Examining the role of networking capability in small and medium firm internationalization

While research on SME internationalization has increased, there remains a lack of relevant theory on the SME internationalization process. The literature reports that small firms overcome their resource poverty-based constraints to internationalization by developing network relationships. Networking enables SMEs to acquire much needed internationalization process knowledge, and knowledge for the development of innovative products and services for this internationalization. However, networking activity has not yet been conceptualized and measured as a competitive capability in internationalization research. Drawing on the capability-based theory of competitive strategy, this paper conjectures that internationally entrepreneurial SMEs build and nurture distinctive networking capabilities, enabling them to acquire new knowledge. These learning capabilities enable them to pursue innovation thereby facilitating nternationalization. Data from Australian firms largely supports the conceptual framework. Implications for theory and practice are presented.

The Hierarchical Structure of the Firm: A Geometric Perspective

This paper incorporates hierarchical structure into the neoclassical theory of the firm. Firms are hierarchical in two respects: the organization of workers in production and the wage structure. The firm’s hierarchy is represented as the sector of a circle, where the radius represents the hierarchy’s height, the width of the sector represents the breadth of the hierarchy at a given height, and the angle of the sector represents span of control for any given supervisor. A perfectly competitive firm then chooses height and width, as well as capital inputs, in order to maximize profit. We analyze the short run and long run impact of changes in scale economies, input substitutability and input and output prices on the firm’s hierarchical structure. We find that the firm unambiguously becomes more hierarchical as the specialization of its workers increases or as its output price increases relative to input prices. The effect of changes in scale economies is contingent on the output price. The model also brings forth an analysis of wage inequality within the firm, which is found to be independent of technological considerations, and only depends on the firm’s wage schedule.

Actor-network theory as a theoretical lens and research strategy for investigating firm internationalisation

Totally generalisable theories of firm internationalisation in the post-industrial era of international business, where national barriers are becoming less significant and technology becoming more influential, appear to be illusory. Stepwise or evolutionary models that predict gradual internationalisation are under challenge from empirical evidence of rapid internationalisation such as the phenomenon of the “born global” firm. Similarly, equilibrium models such as the eclectic paradigm have been criticised for being static and unable to account for process and path dependency. In this paper, the information and knowledge assumptions implied in theories of firm internationalisation are outlined and discussed. From this discussion, we suggest that actor-network theory, with its balance between description and explanation, may be a useful theoretical and empirical tool for investigating the complex and heterogeneous process of firm internationalisation whilst creating opportunities for further theory building.