The Relationship Between Timing, Speed, and Performance in Foreign Market Network Entry

Abstract

The purpose of this article is to examine the performance consequences of an early and rapid foreign network entry process. We develop a theoretical model that uses theories on first mover advantage and capability development as mechanisms to explain the relationship between the timing and speed of entering the network and SME performance in the network. The theoretical model is tested with a dataset collected on-site at 198 SMEs. The results show that earlier network entry positively affects performance and that the speed of relationship development in the network entered has a curvilinear (inverted U-shaped) effect on SMEs’ performance. Although the extant literature recognizes that firm performance is affected by the degree of insidership reached in foreign business networks, little is known about the performance effects of the timing and the speed of entering the network. Our findings suggest that managers of exporting SMEs should move first into new networks to give themselves time to grow slowly in the foreign market network to mitigate diseconomies of time compression.