And yet, non-equity cooperative entries do improve international performance. Uncovering the role of networks’ social capital

Abstract

Drawing on social capital theory, this study analyses the moderating role of social networks in the relation between international new ventures’ choice of non-equity entry modes and international performance. The research adopts an alternative point of view that considers that the development of social capital is dependent upon what actions an individual or group of people carry out to build and maintain social capital. Three relational norms have been associated with effective interaction among network partners, namely, informational exchange, organizational coordination and social conflict resolution. Through these relational norms, firms can co-create the structure of the social network and define what the network benefits and social capital are. Data gathered from a sample of international ventures operating in several industries support the idea that networks’ social capital endows international new ventures with informational advantages and experiential knowledge, which are important to reduce the problems associated with the non-equity entry mode choice when partners do not come from their networks. The results point to the need for INVs’ entrepreneurs to engage in establishing routines that enable them to develop management activities in coordination with their network members. The findings provide entrepreneurs of INVs with contextual evidence for making successful foreign market entry decisions