended that SME have derived much benefit in developing
export activity from their diverse network relations, depending on the market. For example diaspora
communities around the world have been better able to engage in business networking across borders
that draws on kinship and familial contacts. A good example of a highly successful linkage between
diaspora immigrant communities is the well documented experience of Chinese networks which
connect business activities in mainland China to Hong Kong, Europe and the USA. Saxenian (2006)
develops the idea od brain circulation which connects young entrepreneurs from China, India, Taiwan
and Israel to the USA through their alma mater and their initial employment in the USA. Often the
latter experience results in spin-off activities which they can operate in theor home countries while
keeping substantive business links in the US.