Social Capital Types and Internationalization: A Study of Indian Software SMEs
Advanced Institute of Management Research Paper No. 045
43 Pages Posted: 1 Dec 2008
Date Written: August 22, 2006
Small business enterprises (SMEs) from emerging economies have become active participants in international markets. Seeking to capitalize on their unique skills and capabilities and achieve rapid growth and diversify the sources of their revenue streams, SMEs have used their social capital to penetrate foreign markets and acquire market share. In this study we focus on Indian software producers who have used their ethnic ties to enter foreign markets. Our analyses of 96 SMEs suggest that bonding social capital, arising from friendship and kinship relationships, enhances SMEs' ability to adopt and implement higher and more costly modes of entry to international markets. Bridging social capital (between dissimilar groups) enables SMEs to gain a greater percentage of revenues from foreign markets.
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