Abstract:
Less-developed countries benefit from being connected to technologically and economically advanced countries. The well-documented mechanisms for this cross-national flow of knowledge all involve interfirm connections, such as trade, foreign direct investment (FDI), and alliances. We examine the potential of a different mechanism - interpersonal ties abroad - that has only recently become practicable, owing to advances in communication and transportation technologies, globalization, and increased migration. We investigate when business knowledge obtained from interpersonal ties in more-developed countries is more useful than locally sourced knowledge. Using a sample of South African managers, we find that knowledge from more-developed countries is not always more useful. Rather, overseas knowledge is preferable when novel and accessible: that is, when new-to-the-industry knowledge is needed, when there is already a strong tie, and when the knowledge does not involve a long discussion. Conversely, local knowledge is preferable when new-to-the-industry knowledge is not needed, when the interpersonal tie is a weak tie, and when a longer discussion is warranted. This study demonstrates the value of connections between individuals in countries at different levels of development as sources of useful knowledge, and suggests that international business research will benefit from exploring further the networks of individuals in addition to those of firms.
