Trade Shows and SME Internationalisation: Networking for Performance.
| Verfasser | Gerschewski, Stephan |
| Posten | RESEARCH ARTICLE |
1 Introduction
The study of small firm internationalisation has captured increased attention in the literature since the 1990s. This has been evident by the substantial growth of studies, accruing to a large body of knowledge regarding internationalisation processes of international, small and medium-sized enterprises (ISMEs) (Ryan et al. 2019). Due to a lack of resources and the small size of ISMEs, a key rationale is that the dynamics of their firms' internationalisation processes often differ considerably from large multinational enterprises (MNEs) (Cho and Lee 2018; Ojala et al. 2018). One such difference relates to their companies' higher dependency on and usage of their business and social networks for their firms' international development and growth (Jeong et al. 2017). Studies on the entrepreneurs' personal social and business networks in small firm internationalisation have recently become more numerous and popular, especially in academia (e.g., Crick and Spence 2005).
Prior research has indicated that the international growth and expansion of SMEs have relied on their dependency to leverage the needed foreign market knowledge and resources through their respective network relationships (e.g., Jeong et al. 2017; Ryan et al. 2019). Johanson and Vahlne (2009) expanded the orginal Uppsala model of internationalisation by including the role of business networks where the internationalising company is interdependent with and integrated in wider foreign business networks. Inter-organisational networks can support ISMEs to reduce the liabilities of foreignness (Hymer 1976). Without the firm's managerial proactiveness in mobilising their networks for resources, international growth and market expansion would be generally deemed problematic (Evers 2011; Karra et al. 2008).
Networks in the company's have an important function in the internationalisation process in the 'network model of internationalisation' (Johanson and Mattsson 1988). The model argues that SMEs tend to internationalise through business networks and operate in an industrial network setting with different actors being connected to each other. Industrial networks usually consist of social and business relationships across vertical and horizontal actors, including customers, and other stakeholders (Axelsson and Easton 1992; Ryan et al. 2019).
Despite the high frequency of network studies in understanding SME internationalisation, we know little about the role of networks in predicting the performance of ISMEs (Jin and Jung 2016; Zain and Ng 2006). Less is know about how networks are created for access into foreign markets (Johanson and Vahlne 2009; Measson and Campbell-Hunt 2015) and the actual forum and nodes where such networking development, connections and exchanges occur (Ryan et al. 2015). The personal and social nature of forming and building relationships indicate that spatial proximity is important to develop network relationships (Evers and Knight 2008). Trade shows are generally considered a key component of the marketing for SMEs (Rinallo et al. 2016), and trade fairs can act as temporary industry clusters in an intensified form by hosting industrial networks for a specified, limited time (Maskell et al. 2006).
Participating in trade shows is an important mechanism to acquire and develop business networks (Harris and Wheeler 2005; Measson and Campbell-Hunt 2015). Few studies have noted the importance of trade shows for small firm internationalisation providing a temporary, but critical industry node for networking, thus going beyond a firm's traditional selling and commercial activities (Ryan et al. 2015). In such network forums, knowledge, although limited, has indicated that trade shows allow actors to build and strengthen social networks to accelerate the internationalisation process (Evers and Knight 2008). However, the literature has generally scarcely addressed the potential performance outcomes of networking activities at trade shows (Tafesse and Skallerud 2017).
In this study, we build on these research gaps and investigate how trade shows may influence the performance of ISMEs. The network model of internationalisation (e.g., Johanson and Mattsson 1988, 1992) provides the conceptual basis to examine the impact of network development at trade shows on ISMEs' performance. We further leverage theoretical insights from Johanson and Vahlne's (2009) developed Uppsala perspective on business networks in firm internationalisation.
