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Purpose – The role that network competence, environmental hostility and knowledge intensiveness of the industry have on the propensity of small- and medium-sized enterprises (SMEs) to internationalise is examined.

Design/methodology/approach – Hypotheses are developed, based on earlier literature on the subject. Subsequently, binary logistic regression modelling using SPSS software is applied to test the hypotheses on a sample of 224 Finnish SMEs representing five industries, two of which are characterised by knowledge intensiveness and three of which are from less knowledge-intensive ones.

Findings – The propensity of SMEs to internationalise depends on both their level of network competence and their lack of perceived environmental hostility. Knowledge intensiveness of the industry is found to moderate the effect that network competence has on the internationalisation propensity.

Research limitations/implications – The present study indicates that possessing higher levels of network competence helps domestic SMEs in their efforts to turn international, and that its beneficial effect is especially important for small firms in industries characterised by high knowledge intensity. Possible limitations of the study are the small cultural context and inclusion of firms from only five industries.

Originality/value – This study is the first linking measurable network competence to internationalisation decisions of SMEs, while also including environmental and industry considerations. It also provides further evidence for the importance of networks in SME internationalisation theory, but indicates that it is not only the business networks themselves but also the competence in developing and maintaining those networks that help SMEs internationalise.

Innovation competence has become an essential requirement for technology-based organizations to survive in the new economy. Commitment to long-term objectives and learning are considered as indispensable for building innovation competence. Communication networks play a crucial role in both these aspects. In this context management faces the question of how the characteristics as well as the contents of communication present in the network will influence the innovation competence. In this paper a literature study is done to present an understanding of the relationships between communication networks and innovation competence. The paper proposes that the characteristics of communication (frequency, diversity, and centrality) along with the content of communication (shared vision, shared task knowledge, and shared social knowledge) significantly affect the elements necessary to build technological innovation.

This paper deals with competence management from a system's perspective. The authors adopt the meta-model for systems, as introduced by Eric Schwarz, and explain the basic systemic categories (components, relations, whole) of the organisation, in terms of competences. The systemic nature and the interdependencies of competence assets, capabilities and core competences are presented. Subsequently, the authors explore the viability of organisations, from the perspective of competences, and building on the characteristics of viable systems as described by Schwarz. They introduce Systemic Competence Management, a way to manage competence assets, capabilities and core competences in support of the viability of the organisation.

The study this chapter reports focuses on how network theory contributes to the understanding of the internationalization process of SMEs and measures the effect of network capability on performance in international trade and has three research objectives.

The first objective of the study relates to providing new insights into the international market development activities through the application of a network perspective. The chapter reviews the international business literature to ascertain the development of thought, the research gaps, and the shortcomings. This review shows that the network perspective is a useful and popular theoretical domain that researchers can use to understand international activities, particularly of small, high technology, resource-constrained firms.

The second research objective is to gain a deeper understanding of network capability. This chapter presents a model for the impact of network capability on international performance by building on the emerging literature on the dynamic capabilities view of the firm. The model conceptualizes network capability in terms of network characteristics, network operation, and network resources. Network characteristics comprise strong and weak ties (operationalized as foreign-market entry modes), relational capability, and the level of trust between partners. Network operation focuses on network initiation, network coordination, and network learning capabilities. Network resources comprise network human-capital resources, synergy-sensitive resources (resource combinations within the network), and information sharing within the network.

The third research objective is to determine the impact of networking capability on the international performance of SMEs. The study analyzes 11 hypotheses through structural equations modeling using LISREL. The hypotheses relate to strong and weak ties, the relative strength of strong ties over weak ties, and each of the eight remaining constructs of networking capability in the study. The research conducts a cross-sectional study by using a sample of SMEs drawn from the telecommunications industry in Ireland.

The study supports the hypothesis that strong ties are more influential on international performance than weak ties. Similarly, network coordination and human-capital resources have a positive and significant association with international performance. Strong ties, weak ties, trust, network initiation, synergy-sensitive resources, relational capability, network learning, and information sharing do not have a significant association with international performance. The results of this study are strong (R2=0.63 for performance as the outcome) and provide a number of interesting insights into the relations between collaboration or networking capability and performance.

This study provides managers and policy makers with an improved understanding of the contingent effects of networks to highlight situations where networks might have limited, zero, or even negative effects on business outcomes. The study cautions against the tendency to interpret networks as universally beneficial to business development and performance outcomes.

The competence-based management approach has shed light on how firms represent open systems that link assets, strategic logic, and capabilities in order to create new competences. Nonetheless, we find that there are too few empirical studies that illustrate how competences are distributed within an industry. The following case study is based on an in-depth analysis of innovation and standards-formation in industrial automation. Two examples, the standard-setting community PROFIBUS and the field bus-related sensor consortium IO-Link are used to analyze partnership arrangements and competence-distribution patterns.

This study is based on qualitative interviews and it uses patent data to judge competences of a standard-setting community's partner firms. Referring to the empirical case of IO-Link, we show how the integrator firms’ competence-leveraging can be significantly affected by new technology approaches that reason a novel deployment of capabilities. It seems that the deployment of resources depends not only on industry segmentation, but also on the firms’ coordinated agenda concerning innovative, new functionality of a given standard. Our patent analysis also mirrors the variety of knowledge within a standard-setting community. Furthermore, we develop a concept of layered business systems, that is, a terminology of knowledge, organizational, and technology domains. Standard-setting communities bundle complementarity assets, they make their member firms create both proprietary and open technology, and they integrate knowledge across industry boundaries.

In order to elaborate the concept of resources (a key component of the well-established resource-based theory of the firm) this paper concentrates on exploring and elaborating the associated concept of competences, in particular distinctive and core competences. This exploration includes an examination of the extant literature, alongside and in parallel with, an extensive body of action research undertaken over 15 years and with 44 top management teams engaged in strategy making. As such the concepts are scrutinized both in terms of their theoretical underpinnings as well as their impact on practice. The research reinforces the view that distinctiveness emerges most powerfully from the identification (or creation) of unique bundles or combinations of competences and that effective and meaningful core competences can be identified from understanding and refining the links between competences and organizational goals. The resultant conceptualization of the systemic competence/goals structure emerges from the interaction of theory and practice.

This study examines the relationship between the competencies of the small business owners and their interest in international activities. Based on a review of the literature and a quantitative empirical survey among 803 newly founded Austrian companies, the chapter identifies the central explanatory variables of internationalization, thus contributing to a theoretically based conceptualization of this phenomenon. Previous conceptualizations of small firm internationalization are extended and specified. This reveals the necessity for a wider inclusion of utilized resources throughout the internationalization process. Moreover, the impact of the structure of social capital of a business owner on the decision to start international activities is examined. The findings elucidate differences between performance drivers with regard to the network, marketing, and technology competence of the small business manager. The study repudiates the Uppsala Model in favor of the “born global hypothesis.”

The management of competences in interorganizational relations refers to two fundamental domains in strategy: competence and co-operation. Thus, it constitutes an area of research which is at one and the same time complex and promising. The synthesis presented in the form of a literature review in this article allows us to look at the current state of approaches in the management of competences in interorganizational relations in the context of the resource-based view and the competence-based management perspective. We then propose a model based on two dimensions: the first is defined by the nature of the relationship (considered to be a space where either co-operation or competition predominates) and the second by the actions taken on the competences in the context of the relationship (oriented either towards creating new competences or leveraging existing ones).