Networking responses to different levels of institutional void: A comparison of internationalizing SMEs in Egypt and the UK

Abstract

This paper reports a comparative qualitative study of how decision-makers in internationalizing SMEs respond to relevant institutions in their domestic environment through networking activity. Twenty SMEs are compared respectively from a developing economy (Egypt) and a developed economy (UK). The two countries contrast both in the effectiveness of their institutional support for SMEs and in their cultural norms towards network relationships. Substantial differences are found between the two national samples in SME decision makers' networking behaviour in response to specific institutional conditions. The links between institutional conditions, national cultural norms and SME networking responses are explicated in a new theoretical model.

Success through Trust, Control, and Learning? Contrasting the Drivers of SME Performance between Different Modes of Foreign Market Entry

“…Not surprisingly, leveraging foreign networks to obtain access to specific market knowledge or local marketing and sales capabilities is vital for SMEs' foreign market success [33,106]. Our results thus seem to corroborate those of Narooz and Child [61], who found that learning from their network partners helps SMEs fill the institutional voids many Arab markets suffer from. Second, by learning about the foreign party, SMEs pick up vital information regarding the foreign party's norms, values, perceptions, and ways of conducting business [20].…”

“…Secondly, SMEs may benefit from institutional support, such as governments providing financial and informational resources to promote SME business development and foreign trade [59,60]. However, a recent study by Narooz and Child [61] compared processes of internationalization in Egypt and the United Kingdom and found that particularly developing economies frequently suffer from institutional voids. Specifically, the authors highlight how SMEs in developing economies have to deal with weak institutional contexts that are characterized by an inefficient enactment of laws and regulations, prevalent corruption and bureaucracy, and limited infrastructure.…”

“…In fact, numerous studies have demonstrated networks and particularly the knowledge exchanged through networks to have a positive impact on SME internationalization and foreign market success (for a review, see [104,105]). Moreover, Narooz and Child [61] found that learning from their network partners may even help SMEs to fill the institutional voids many Arab markets suffer from. In other words, when SMEs lack local knowledge, the probability of success largely depends upon the parties that make up their foreign networks and that can provide the SME with much needed access to downstream resources, such as specific market knowledge or local marketing and sales capabilities [33,106].…”

“…Over time, SMEs' interaction with foreign parties leads to an accumulation of knowledge and enhances their ability to refine existing and use new information. Hence, learning has been found to be an important driver of innovativeness and performance [129], especially in Arab markets where conditions differ greatly from those of Western SMEs domestic environments and psychic distance is consequently high [61].…”

SME Internationalization: Investigating Antecedents and the Effect of Organizational Capabilities on Strategy in the German MedTech Industry

“…National export-promotion programs can be seen as drivers of organizational resources and capabilities with effects on strategy, competitive advantage, and performance. Narooz and Child [46] stated substantial differences around the institutional support for SMEs and in their cultural norms towards network relationships by questing twenty SMEs from developing as well as from developed economies. The survey demonstrates a lack at some SME decision makers' networking behavior in response to specific institutional conditions.…”