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Internationalization and the performance of born-global SMEs: the mediating role of social networks

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Abstract

This paper offers a social network explanation for the purported relationship between internationalization and firm performance in the context of born-global small and medium enterprises (SMEs). We argue that home-based social networks play a mediating role in the relationship between inward and outward internationalization and firm performance. The mediating mechanism is attributed to three information benefits of social networks: (1) knowledge of foreign market opportunities; (2) advice and experiential learning; and (3) referral trust and solidarity. Using survey data from SMEs in the largest emerging economy of China, we found some support for this mediating role of social networks in the form of guanxi. The results imply that international business managers should consider social networks as an efficient means of helping internationally oriented SMEs to go international more rapidly and profitably.

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Acknowledgements

We thank with appreciation the Departmental Editor, Professor Nicolai Juul Foss, and three anonymous reviewers who provided valuable and insightful comments on earlier drafts of this paper. The financial support by the Research Grant Council of Hong Kong is also acknowledged with gratitude.

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Authors and Affiliations

  1. Department of Marketing and International Business, Lingnan University, Tuen Mun, Hong Kong

    Lianxi Zhou

  2. Department of Marketing, School of Business, Hong Kong Baptist University, Kowloon Tong, Hong Kong

    Wei-ping Wu

  3. Department of Marketing, College of Business Administration, University of Texas at Arlington, Arlington, TX, USA

    Xueming Luo

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  1. Lianxi Zhou
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Correspondence to Lianxi Zhou.

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Accepted by Professor Nicolai Juul Foss, Departmental Editor, 19 December 2006. This paper has been with the author for three revisions.

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Zhou, L., Wu, Wp. & Luo, X. Internationalization and the performance of born-global SMEs: the mediating role of social networks. J Int Bus Stud 38, 673–690 (2007). https://doi.org/10.1057/palgrave.jibs.8400282

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