Social Capital and Indian Micromultinationals

Abstract

‘Micromultinationals’ are small to medium‐sized enterprises (SMEs) that use higher‐commitment entry modes beyond exporting. The study extends the micromultinational notion by addressing the question: what enables some internationalizing SMEs to become micromultinationals rather than pure exporters? Adopting a connectionist and bonding perspective, its focus is on cross‐border coethnic ties as a valuable source of social capital. A survey of 102 Indian software SMEs indicates that higher stocks of cross‐border coethnic social capital facilitate the adoption of higher‐commitment entry modes by micromultinationals. Also, micromultinationals have a significantly higher degree of internationalization (the percentage of sales from foreign sources) than pure exporters.

Internationalisation of family small and medium sized enterprises: The role of stewardship orientation, family commitment culture and top management team

“…However, the current model lends support to theoretical considerations and empirical findings from previous studies (e.g. Zahra et al, 2008 experience, and ability to work in different economic systems (Prashantham, 2011;Prashantham & Dhanaraj, 2010). In such circumstances family commitment culture could have a positive relationship with degree of internationalisation as their families might be spread out throughout the world and their businesses might follow suit.…”

Organisational-Level Attributes of Micro-Multinationals. The Evidence From European SMEs

“…Entry mode studies investigate the antecedents and consequences of a firm's choices posed by possible arrangements for participating in a foreign market [Hennart, 2014]. Despite a large body of literature, some gaps remain, including analyses of the modes of entry chosen by SMEs [Prashantham, 2011]. More specifically, the majority of studies on SME internationalisation focus on exporting.…”

“…Dimitratos et al [2014], relying on a sample of 116 internationalized Chilean SMEs, found that networking (with both domestic and international partners), as well as risk-taking propensity, increased the probability of a firm becoming a mMNE. Prashantham [2011], using data from 102 Indian software firms concluded that cross-border co-ethnic ties increase the likelihood that a SME become a mMNE, and that mMNEs have a significantly higher level of internationalisation (measured with the foreign sales to total sales ratio) than exporters.…”

“…Micro-multinationals (mMNEs) are defined as "small-and medium-size firms that control and manage value-added activities through constellation and investment modes in more than one country" [Dimitratos, Johnson, Slow, Young, 2003, p. 165] or "small to medium size enterprises that use higher commitment entry modes beyond exporting" [Prashantham, 2011]. Their competitive advantage over traditional, large MNCs is based on agility: mMNEs are smaller, less complex, with fewer levels of decision-making [HSBC, 2016].…”

Transnational entrepreneurship, social networks, and institutional distance

“…Social networks are important in the internationalization process of both large and small firms (Chetty and Blankenburg Holm, 2000). The advantages embedded in social ties are often referred to as social capital which can be considered TEs' most effective resource (Acquaah, 2007;Prashantham, 2011). Social embeddedness is defined as "the density and strength" of an immigrant's social ties within their local ethnic community and their homeland (Nielsen and Riddle, 2007, p. 5).…”