The Role of Social Capital during SMEs' Internationalization - Build, Maintain and Use of Networks

Internationalization has been an important topic for SMEs (small and medium-sized enterprises) around the world. Based on the size of the firm, internationalization creates chances and risks, advantages and disadvantages. Social capital serves as an important resource for SMEs to compensate certain disadvantages and higher risks they have in comparison with big firms. This paper takes a closer look at SMEs' social capital in form of networks and connections to key institutions (e.g. financial, governmental institutions) before and during the internationalization process. The study explores how SMEs build, maintain and use network resources in two countries with a different cultural and economic background. It depicts in detail the sources of social capital, private and business networks, and the influence on the access to other supporting resources. Social capital is predominantly used unknowingly as a resource. With the help of a multiple case study, this paper analyzes four firms from Germany and China which operate in different sectors. The results of the study clarify the role of social capital and demonstrate the importance of communication and their technology in this context.