Knowledge, uncertainty and networks: what drives SMEs' international

What are the key variables that can explain SMEs’ international market selection? International business literature has shown that firms’ costs of expanding business activities to host markets along with the lack of roots in foreign countries apparently result in competitive disadvantages for the alien enterprises. However, depending on the relationships established with other members of the network, companies may be able to more easily overcome the risks of selecting a certain market. In turn, the fear of facing unknown situations as well as the absence of knowledge about a specific country may hinder firms from going abroad, which may lead to the loss of opportunities. Based on a literature review regarding the topic and after developing some propositions, the authors developed a conceptual model which shows the existence of five variables that explain SMEs’ market selection – knowledge, market commitment, international networks, SMEs’ ties within networks, and SMEs’ status among members of the network. These variables seem to influence firms’ uncertainty, perception of psychic distance, as well as the liabilities of foreignness and outsidership. Consequently, relationships established with other players inside the network tend to enhance firms’ knowledge about foreign markets, allowing them to better assess opportunities and avoid risks.