Networks Paving the Way for Initial Internationalization - A case study on how networks influence the way small firms select their initial foreign entry market

Abstract

Previous research has underlined the importance for SMEs to be part of networks in order to obtain a successful internationalization process, where literature mainly has focused on what happens in the internationalization phase. Nevertheless, limited attention has been given to what occurs in the pre-internationalization phase, hence where the decision on initial entry market is made. This study strives to achieve a deeper understanding for this underresearched field, by studying how networks influence the way small firms select their initial foreign entry market. This is accomplished by providing a multiple case study of seven microbreweries. The findings show that diverse networks, being either business- or social, influence how small firms select their initial foreign entry market in the pre-internationalization phase, although in different ways and to different extents. This is accomplished by providing the small firms with strong- or weak factors, resulting in either a direct- or indirect influence on the initial foreign market selection. The strong- and weak factors separately create trust towards the network, which is the critical element for the initial market selection. The findings further suggest that the outcome of the networks’ influence can lead to an unplanned internationalization. This study adds to existing theory by improving the understanding and the connection between important aspects from three theoretical fields; networks, pre-internationalization and managerial decision making.