Recognizing the Role of Networks in Market Entry Mode Decisions of SMEs

Abstract: Following the network perspective on internationalization, this study focuses on the entry mode decisions of SMEs during their foreign expansion. The study conceptualized six network-related factors from existing literature about networks and network theory, and integrated them to the previously recognized internal and external factors in entry mode frameworks. Empirical research design of multiple case study was conducted on four Swedish SMEs to learn about the role of networks and the influence of the six conceptualized network factors on the SMEs’ market entry mode decision. Evidence that informal relationships, multiplexity of relationship and trust together influence such decision can be found in the case studies. Furthermore, findings regarding experiential network knowledge and reputational content of relationships are discussed. The network position factor is found to be present through the whole internationalization process and needs to be assessed by decision-makers not only during the market selection, entry mode selection but also during the development stage in the foreign market. Finally, an integrated framework to market entry mode decisions of SMEs with network theory as one of the theoretical foundations is proposed for further research into this area.