Influence of Network forms on the internationalization process : A study on Swedish SMEs

Internationalization is a key concept in today’s globalized world. Globalization has brought about a major shift in the way firms internationalize. Previously, large firms were thought to follow an incremental internationalization process. However, as a result of the rise of international new ventures, the internationalization process has seen a dramatic shift in the internationalization process of firms. Firms no longer follow the traditional models of internationalization. Instead, there are three general phases an international new venture may pass through which are identified by Leonidou and Katsikeas (1996, p. 524): namely: pre-engagement, initial, and advanced. The change in the internationalization process of firms has led firms access networks to internationalize. The use of networks have been shown to help international new ventures to skip the traditional phases of internationalization and expand rapidly by linking themselves to established networks (Coviello & Munro, 1995, p. 53). Participation in networks, among other benefits, includes acquiring the necessary knowledge for international operations. Several important network forms have been identified by different authors. This raises the question what effect these network forms have at the phases of the internationalization process. Three major networks were identified, namely, social, business and intermediaries where each form has its own benefits in the internationalization process of an Small-to-Medium-Size Enterprise (SME). The forms of networks are often described as positive drivers for internationalization. We, however, think that there might also be negative aspects concerning the use of network for internationalization. This study sets out to find what the benefits of each form of network is and also how the networks are used in the internationalization process of an SME. We take into account the perspective of the entrepreneurs as to how they perceive network forms affecting SMEs’ performance at each phase of the internationalization process. Along with that, we also aim to find out how the forms of networks interact with each other and how they evolve from one network to the other. We use qualitative methods, in our study, by interviewing six SMEs located in northern Sweden. Multiple case studies were developed, in order to analyse the collected data from the semi-structured interviews. The collected data was transcribed and categorized in order to find the phases of internationalization, benefits of networks, interaction between networks and the negative aspects of networks. It was then analysed using the three predefined forms of networks: social, business and intermediaries. The findings of the study show that business networks were the most widely used network form throughout the phases of the internationalization process. Social networks and intermediaries were used equally. However, social networks had a greater influence than intermediaries. Our research also identified three phases in the internationalization process. Networks were found to influence each other at all the phases of internationalization and therefore cannot be seperated from each other.