The role of business and social networks in the effectual internationalization: Insights from emerging market SMEs

Abstract

This study investigates the performance implications of the distinct mechanisms represented by business and social networks in the effectual internationalization. Our hypotheses consider the influence of both network types on firms’ decision-making during internationalization, including the use of effectuation’s overarching principle of non-predictive strategy and the analysis of affordable losses as preferred criterion for selecting between action paths. We test our structural model on a sample of 469 SMEs from Brazil, China, and Poland. The analysis demonstrates that the knowledge circulating in the firms’ business networks negatively moderates the relationship between non-predictive strategy and affordable losses, while social networking mediates the relationships between both non-predictive strategy and affordable losses, on the one hand, and international performance, on the other.