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A network perspective on foreign entry modes of small knowledge-intensive services firms

Martina Battisti (Grenoble École de Management, Grenoble, France)
Joanna Scott-Kennel (University of Waikato, Hamilton, New Zealand)
David Deakins (Lancaster University, Lancaster, UK)

European Journal of Marketing

ISSN: 0309-0566

Article publication date: 1 March 2021

Issue publication date: 13 July 2021

921

Abstract

Purpose

Integrating network attributes from studies of social networks, business relationships and small- to medium-sized enterprise (SME) internationalization, this study adopts a perceptual view of a firm’s focal “net” of relationships to examine foreign market entry mode choice. This study aims to examine how the interaction between knowledge-intensive service (KIS) firm’s network ties, embeddedness and position is related to choice of mode and subsequently the firm’s perceived insidership status within its focal net.

Design/methodology/approach

This research is based on qualitative interviews with 25 small- to medium-sized KIS firms engaged in direct exporting or foreign direct investment (FDI). This study derives an empirically grounded framework of four distinct network patterns of these KIS firms through an iterative process of triangulation between cases and theory.

Findings

The four network patterns illustrate the complex interaction between network attributes and entry mode choice by KIS firms. The findings suggest formal ties and centrality in closed network relationships provide the “central controller” firm discretion over their entry mode choice. Resource-intensive FDI by “opportunistic investors” proved essential to securing centrality through formal, institutional ties. Less optimal patterns lacking institutional ties and centrality, however, precluded choice of FDI by “specialized exporters” and “client followers.” The study finds that entry modes are less likely to be influenced by the firm’s embeddedness in open or closed network relationships, but rather by the desire to achieve a more central network position and legitimacy through more formal, less imitable ties.

Research limitations/implications

The findings demonstrate the importance of network structure, a position of centrality, and strength of professional and institutional ties to small KIS firm internationalization. By adopting a more finely grained examination of the interaction between key attributes of the firm’s focal net, this study provides a valuable first step in conceptualizing the complexities associated with networking and adoption of export/investment internationalization modes.

Practical implications

There are a number of implications for the strategic and operational facets of smaller KIS firm internationalization. To avoid excessive network liability for resource-deficient SMEs, practitioners should consider network positioning as a strategic activity, with the costs associated with building and maintaining networks offset against economic- and resource-related returns.

Originality/value

The authors contribute to a better understanding of entry mode choices of KIS by taking a network perspective that accounts for the combined effects of different network attributes. The four network patterns identified extend current theoretical knowledge on the role of networks for entry mode choices of small KIS by highlighting that entry mode choices reflect the particular firm’s focal net and its attempt to achieve insidership status through high centrality and formal ties.

Keywords

Acknowledgements

This study received funding from the New Zealand Government’s Ministry of Business, Innovation and Employment, Ministry of Foreign Affairs and Trade and the New Zealand Treasury.

Citation

Battisti, M., Scott-Kennel, J. and Deakins, D. (2021), "A network perspective on foreign entry modes of small knowledge-intensive services firms", European Journal of Marketing, Vol. 55 No. 7, pp. 1979-2011. https://doi.org/10.1108/EJM-10-2018-0732

Publisher

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Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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