A1 Journal article (refereed), original research

Institutional environment and network competence in successful SME internationalisation

Open Access publication

Publication Details
Authors: Torkkeli Lasse, Kuivalainen Olli, Saarenketo Sami, Puumalainen Kaisu
Publisher: Emerald: 24 month embargo
Publication year: 2019
Language: English
Related Journal or Series Information: International Marketing Review
Volume number: 36
Issue number: 1
Start page: 31
End page: 55
Number of pages: 25
ISSN: 0265-1335
eISSN: 1758-6763
JUFO-Level of this publication: 2
Open Access: Open Access publication
Location of the parallel saved publication: http://urn.fi/URN:NBN:fi-fe2018121450863


The purpose of this paper is to examine the impact of institutional environment on the international performance of small- and medium-sized enterprises (SMEs) and how this relationship is influenced by network competence.

This study uses a quantitative approach. In total, 119 internationally operating Finnish SMEs from five industry sectors are sampled via a cross-sectional survey. Data are analysed through regression modelling.

The international performance of SMEs is influenced directly and indirectly by institutional drivers. The results show that network competence mediates the positive relationship between institutional drivers and international performance.

Network capability development can help SMEs leverage more or less favourable institutional environments for successful internationalisation. Perceived institutional drivers directly result in higher performance, but the effect can be partially mediated by dynamic capabilities. The limitations of the study include its single-country context and the cross-sectional nature of the data.
Practical implications

SMEs should take their home countries’ institutional environments into account, but for long-term success, they should develop the ability to manage their business networks. A conducive institutional environment may help develop competence, which in turn can enable more successful internationalisation in terms of scale, scope and satisfaction.

Decision-makers may benefit from knowing that, in addition to capabilities, an institutionally conducive environment that drives domestic SMEs towards international markets may be an antecedent of successful internationalisation in the SME sector.

This is one of the few studies to illustrate how network capabilities can mediate the influence of institutional factors on entrepreneurial internationalisation. It combines institutional theory and the dynamic capabilities view to explain successful SME internationalisation.

Last updated on 2020-20-03 at 10:03