Social Networks and Internationalization of SMEs: The Mediating Role of Market Knowledge and Opportunity Recognition

Document Type : Research Paper


1 Associate Professor, Faculty of Management, University of Tehran, Tehran, Iran

2 M.Sc. in International Business Management, Department of Management, Shahed University, Tehran, Iran


Drawing insight from social network and internationalization theory perspectives, our study develops a conceptual model and test hypothesis using structural equation modeling by Smart PLS software, relying on a sample of 145 Iranian exporter SMEs obtained using a constructed questionnaire. Firstly, firms were placed in 5 categories, based on the classification of the Trade Promotion Organization of Iran (ITPO), to categorize the field of export activity. Then, the sample was selected via simple random sampling method. Values of the research model fitness fit the data well and the model exhibited an acceptable fit. Concerning the research results, the first hypothesis (which predicted that the greater the level of social networks, the higher the internationalization) was not supported by data. Nonetheless, our findings confirmed that social networks have a significant effect on both market knowledge and opportunity recognition in international markets. In addition, the study results confirmed the mediating role of opportunity recognition in the relationship between social networks and internationalization. Finally, we might recommend government institutions and SMEs managers to pay particular attention to the structures and relationships in social networks for developing international business.


Main Subjects

Aghazadeh, H. (2016). Principles of marketology (Vol. 1: Theory). Springer.
Akbar, Y. H., Balboni, B., Bortoluzzi, G., & Tracogna, A. (2017). SME export performance, capabilities and emerging markets: The impact of institutional voids. European Journal of International Management, 11(2), 201-226.
Alayo, M., Maseda, A., Iturralde, T., & Arzubiaga, U. (2019). Internationalization and entrepreneurial orientation of family SMEs: The influence of the family character. International Business Review, 28(1), 48-59.
Alsharif, N., Bhattacharyya, S., & Intartaglia, M. (2017). Economic diversification in resource rich countries: History, state of knowledge and research agenda. Resources Policy, 52, 154-164.
Altnaa, U., Vasa, L., & Neszmelyi, G. I. (2021). The role of network ties on SMEs internationalization process in the developing countries/emerging markets: A comparison between Mongolia, China, and Malaysia. International Journal of Economics & Business Administration, 9(1), 274-291.
Andersen, P. H. (2006). Listening to the global grapevine: SME export managers’ personal contacts as a vehicle for export information generation. Journal of World business, 41(1), 81-96.
Andersson, S., & Evers, N. (2015). International opportunity recognition in international new ventures – a dynamic managerial capabilities perspective. Journal of International Entrepreneurship, 13(3), 260-276.
Arenius, P., & De Clercq, D. (2005). A network-based approach on opportunity recognition. Small Business Economics, 24(3), 249-265.
Bagnaia, S. (2013). The role of knowledge sharing in SMEs’ innovation and internationalization process: A case study: Monnalisa Spa .
Bai, W., & Johanson, M. (2018). International opportunity networks. Industrial Marketing Management, 70 , 167-179.
Bai, W., Johanson, M., Oliveira, L., & Ratajczak-Mrozek, M. (2021). The role of business and social networks in the effectual internationalization: Insights from emerging market SMEs. Journal of Business Research, 129 , 96-109.
Baron, R. A. (2006). Opportunity recognition as pattern recognition: How entrepreneurs “connect the dots” to identify new business opportunities. Academy of management perspectives, 20(1), 104-119.
Basle, N., Tominc, P., & Korez-Vide, R. (2018). The impact of market knowledge on the internationalisation of small and medium-sized enterprises in Slovenia. European Journal of International Management, 12(3), 334-350.
Bianchi, C., & Mathews, S. (2016). Internet marketing and export market growth in Chile. Journal of Business Research, 69(2), 426-434.
Bianchi, C., & Wickramasekera, R. (2016). Antecedents of SME export intensity in a Latin American Market. Journal of Business Research, 69(10), 4368-4376.
Bose, T. K. (2016). Critical success factors of SME internationalization. Journal of Small Business Strategy, 26(2), 87-109.
