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S-9735-PE

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Published by: DaniHasan on Oct 16, 2013
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Networks as facilitators for the Internationalization process of Wine Businesses
Tina Gruber-MueckeJohannes Kepler University of LinzDepartment of Entrepreneurship and Organisational DevelopmentFreistaedterstrasse 315/1, A-4040 Linztina.gruber-muecke@jku.at
Conference Topic areas:
Entrepreneurship and family business, International strategies and practice
 
Abstract
This paper analyses the internationalization process of family businesses in the wine businessindustry. Based on a survey from Austrian small firms in the wine business industry, theimpact of resources drawn from private and professional networks as facilitators for theinternationalization process is discussed. The findings elucidate differences betweennetworking competencies of the wine business owners. These differences are interrelated withthe internationalization process (in particular the export activities) of the company. The studyrepudiates the Uppsala Model in favour of the „born global hypothesis“ for companies after the completion of the business succession process.
Key words:
resource based theory of the firm, networking capabilities, exporters, born global, wine business, international performance
1. Introduction
The phenomenon of small firms that commence international activities increasingly early intheir existence has elucidated a clear shift in theory building in the field of InternationalEntrepreneurship research. Recent empirical evidence suggests that the networks of theentrepreneur have the unique ability to impart growth and survival to companies (Arenius,2002). More precisely Autio stated that the resources drawn from social capital in aninternational context could be discussed in terms of an entrepreneurial network that becomes a base for international growth of new ventures (Autio, 2006), suggesting a strong reciprocalrelationship between this type of entrepreneurship and social capital.Until now, researchers (Oviatt & McDougall, 2005) have found that the pattern of internationalization in technology-based industries differs from that of traditional companiesconcerning choice of markets and entry modes, which tend to become international in a slowand incremental manner. Although some empirical evidence for the internationalization of thewine business industry exists (Graves & Thomas, 2006), the question of the impact of socialcapital on the pattern of internationalization has not yet been analysed. Therefore, the primary purpose of this paper is to provide a detailed account of how internationalization was inspired,adopted and managed in companies in the Wine Business Industry, in an attempt to locate thedomain and distinctiveness of social capital. The significance of focusing on social capital isdue to its unique role as the single common factor in all the three areas of wine business,international new ventures and high-technology companies.This article differs from other empirical work on internationalization in SMEs in three ways.Whereas previous studies in the wine business field focused on stages of theinternationalization process, the author discusses the internationalization process as a result of strategic management decisions and looks for the impact of resources from private and professional networks as facilitators for the internationalization process. Third, the author extends the theory building for International Entrepreneurship by integrating the concept of  business succession and analysing the impact of business succession on theinternationalization process.
 
By so doing, the author addresses several hitherto unexplored questions: Can resources drawnfrom private and professional networks embedded in international relationships be leveragedfor relationship benefits in a similar manner as in domestic contexts? What kind of impact dothese resources have on the growth and performance of the firms after the business succession process has been completed?
2. Theoretical Framework 
 Numerous theories have been presented to explain why small and medium enterprises engagein international operations. Three basic issues in the literature helped the author frame thetheoretical background for this research.1)The first issue concerns the two schools of thought on internationalization which can be distinguished. The underlying theoretical perspectives on internationalizationincluded in this article are the Uppsala Internationalization Model and theInternational-New-Venture Approach. The main premise behind the Uppsalainternationalization model (Johanson & Vahlne 1977, 1990) is that the process of internationalization is gradual and evolutionary. Incremental learning at the firm levelis the main factor explaining the firm’s internationalization. A firm increases itscommitment to a market incrementally as it learns about the market. Thus, theUppsala model describes the managerial goals of internationalization in terms of reducing risk and avoiding uncertainty. The Uppsala internationalization model has been criticized for being too deterministic and unable to explain the “leapfrogging”activities of born-global firms identified in the international-new-venture literature(McDougall et al. 1994). The Uppsala model was extended by the network theory of internationalisation which emphasises the impact of business relationships upon thegrowth and internationalisation of firms (Johanson et al., 1988; Johanson & Vahlne,1990, 1992). There is evidence to suggest that networks are important for born globalfirms because of their resource constraints (Coviello & Munro, 1995, 1997). Networkshave been argued to contribute to the success of born global firms by helping toidentify new market opportunities and contribute to building market knowledge(Coviello et al., 1995; Chetty et al., 2000; Madsen et al.; 1997). However only littleattention has been drawn to the capability of small business owners to exploitresources from social capital. Autio (Autio, 2006) held a similar view and stated thatinternationalization theories for new ventures including only two or three variableshave limited predictive ability for growth or survival of the company. Researchtherefore suggests a broader conceptualization of internationalization which wasadopted in this study and which confirms that internationalization is multi-dimensionaland complex phenomenon. A review of a decade of ‘born global’ firminternationalisation (Rialp-Criado, Rialp-Criado & Knight, 2002) observes that theliterature remains fragmented with a comprehensive theoretical explanation (Knight etal., 1996; Oviatt & McDougall, 1997; Servais & Rasmussen, 2000) for SMEinternationalization. The examination of the existing studies points to the need for asynthesis. Generally, most of the studies until now have tended to explore rather specific aspects of internationalization such as market entry forms (e.g. export, jointventure). However, Oviatt and McDougall (Oviatt & McDougall, 2005) demonstratedthat internationalization of SMEs is a multi-dimensional concept and exhibits acomplex relationship to the organisational factors and firm performance. Developing aunified framework goes beyond the limits of this study. Here the author concentrates

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