Determinant factors of the
internationalization of SMEs in
Pusan and Kyeongsang region
- A network approach-


Choi Yuri

Department of Business Administration
The Graduate School
Pusan National University


Abstract

As the internationalization of firms has accelerated due to globalization, domestic-focused firms cannot help being kicked out if they fell behind international competitions. Accordingly, small and medium sized corporations in provinces are also attempting to actively join internationalization. However, they feel limits in pushing toward it because it is more difficult for them to obtain information, human capital, and resources that are necessary for internationalization compared to large corporations or small and medium sized businesses in the metropolitan area. Small and medium sized companies face many constraints in securing information, technology, and other management resources they need in the environment under the intensified global competition. Thus, a network factor is emerging as a strategic measure for acquiring a new market and knowledge as well as using them effectively.
This research divided the network factor into three dimensions of social capitals based on the existing study, and examined how each category of structural dimension, relational dimension, and cognitive dimension of network affects the internationalization of small and medium sized corporations. Also, it set a hypothesis on whether innovativeness of an entrepreneur plays a regulative role in the relationship between the network factor and the internationalization of small and medium sized firms. I conducted a survey to the CEOS of small and medium businesses in Pusan and South Kyeongsang area for this research. After, I verified the hypothesis through the examination of its reliability and validity as well as correlation and regression analyses, using SPSS 19.0. The summary of the research result based on the analysis of hypothesis verification is as the following.
First, I partially chose the hypothesis that the structural dimension of network would influence the internationalization. The more connections of official networks(strong ties) there were the more impacts that the internationalization of small and medium sized businesses had. However, unofficial networks(weak ties) did not demonstrate any positive influence on internationalization.
Second, I partially chose the hypothesis that the relation dimension of network would influence the internationalization. Trust and norm were proven to be variables that would influence the internalization positively, whereas identification was not proved to be beneficial.
Third, I partially chose the hypothesis that cognitive dimension would influence the internationalization. The more shared narratives and shared tacit knowledge the members of a network had, the more positive influence there was on the internationalization of small and medium sized firms. However, shared vision did not show any positive impact.
Finally, I dismissed the hypothesis that the impacts of the network factor on the globalization of small and medium sized corporations would change depending on the innovativeness of an entrepreneur. There was no regulative impact of innovativeness for structural, relational, and cognitive dimensions of the network factor after verifying the regulative impact of innovativeness when the network factor influences the internationalization.