Brettel, M., & Rottenberger, J. D. (2013). Examining the link between entrepreneurial orientation and learning processes in small and medium‐sized enterprises. Journal of Small Business Management, 51(4), 471-490.
Buckley, P. J., Dunning, J. H., & Pearce, R. D. (1978). The influence of firm size, industry, nationality, and degree of multinationality on the growth and profitability of the World’s largest firms, 1962–1972. Review of World Economics, 114(2), 243-257.
Bužavaitė, M., & Korsakienė, R. (2018). Inter-personal and inter-organizational networks in internationalization of SMEs: A bibliometric analysis and review. Open Economics, 1(1), 94-104.
Calof, J. L., & Beamish, P. W. (1995). Adapting to foreign markets: Explaining internationalization. International Business Review, 4(2), 115-131.
Carter, C. R., Ellram, L. M., & Tate, W. (2007). The use of social network analysis in logistics research. Journal of Business Logistics, 28(1), 137-168.
Castro, I., & Roldán, J. L. (2013). A mediation model between dimensions of social capital. International Business Review, 22(6), 1034-1050.
Cesinger, B., Hughes, M., Mensching, H., Bouncken, R., Fredrich, V., & Kraus, S. (2016). A socioemotional wealth perspective on how collaboration intensity, trust, and international market knowledge affect family firms’ multinationality. Journal of World Business, 51(4), 586-599.
Chen, H., & Chen, T. J. (1998). Network linkages and location choice in foreign direct investment. Journal of International Business Studies, 29(3), 445-467.
Chen, J., & Singpurwalla, N. D. (1996). The notion of “composite reliability” and its hierarchical Bayes estimation. Journal of the American Statistical Association, 91(1996), 1474-1484 .
Chetty, S., & Agndal, H. (2007). Social capital and its influence on changes in internationalization mode among small and medium-sized enterprises. Journal of International Marketing, 15(1), 1-29.
Ciravegna, L., Majano, S. B., & Zhan, G. (2014). The inception of internationalization of small and medium enterprises: The role of activeness and networks. Journal of Business Research, 67(6), 1081-1089.
Clarke, R., Chandra, R., & Machado, M. (2016). SMEs and social capital: Exploring the Brazilian context. European Business Review, 28(1), 2-20.
Dabić, M., Maley, J., Dana, L. P., Novak, I., Pellegrini, M. M., & Caputo, A. (2020). Pathways of SME internationalization: A bibliometric and systematic review. Small Business Economics , 55(3), 705-725.
Eberhard, M., & Craig, J. (2013). The evolving role of organizational and personal networks in international market venturing. Journal of World Business, 48(3), 385-397.
Ellis, P. (2000). Social ties and foreign market entry. Journal of International Business Studies, 31(3), 443-469.
Ellis, P. D. (2011). Social ties and international entrepreneurship: Opportunities and constraints affecting firm internationalization. Journal of International Business Studies, 42(1), 99-127.
European Union Commission. (2003). Commission recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises. official Journal of the European union, 46(L124), 36-41 
Evers, N., & O’Gorman, C. (2011). Improvised internationalization in new ventures: The role of prior knowledge and networks. Entrepreneurship & Regional Development, 23(7-8), 549-574.
Fernhaber, S. A., Gilbert, B. A., & McDougall, P. P. (2014). International entrepreneurship and geographic location: an empirical examination of new venture internationalization . In Location of international business activities (pp. 94-136). Palgrave Macmillan, London
Ferro, L. M., Préfontaine, L., & Skander, D. (2009). How do social networks make a difference in the internationalization of high-tech SMEs? The case of Colombia. The International Journal of Entrepreneurship and Innovation, 10(3), 201-212.
Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable  variables and measurement error. Journal of marketing research, 18(1), 39-50
Forsgren, M. (2017). Theories of the multinational firm: A multidimensional creature in the global economy. Edward Elgar Publishing.
