The effect of resource acquisition networks on the internationalisation of small and medium enterprises (SMEs)

Abstract

The need for this research stemmed from the fact that most of what we know about the internationalisation of small and medium enterprises (SMEs) emerges from developed countries; little is known about internationalisation of African SMEs or, in particular, South African SMEs. The impact of globalisation, trade liberalisation, and technology advancement on SMEs is that they face increased competition right on their doorstep. To remain in existence and sustain their growth, SMEs are concertedly seeking opportunities in foreign markets. In order for SMEs to succeed and exploit international opportunities, they develop and rely on networks to compensate for their liability of foreignness, as well as their lack of resources in terms of finance, marketing, human capital, reputation, and technology.This research investigated the effect of resource acquisition networks on the internationalisation of small and medium enterprises. The study involved SMEs who had internationalised their operations. Data were collected through unstructured interviews in Phase One and semistructured interviews in Phase Two of this research study, with SME owners and their managers who were responsible for international operations. The key focus was the three research propositions dealing with networks, which focused on three network characteristics: network diversity, network density, and network size.The findings show that the South African SME internationalisation process is highly influenced by resource acquisition networks. SMEs use their networks to exploit international opportunities by accessing resources that they lack internally. A highly diversified and highly connected network is significant to the SMEs’ opportunity identification of and access to resources, while the size of the network is quite important.