1. ¹Department of Marketing and International Business, Lingnan University, Tuen Mun, Hong Kong
2. ²Department of Marketing, School of Business, Hong Kong Baptist University, Kowloon Tong, Hong Kong
3. ³Department of Marketing, College of Business Administration, University of Texas at Arlington, Arlington, TX, USA

Correspondence: Lianxi Zhou, Department of Marketing and International Business, Lingnan University, Tuen Mun, Hong Kong. Tel: +852 2616 8243; Fax: +852 2467 3049; E-mail: lxzhou@ln.edu.hk

Received 23 October 2003; Revised 11 October 2006; Accepted 19 December 2006; Published online 10 May 2007.

Abstract

This paper offers a social network explanation for the purported relationship between internationalization and firm performance in the context of born-global small and medium enterprises (SMEs). We argue that home-based social networks play a mediating role in the relationship between inward and outward internationalization and firm performance. The mediating mechanism is attributed to three information benefits of social networks: (1) knowledge of foreign market opportunities; (2) advice and experiential learning; and (3) referral trust and solidarity. Using survey data from SMEs in the largest emerging economy of China, we found some support for this mediating role of social networks in the form of guanxi. The results imply that international business managers should consider social networks as an efficient means of helping internationally oriented SMEs to go international more rapidly and profitably.