Franco, M., Haase, H., & Pereira, A. (2016). Empirical study about the role of social networks in SME performance. Journal of Systems and Information Technology , 18(4), 383-403.
Gaur, A. S., Kumar, V., & Singh, D. (2014). Institutions, resources, and internationalization of emerging economy firms. Journal of World Business, 49(1), 12-20.
Ghanat-Abadi, F. (2005). Internationalization of small and medium-sized enterprises in Iran [Unpublished doctoral dissertation]. Luleå Tekniska Universitet.
Ghauri, P., Lutz, C., & Tesfom, G. (2003). Using networks to solve export-marketing problems of small-and medium-sized firms from developing countries. European Journal of Marketing, 37(5/6), 728-752.
Gilbert, B. A., McDougall, P. P., & Audretsch, D. B. (2008). Clusters, knowledge spillovers and new venture performance: An empirical examination. Journal of Business Venturing, 23(4), 405-422.
Gregoire, D. A., Shepherd, D. A., & Schurer Lambert, L. (2010). Measuring opportunity-recognition beliefs: Illustrating and validating an experimental approach. Organizational Research Methods, 13(1), 114-145.
Hair Jr., J. F., Hult, G. T. M., Ringle, C., & Sarstedt, M. (2016). A primer on partial least squares structural equation modeling (PLS-SEM). Sage publications.
Hall Jr., E. H., & Lee, J. (2008). Assessing the impact of export performance: A critical analysis of its effect on diversification. Journal of Global Business Management, 4(1), 56-65.
Hånell, S. M., & Ghauri, P. N. (2016). Internationalization of smaller firms: Opportunity development through networks. Thunderbird International Business Review, 58(5), 465-477.
Hayes, A. F. (2017). Introduction to mediation, moderation, and conditional process analysis: A regression-based approach. Guilford Publications.
Henseler, J., Ringle, C. M., & Sinkovics, R. R. (2009). The use of partial least squares path modeling  in international marketing. In New challenges to international marketing. Emerald Group Publishing Limited
Hosseini, S. S., Nikkhah Tekmedash, Y., Karami, A., & Jabarzadeh, Y. (2019). The impact of knowledge management strategy on service innovation performance in private and public hospitals. Iranian Journal Of Management Studies, 12(1), 1-24.
Hsu, K. Y., Fu, H. P., Lin, A. J., & Ou, T. Y. (2020). Factor analysis of SMEs entering foreign markets: The case of Taiwanese SMEs in Vietnam. European Journal of International Management, 14(3), 524-550.
Ibeh, K., & Kasem, L. (2011). The network perspective and the internationalization of small and medium sized software firms from Syria. Industrial Marketing Management, 40(3), 358-367. International trade Centre (2017). Regions, countries and territories.html
Jeong, S. W. (2016). Types of foreign networks and internationalization performance of Korean SMEs. Multinational Business Review, 24(1), 47-61.
Jin, B., & Jung, S. (2016). Toward a deeper understanding of the roles of personal and business networks and market knowledge in SMEs’ international performance. Journal of Small Business and Enterprise Development, 23(3), 812-830.
Johanson, J., & Mattson, L. (1988). Internationalization in industrial systems–a network approach. In: N. Hood & J.-E. Vahlne (eds), Strategies in global competition. Croom Helm .
Johanson, J., & Vahlne, J. E. (1990). The mechanism of internationalisation. International marketing  review.
Johanson, J., & Vahlne, J. E. (2009). The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership. Journal of International Business Studies, 40(9), 1411-1431.
Johanson, M., & Kao, P. T. (2010). Networks in internationalisation. In Reshaping the boundaries of the firm in an era of global interdependence. Emerald Group Publishing Limited .
Jonsson, A., & Elg, U. (2006). Knowledge and knowledge sharing in retail internationalization: IKEA’s entry into Russia. International Review of Retail, Distribution and Consumer Research, 16(2), 239-256.
Karami, M., He, C. X., & Zhengang, S. (2018). Social Ties and Human Capital in Family SMEs’ Internationalization. In Knowledge, Learning and Innovation (pp. 59-73). Springer, Cham .
