The Importance of Relationships to become a Business Network Insider. Foreign micro-enterprises entering Shanghai

Abstract

Abstract In a world that is shrinking with distant markets becoming more accessible and at a lower cost, this enables even smaller businesses such as micro-enterprises the opportunity to invest and establish abroad. In recent years there has been a rise in interest of business networking as a major part of the internationalization process regarding how a new business is to establish itself as a newcomer in a foreign market. Although both internationalization and business networking has been studied thoroughly during many years, there has been only limited attention given to the study of micro-enterprises and their internationalization processes. This thesis intends to investigate how foreign micro-enterprises become business network insiders when they enter Shanghai. The purpose of this study is therefore to understand micro-enterprises internationalization process in terms of how they reach their business network insider positions. The study is based on interviews with the founders of eight individual foreign micro-enterprises who have all established themselves in Shanghai, China. The conclusion is that in order to become business network insiders the foreign micro-enterprises need to spend significant amount of effort in informal and formal forms of networking. The result of this thesis suggests that the business network position as suggested by the revisited Uppsala model is highly relevant when foreign micro-enterprises are establishing in Shanghai. We argue that a network insider position is reached when other actors are recommending the company further to other contacts and therefore developing personal relationships and strong connections are key aspects.