In addition, we draw on extant studies positing that access to vital resources for international performance is driven by network mobilisation brought about by proactiveness as one component of entrepreneurial orientation (Covin and Slevin 1989). We, thus, examine the impact of proactiveness on the network development of ISMEs at trade shows. To address these research objectives, we conduct a survey of 229 Australian and New Zealand ISMEs, operating in different industry sectors. Further, in response to recent calls in the literature regarding the notion of export and internationalisation readiness (Gerschewski 2017; Tan et al. 2007, 2018), we examine the post-internationalisation stage whereby we specifically investigate the firms' initial foreign market entry and internationalisation process, covering the initial first 5 years of firm internationalisation.
2 Literature Review
2.1 Trade Shows and SME Internationalisation
Trade shows are regular events, where a large number of companies are able to present and 'showcase' their main products and services (Kirchgeorg et al. 2010). Trade shows can provide opportunities for firms to increase their global reach and exposure, to advertise their products and services, and to establish new business relationships and enable efficient knowledge exchange with key stakeholders (Brown et al. 2017; Evers 2011; Evers and Knight 2008).
Trade shows are generally viewed favourably and positively by firms, which are already 'ready to export' (Wilkinson and Brouthers 2000). Axinn (1988) indicated that trade show attendance yields an increase in export sales, thus often resulting in unsolicited orders from new customers and clients. Wilkinson and Brouthers (2006) found that trade show attendance can lead to superior export performance.
2.2 Conceptual Model
The network view (Johanson and Mattsson 1988) provides the key theoretical basis for this study. The model argues that firms depend on assets and resources that other companies control, and acquire access to network resources via a specific position in the focal networks. The firm's knowledge acquisition is mainly dependent on the establishment of international networks and the inter-dependencies among the actors in the business, industrial, and social networks (e.g., 576
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Andersson et al. 2018; Axelsson and Easton 1992; Johanson and Mattsson 1988). The model states that company survival is generally dependent on establishing networks during the internationalisation process (Johanson and Vahlne 2003). A company enters foreign markets by developing networks in new international markets (Johanson and Mattsson 1988), e.g., establishing new relationships with stakeholders of the firm (e.g., customers, suppliers, etc.) (Johanson and Vahlne 2003). After attaining a foothold position in a network, the company moves to the penetration phase, where it develops relationships and increases resource commitments in markets. Thus, firms start learning and establish trust and commitment, which are key to succeed in international markets. The integration phase signals greater global reach and a higher degree of internationalisation, in terms of the competitive position in international markets (Chetty and Holm 2000).
Johanson and Vahlne (2009) indicate that networks between organisations are instrumental in influencing international market selection and foreign market entry mode, identifying two preconditions for firm internationalisation. The first is attaining 'insidership' within an established network which is pertinent to a firm's internationalisation process. Industrial markets are generally considered as networks of relationships, where companies tend to be linked to each other, thus rendering them 'insiders' in the relevant network(s) for successful internationalisation. If they remain unconnected to this network, there is a liability of outsidership. Liability of outsidership can occur when a firm's challenges in internationalisation are connected to relationship- and network-specificity and less to country-specificity. Thus, the firm does not necessarily know who the stakeholder are, and how they may be connected to each other. Second, these relationships are critical sources of acquiring learning where knowledge is accrued from these relationships about foreign markets. Such relationships are generally built upon trust and commitment. Thus, an extensive network of relevant business relationships equips firms with improved knowledge levels (Kogut 2000). We argue in our study that trade shows can serve as a key forum to facilitate the entry and development of the firms linking them to a relevant network of relationships comprising valuable business and social networks for superior firm performance. We also contend that entrepreneurial proactiveness, a component of entrepreneurial orientation (EO) (Covin and Slevin 1989), is an important antecedent for our understanding of how networks at trade shows are utilised by ISMEs for positively contributing to their firm performance. We argue that trade shows are particularly pertinent to the extension phase of internationalisation where network relationships with customers, distributors, agents, and suppliers are formed and developed as the company is entering a new foreign market. Thus, the notion of 'proactiveness' becomes important in that a proactive approach can facilitate the establishment and maintenance of network relationships with key...
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