Kenny, B., & Fahy, J. (2011a). Network resources and international performance of high tech SMEs. Journal of Small Business and Enterprise Development, 18(3), 529-555.
Kenny, B., & Fahy, J. (2011). Smes' networking capability and international performance. In Interfirm Networks: Theory, Strategy, and Behavior. Emerald Group Publishing Limited .
Kim, H. (2017). Emerging market multinationals: The new model of internationalization of firms. Journal of Research in Business and Management, 5(4), 22-31.
Kiss, A. N., & Danis, W. M. (2010). Social networks and speed of new venture internationalization during institutional transition: A conceptual model. Journal of International Entrepreneurship, 8(3), 273-287.
Kontinen, T., & Ojala, A. (2011). International opportunity recognition among small and medium‐sized family firms. Journal of Small Business Management, 49(3), 490-514.
Kraus, S., Niemand, T., Besler, M., Stieg, P., & Martinez-Ciment, C. (2018). The influence of leadership styles on the internationalisation of’born-global’firms and traditionally global-expanding firms. European Journal of International Management, 12(5-6), 554-575.
Länsiluoto, A., Joensuu‐Salo, S., Varamäki, E., Viljamaa, A., & Sorama, K. (2019). Market orientation and performance measurement system adoption impact on performance in SMEs. Journal of Small Business Management, 57(3), 1027-1043.
Lashitew, A. A., Ross, M. L., & Werker, E. (2021). What drives successful economic diversification in resource-rich countries?. The World Bank Research Observer, 36(2), 164-196.
Lavanya, B. L. (2012). Antecedents of Knowledge Sharing. International Journal of Business Insights  & Transformation, 5(2), 30-35.
Lim, W. L., & Xavier, S. R. (2015). Opportunity recognition framework: Exploring the technology entrepreneurs. American Journal of Economics, 5(2), 105-111.
Lin, C. Y. Y., & Zhang, J. (2005). Changing structures of SME networks: Lessons from the publishing industry in Taiwan. Long Range Planning, 38(2), 145-162.
Lindstrand, A., & Hånell, S. M. (2017). International and market-specific social capital effects on international opportunity exploitation in the internationalization process. Journal of World Business, 52(5), 653-663.
Loane, S., & Bell, J. (2009). Clients as a ‘hidden resource’in rapid internationalization. Internationalization, Entrepreneurship and the Smaller Firm: Evidence from Around the World , 91-105. Edward Elgar Publishing.
Luft, G. (2009). Dependence on Middle East energy and its impact on global security. In Energy and environmental challenges to security (pp. 197-210). Springer, Dordrecht.
Ma, R., Huang, Y. C., & Shenkar, O. (2011). Social networks and opportunity recognition: A cultural comparison between Taiwan and the United States. Strategic Management Journal, 32(11), 1183-1205.
Magner, N., Welker, R. B., & Campbell, T. L. (1996). Testing a model of cognitive budgetary participation processes in a latent variable structural equations framework. Accounting and Business Research, 27(1), 41-50.
Magni, D., Chierici, R., Fait, M., & Lefebvre, K. (2021). A network model approach to enhance knowledge sharing for internationalization readiness of SMEs. International Marketing Review, 39(3), 626-652.
Mejri, K., & Umemoto, K. (2010). Small-and medium-sized enterprise internationalization: Towards the knowledge-based model. Journal of International Entrepreneurship, 8(2), 156-167.
Melén, S., & Ghauri, P. (2015). Internationalization of Smaller Firms: Opportunity development through networks. In S. M. Hånell & P. N. Ghauri (Eds.), Internationalization of Smaller Firms: Opportunity Development through Networks. Wiley Online Library.
Musteen, M., Datta, D. K., & Butts, M. M. (2014). Do international networks and foreign market knowledge facilitate SME internationalization? Evidence from the Czech Republic. Entrepreneurship Theory And Practice, 38(4), 749-774.
Nobre, H., & Silva, D. (2014). Social network marketing strategy and SME strategy benefits. Journal of Transnational Management, 19(2), 138-151.
