Helping SMEs Go Global Through Networking

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Helping SMEs Go Global Through Networking

• Dr Shameen Prashantham
• -Nasscom Delhi, 10 Feb 2006-

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Networks and Internationalization

• Firm resources especially knowledge are vital
  drivers of international growth
• However, external sources of resources are
  crucial too, especially for SMEs
• Network relationships yield social capital

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Social Capital

• The sum of the actual and potential resources
  embedded within, available through, and derived
  from the network of relationships possessed by an
  individual or social unit (Nahapiet and Ghoshal,
  1998).

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Internationalization A Model
Market Knowledge
Social Capital
Technological Knowledge
Prashantham (2005), Journal of International
Entrepreneurship
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This Presentation

• Not a How to checklist
• Rather, some issues to provoke thought
• Draws on a unique research base
• Survey of about 100 Indian software SMEs
• Case-studies of 4 software SMEs in Bangalore,
  over 3 years
• Ongoing exploratory research on Scottish software
  SMEs

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Networks Some Issues

• Leverage
• Utilizing, not merely having, relationships
• Limitations
• Balancing between direct (business) and indirect
  (learning) benefits
• Location
• Recognizing valuable local relationships

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• Leverage

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Relationship vs. Resourcefulness

• Relationship
• Extensive relationships
• Close interactions
• Mutual trust
• Highly reciprocal
• Opened new doors

• Resourcefulness
• Large amount of information
• A variety of useful information
• In-depth information
• Access to information sources
• Timely information

• Relationship strength/quality necessary but
  not sufficient

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Leveraging Social Capital
Could do better?
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What Kind of Networker is Your Firm?
Prashantham (2006), International Journal of
Entrepreneurship
Innovation Management
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• Limitations

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The Story of One Firm

• 2002
• All business from US
• Entrepreneurs contacts
• 2005
• All business from Europe
• No previous contacts
• I had only so many contacts who could give me
  only so much business

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Different Benefits

• Direct
• Business opportunities
• Indirect
• Market learning
• Technological learning
• Changes over time
• Direct at early stages indirect at later stages
• Social capitals limited shelf-life (?)

• Learning (indirect) outcomes more sustainable
  over time

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• Location

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Dimensions of Social Capital

• Location
• Overseas/foreign most attention paid here
• Local
• Social homogeneity
• Bonding Similar actors (e.g. ethnicity, age,
  gender) good for trust
• Bridging Dissimilar actors good for novelty of
  information and ideas
• Combining the dimensions
• Local social capital mostly bonding
• But what about MNC subsidiary ties(?)

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Social Capital Types
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Local but Bridging Ties

• MNC subsidiary ties (e.g. Sun India), potentially
  useful
• Novelty particularly relevant in terms of growth
• Partnership / Collaboration (e.g. new product
  development)
• Scottish Technology and Collaboration (STAC)
• Architecting
• Brokering
• Coaching

• Are there valuable networks right under your
  nose?

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Conclusions

• Utilizing networks is not easy
• Not an easy way out no substitute for
  internal capability-development indeed, networks
  could facilitate this
• Summary take-away networking as
• Deliberate (leverage)
• Realistic (limitations)
• Proximate (location)
• ltshameen_at_gsb.strath.ac.ukgt

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