Title: Profitable SME internationalisation: the influence of cross-relational and relationship-specific network competence

Authors: Lasse Torkkeli

Addresses: Lappeenranta University of Technology, School of Business, Skinnarilankatu 34, P.O. Box 20, FI-53851 Lappeenranta, Finland

Abstract: Small- and medium-sized enterprises (SMEs) often internationalise to enhance their long-term survival and profitability. Their abilities to develop business network relationships with supply chain and other business partners have also been found to have a beneficial effect on their international success. However, the influence of such network competence on their long-term profitability has received less attention. The aim of this study is to do so, by examining how the network competence of SMEs influences their internationalisation propensity and subsequent profitability. Using a sample of 298 Finnish SMEs across five industries, the results indicate that relationship-specific network competence is associated with increased likelihood of first foreign market entry, whereas cross-relational network competence is positively related to increased profitability among internationalised SMEs. Thus, internationalising SMEs benefit from both types of network competence, but their importance depends on the phase of the internationalisation process and on the strategic goals of the firm.

Keywords: network competence; relationship-specific competence; cross-relational competence; SME internationalisation; SMEs; profitability; business networks; procurement management; small and medium-sized enterprises; long term survival; SCM; supply chain management; business partnerships; business relationships; networking; Finland.

DOI: 10.1504/IJPM.2014.064972

International Journal of Procurement Management, 2014 Vol.7 No.6, pp.677 - 694

Published online: 11 Oct 2014 *

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