Local horizontal network membership for accelerated global market reach

Abstract

Purpose The purpose of this paper is to explain how some born global firms can leverage the rich social capital in their local (home country) horizontal network for accelerated international market entry and growth. Horizontal networks warrant separate attention from their vertical counterparts, which, along with those focussed on external international contexts, dominate most network studies in the realm of born global research. Design/methodology/approach The study utilises a multi-level qualitative approach in the study of a multi-firm population of animators in Ireland that, due to the small domestic market for their product, needed to pursue global customers from inception. The case study domain was purposely selected as a critical exemplar of a local horizontal network operating in a highly globalised industry. The authors collected data through in-depth interviews with 16 company founders. This primary interview data were complemented by interviews with staff at the apposite industry association and triangulated with secondary data on the local and global industry conditions, members’ international successes and awards. Findings The results demonstrate how active membership of a local horizontal network can be leveraged for the acquisition of international market knowledge and customers for born global ventures. This arises from the sharing of collective market knowledge and communal global customer information within the network to mutual benefit. Originality/value Although limited by the specific conditions in this highly globalised, non-competitive industry context, this study is unique in that it finds that cooperative interpersonal and inter-firm relationships embedded in a local horizontal social network, and mediated in part by an institutional support actor, emerge as important levers for a born global’s accelerated acquisition of foreign market knowledge and of global customers.

Firms' use of organizational, personal, and intermediary networks to gain access to resources for internationalization

“…This provides support for the assumption that market and reputational resources can be accessed through internationally active intermediary networks, such as Business Sweden and Swecare. Our findings differ from those found by Belso‐Martinez (), Kontinen and Ojala (), and Zhang, Ma, and Wang (), where firms did not use the support from intermediary networks, but are in line with Chetty and Blankenburg‐Holm (), Hånell and Ghauri (), and Ryan et al () who found that intermediary networks were important to identify and develop opportunities in foreign markets. The results indicate that intermediary networks need to build up an international network and reputation to be useful for firms' internationalization.

Proposition 1 Firms' relationships with internationally active intermediary networks have a positive influence on access to market, human, and reputational resources that facilitates firms' internationalization .

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“…Reputational resources include, among other factors, credibility, trust, and recognition (Tolstoy & Agndal, ). These resources have an important influence on the outcome of internationalization because a firm's reputation influences its ability to attract foreign customers (Galbreath, ; Ryan, Evers, Smith, & Andersson, ). Turnbull, Ford, and Cunningham () found the credibility and reputation of one or more actors rub off onto other actors in the same network.…”

“…In many countries and regions, policy makers encourage and provide support for the international growth of firms through government‐funded EPOs (Ahmed, Mohamed, Johnson, & Meng, ; Francis & Collins‐Dodd, ; Leonidou, Katsikeas, Palihawadana, & Spyropoulou, ; O'Gorman & Evers, ; Smith, Ryan, & Collings, ). EPOs are often established with the intention to enhance the competitive position of one or several domestic industries, particular regions, or a whole country (Boter & Lundström, ; Diamantopoulos, Schlegelmilch, & Katy Tse, ; Ryan et al, ). In this study, two government funded EPOs in Sweden are in focus, Business Sweden (BusSwe), which deals with all sectors, and Swecare, which focuses on the health‐care and life sciences sectors.…”

“…However, there is conflicting evidence as to whether intermediary networks and EPOs do in fact facilitate internationalization (O'Gorman & Evers, ). For example, Chetty and Blankenburg‐Holm (), Ellis (); Hånell and Ghauri (), and Ryan et al () found the intermediary network has facilitated firms' internationalization, while Belso‐Martinez () and Kontinen and Ojala () found intermediary networks were insignificant for firms' internationalization. According to our review of the literature, there is no comprehensive study that has focused on which type of network that is useful for providing which types of resources, which is the focus of this study.…”

“…Both Business Sweden and Swecare are partly owned by the Swedish state, which means that firms using their services could take advantage of Sweden's good reputation in foreign markets. Intermediary networks, which are present on international markets, were instrumental in bridging different networks (Burt, ; Ryan et al, ; Smith et al, ). In contrast with the findings for organizational networks, the study found that firms are not likely to access technical resources through intermediary networks or international networks.…”