Nowiński, W., & Rialp, A. (2016). The impact of social networks on perceptions of international opportunities. Journal of Small Business Management, 54(2), 445-461.
Oviatt, B. M., & McDougall, P. P. (1994). Toward a theory of international new ventures. Journal of International Business Studies, 25(1), 45-64.
Oviatt, B. M., & McDougall, P. P. (2005a). Defining international entrepreneurship and modeling the speed of internationalization. Entrepreneurship Theory and Practice, 29(5), 537-553.
Oviatt, B. M., & McDougall, P. P. (2005b). The internationalization of entrepreneurship. Journal of International Business Studies, 36(1), 2-8.
Ozgen, E., & Baron, R. A. (2007). Social sources of information in opportunity recognition: Effects of mentors, industry networks, and professional forums. Journal of Business Venturing, 22(2), 174-192.
Pangarkar, N. (2008). Internationalization and performance of small-and medium-sized enterprises. Journal of World Business, 43(4), 475-485.
Park, T., & Rhee, J. (2012). Antecedents of knowledge competency and performance in born globals. Management Decision, 50(8), 1361-1381.
Pinho, J. C. (2016). Social capital and export performance within exporter-intermediary relationships: The mediated effect of cooperation and commitment. Management Research Review, 39(4), 425-448.
Pinho, J. C., & Pinheiro, M. L. (2015). Social network analysis and the internationalization of SMEs: Towards a different methodological approach. European Business Review, 27(6), 554-572.
Pinho, J. C., & Prange, C. (2016). The effect of social networks and dynamic internationalization capabilities on international performance. Journal of World Business, 51(3), 391-403.
Podolny, J. M., & Baron, J. N. (1997). Resources and relationships: Social networks and mobility in the workplace. American Sociological Review, 62(5),673-693.
Prell, C., Hubacek, K., & Reed, M. (2009). Stakeholder analysis and social network analysis in natural resource management. Society and Natural Resources, 22(6), 501-518.
Ranganathan, S., Nakai, K., & Schonbach, C. (2018). Encyclopedia of bioinformatics and computational biology: ABC of bioinformatics. Elsevier.
Ratten, V., & Tajeddini, K. (2018). Women’s entrepreneurship and internationalization: Patterns and trends. International Journal of Sociology and Social Policy, 38(9), 780-793.
Ribau, C. P., Moreira, A. C., & Raposo, M. (2018). SME internationalization research: Mapping the state of the art. Canadian Journal of Administrative Sciences/Revue Canadienne des Sciences de l’Administration, 35(2), 280-303.
Rietveldt, L., & Goedegebuure, R. (2014). The influence of network relationships on the internationalization process of SMEs: A multiple case-study of Ethiopian SMEs                        .Maastricht School of Management. (No. 2014/08). 
Rutashobya, L., & Jaensson, J. E. (2004). Small firms’ internationalization for development in Tanzania. International Journal of Social Economics, 31(2) 159-172.
Salvador, E., Pinot de Villechenon, F., & López Rizzo, H. (2014). European SMEs and the Brazilian market: The key role of social networks. European Business Review, 26(4), 368-388.
Sarasvathy, S. D., Dew, N., Velamuri, S. R., & Venkataraman, S. (2003). Three views of entrepreneurial opportunity. In Handbook of entrepreneurship research (pp. 141-160). Springer, Boston, MA .
Sarasvathy, S., Kumar, K., York, J. G., & Bhagavatula, S. (2014). An effectual approach to international entrepreneurship: Overlaps, challenges, and provocative possibilities. Entrepreneurship Theory and Practice, 38(1), 71-93.
Senik, Z. C., Scott-Ladd, B., Entrekin, L., & Adham, K. A. (2011). Networking and internationalization of SMEs in emerging economies. Journal of International Entrepreneurship, 9(4), 259-281.
Shane, S., & Stuart, T. (2002). Organizational endowments and the performance of university start-ups. Management science, 48(1), 154-170.
