The influence of network relationships on the internationalization process of SMEs: A multiple case-study of Ethiopian SMEs

The role of network relationships has become topical in research on the internationalization process of firms. Research has focused on the internationalization process of firms in developed nations. This research adds to the literature by looking at the use of network relationships in Ethiopian small and medium sized enterprises (SMEs2) exporting spices, meat and shoes. Propositions are formulated from findings in the literature. Using a multiple case study of three Ethiopian firms, the influence of different networks on the foreign market entry process (FME) was researched. The focus was on the effect of network relations on the foreign market choice (FMC) and market entry mode choice (MEMC). The outcomes show that network relations play an important role in the internationalization. Contrary to expectations, the internationalization of the Ethiopian case firms depended completely on foreign firms initiating contacts and therewith the entrance into foreign markets. The foreign firms also influenced market entry mode choices of the firms under study. None of the firms did market research or had a strategic plan to enter the market, reflecting a reactive approach to internationalization. The vertical network, based on strong formal relations with the foreign product buyers, played a significant role in the foreign market and market entry mode choice. An important finding from the research is the notion that horizontal networks, especially the intermediary role played by foreign country governments and foreign and Ethiopian export organizations, had a big influence in the early stages on the contact relations between the foreign buyer and the Ethiopian exporter.