How do Eastern European SMEs establish networks to support their internationalization?

The competition in the international markets traditionally was considered as a prerogative of the large companies while the player's part in the local and regional markets was assigned to small and medium business. In these conditions traditional theories of internationalization were focused mainly on large multinational corporations and were less applicable to SMEs. The network theory of internationalization was created as a response to the need for explaining the process of internationalization of SMEs. Previous researches were trying to explain why networks are essential for the international expansion. This study will try to shed the light to the practical importance of the networks for the internationalization process and give the more in-depth look at the role of networks for the organizations and methods of engaging, managing and exiting the networks. For this purpose main research question and tree sub-reserch questions were formulated. Multiple case study method of research was chosen. Three Ukrainian companies were selected and in-depth live interviews with the company representatives were conducted. The results were transcripted and analyzed using the pattern matching and cross-case analyses techniques. The findings reveal that international networks are used to increase the profits through territorial expansion, gain an access to the knowledge about other markets, build the competitive advantage in the foreign markets and distribute the produce. Companies engage in networks through recommendations, personal informal contacts, industrial exhibitions and trade fairs, traditional institutions and third-party authorities. The relationships inside the networks are maintained due to the trust, informal relationships, formal agreements, mutual adaptation and willingness to sacrifice, with the later being introduced by the author. The concept of exiting the networks is currently not studied in the literature; hence this concept was developed by the author and considers both the causes for the termination of the relationships inside the network and modes of exiting the networks