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The impact of institutional impediments and information and knowledge exchange on SMEs’ investments in international business relationships
KTH, School of Architecture and the Built Environment (ABE), Centres, Centre for Banking and Finance, Cefin.
KTH, School of Architecture and the Built Environment (ABE), Centres, Centre for Banking and Finance, Cefin.
2010 (English)In: International Business Review, ISSN 0969-5931, Vol. 19, no 6, 548-561 p.Article in journal (Refereed) Published
Abstract [en]

This paper investigates the impact of institutional impediments and of knowledge and information exchange in international business relationships on small and medium-sized enterprises (SMEs) specific investments in international business relationships and the outcome of such investments on the performance of SMEs. Using a sample of 255 internationalising SMEs, we develop and test three hypotheses with the linear structural relations (LISREL) model. The analysis shows that institutional impediments and the exchange of knowledge and information in business relationships lead to increased relationship specific investments (RSIs). Furthermore, such investment results in increased performance for the internationalising SME. Research commonly uses micro or macro properties of institutions to explain how institutional differences affect international business; however, limited research has been devoted to investigate how institutional differences, experienced through interaction in business relationships, affect the business relationship. This paper helps to close this gap by showing the effects of institutional differences on a relational level.

Place, publisher, year, edition, pages
2010. Vol. 19, no 6, 548-561 p.
Keyword [en]
Information and knowledge exchange; Institutional impediments; International business relationships; Relationship specific investments (RSI); Small- and medium-sized enterprises (SMEs); Structural equation modeling (SEM)
National Category
Other Mechanical Engineering
Identifiers
URN: urn:nbn:se:kth:diva-14171DOI: 10.1016/j.ibusrev.2010.04.002ISI: 000283612100003Scopus ID: 2-s2.0-77956910140OAI: oai:DiVA.org:kth-14171DiVA: diva2:331355
Note
QC 20100722Available from: 2010-07-22 Created: 2010-07-22 Last updated: 2012-03-21Bibliographically approved
In thesis
1. New insights on financing and business development of start-up firms and SMEs
Open this publication in new window or tab >>New insights on financing and business development of start-up firms and SMEs
2009 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This thesis aspires to advance understanding of how start-up firms’ and small and medium sized firms’(SMEs) network relationships affect acquisition of financing and information necessary to achieve firmbusiness development through the exchange in business relationships. It contributes to research on socialstructure by clarifying how network relationships that facilitate exchange have a positive effect on firmbusiness development, defined as subjective and objective enhancement of firm performance.

The empirical setting consists of case studies in entrepreneurial start-up firms and of quantitative researchin SMEs. The findings show that in the start-up phase of firm development, network relationships that areembedded in social attachment and shared cognitive schemes constitute means to acquire informationcontaining referrals to new business partners, thus affecting the structural development of start-ups firms’business network. Findings further show that relationships to banks are important in order to fund thisstructural development. The thesis also shows the effects of banks, as institutional actors, on SMEs’investments in international business relationships and the effects of such investments on SMEs’ businessdevelopment. It is shown that relationships to domestic and local banks in different ways affect SMEs’specific investments in international business relationships. A local bank relationship decreases the SME’srelationship specific investments, while a domestic bank relationship increases relationship specificinvestments. There is however an indirect positive effect of a local bank relationship on the SME’srelationship specific investments, mediated by a positive effect of the SME’s relationships to other localinstitutional actors. The results further show that increases in relationship specific investments promoteSMEs’ business development. Findings made in this thesis also show that institutions, experiencedthrough interaction in the international business relationship, positively affect relationship specificinvestments and the performance enhancement of such investments. A general conclusion drawn fromthe findings presented in this thesis is the relevance of a type of actor - actors that facilitate exchangesamong firms and their business partners who are, or wish to be, independent - to the businessdevelopment of start-ups and SMEs.

This thesis challenges banks to increase cognitive alignment with customers of start-up firms and toconsider corporate customers in view of their business relationships and network structure. Theseapproaches are suggested to facilitate bank’s assessment of firm creditworthiness.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2009. 60 p.
Series
TRITA/KTH/CEFIN-DT, ISSN 1654-9376 ; 2009:02
Keyword
start-ups, SMEs, banks, financing, information, business development, social structure, net work relationships
National Category
Production Engineering, Human Work Science and Ergonomics
Identifiers
urn:nbn:se:kth:diva-11009 (URN)978-91-976270-7-8 (ISBN)
Public defence
2009-09-11, Sal F3, Lindstedtsvägen 26, KTH, Stockholm, 10:00 (English)
Opponent
Supervisors
Note

QC 20100722

Available from: 2009-09-09 Created: 2009-09-07 Last updated: 2013-11-11Bibliographically approved

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