Sharma, D. D., & Blomstermo, A. (2003). The internationalization process of born globals: A network view. International Business Review, 12(6), 739-753.
Shih, T. Y. (2017). An empirical study of food and beverage chains’ internationalisation: Advancing intangible resource theory and research. European Journal of International Management, 11(6), 660-687.
Singh, R. P. (2000). Entrepreneurial opportunity recognition through social networks. Psychology Press.
Sobel, M. E. (1986). Some new results on indirect effects and their standard errors in covariance structure models. Sociological methodology, 16 , 159-186.
Song, G., Min, S., Lee, S., & Seo, Y. (2017). The effects of network reliance on opportunity recognition: A moderated mediation model of knowledge acquisition and entrepreneurial orientation. Technological Forecasting and Social Change, 117 , 98-107.
Söderqvist, A. (2011). Opportunity exploration and exploitation in international new ventures: a study of relationships’ involvement in early entrepreneurial and internationalisation events. Svenska handelshögskolan.
Stoian, M. C., Dimitratos, P., & Plakoyiannaki, E. (2018). SME internationalization beyond exporting: A knowledge-based perspective across managers and advisers. Journal of World Business, 53(5), 768-779.
Stoian, M. C., Rialp, J., & Dimitratos, P. (2017). SME networks and international performance: Unveiling the significance of foreign market entry mode. Journal of Small Business Management, 55(1), 128-148.
Styles, C., & Seymour, R. G. (2006). Opportunities for marketing researchers in international entrepreneurship. International Marketing Review, 23(2), 126-145.
Tajeddini, K., Martin, E., & Ali, A. (2020). Enhancing hospitality business performance: The role of entrepreneurial orientation and networking ties in a dynamic environment. International Journal of Hospitality Management, 90, 102605.
Takata, H. (2016). Effects of industry forces, market orientation, and marketing capabilities on business performance: An empirical analysis of Japanese manufacturers from 2009 to 2011. Journal of Business Research, 69(12), 5611-5619.
Tang, Y. K. (2011). The Influence of networking on the internationalization of SMEs: Evidence from internationalized Chinese firms. International Small Business Journal, 29(4), 374-398.
The World Bank (2017). National accounts data from
Tichy, N. M., Tushman, M. L., & Fombrun, C. (1979). Social network analysis for organizations. Academy of Management Review, 4(4), 507-519.
Toyne, B. (1989). International exchange: A foundation for theory building in international business. Journal of International Business Studies, 20(1), 1-17.
Udani, A. V., Chelliah, S., & Akhtar, S. (2016). Conceptualization of Network for Internationalization of Garments SMES in Gujarat’. International Journal of Business Management and Economic Research, 7(5), 763-768.
Vinzi, V. E., Trinchera, L., & Amato, S. (2010). PLS path modeling: from foundations to recent developments and open issues for model assessment and improvement. Handbook of partial  least squares, 47-82.
Wilden, R., & Gudergan, S. P. (2015). The impact of dynamic capabilities on operational marketing and technological capabilities: Investigating the role of environmental turbulence. Journal of the Academy of Marketing Science, 43(2), 181-199.
Yiu, D. W., Lau, C., & Bruton, G. D. (2007). International venturing by emerging economy firms: The effects of firm capabilities, home country networks, and corporate entrepreneurship. Journal of International Business Studies, 38(4), 519-540.
Yli-Renko, H., Autio, E., & Tontti, V. (2002). Social capital, knowledge, and the international growth of technology-based new firms. International Business Review, 11(3), 279-304.
Zain, M., & Ng, S. I. (2006). The impacts of network relationships on SMEs’ internationalization process. Thunderbird international Business Review, 48(2), 183-205.
Zhou, L. (2007). The effects of entrepreneurial proclivity and foreign market knowledge on early internationalization. Journal of World Business, 42(3), 281-293.
Zhou, L., Wu, W. P., & Luo, X. (2007). Internationalization and the performance of born-global SMEs: The mediating role of social networks. Journal of International Business Studies, 38(4), 673-690.