Social Networks and Internationalization of SMEs: The Mediating Role of Market Knowledge and Opportunity Recognition

Drawing insight from social network and internationalization theory perspectives, our study develops a conceptual model and test hypothesis using structural equation modeling by Smart PLS software, relying on a sample of 145 Iranian exporter SMEs obtained using a constructed questionnaire. Firstly, firms were placed in 5 categories, based on the classification of the Trade Promotion Organization of Iran (ITPO), to categorize the field of export activity. Then, the sample was selected via simple random sampling method. Values of the research model fitness fit the data well and the model exhibited an acceptable fit. Concerning the research results, the first hypothesis (which predicted that the greater the level of social networks, the higher the internationalization) was not supported by data. Nonetheless, our findings confirmed that social networks have a significant effect on both market knowledge and opportunity recognition in international markets. In addition, the study results confirmed the mediating role of opportunity recognition in the relationship between social networks and internationalization. Finally, we might recommend government institutions and SMEs managers to pay particular attention to the structures and relationships in social networks for developing international business.