Networks: What do we know about Norwegian firms going abroad? Morten H. Abrahamsen, Associate Professor
Networks: What do we know about Norwegian firms going abroad?some Morten H. Abrahamsen, Associate Professor
Starting point• International marketing research traditionally focuses on entry strategies: – Agent, distributor, intermediary, sales office, domestic or local production?• Export performance is related to relationship quality with these actors• Governance mechanisms
Traditional value chain (Solberg and Nes, 2002)
Relationship quality dependent on• Uncertainty and complexity• Trust and commitment• Cultural disctance/closeness• Adaption and relationship investment• Cooperation and conflict
But what if it looks like this? ’No business is an island’
Networks and export performance• ”Firms success in entering international markets is more dependent on its position in a network than cultural characteristics” (Johanson and Mattson, 1988)• ”Using existing relationships as bridges to other networks” (Kenny and Fahy, 2011)
• ”Roles performed in a network rather than functions in a distribution or value chain may explain export performance” (Abrahamsen et al., 2012)
Levels of export capabilities Networking capabilities Relational capabilities Relationa Firm- specific capabilities Based on Grant (1995)
Characteristics of successful exporters• Attitudes • Organisational skills – Risk asessment – Organisational backing – Market orientation – Top management and – Cultural sensitivity board support• Competence – Pricing policy – Sales skills – Ability to cooperate with partners (Solberg, 2009)
Relational capabilies• Adaptation required• Interdependence between companies• Exporting is a learning process Networking capabilities• Other: Relational – The resource-based view capabilities Relationa – Knowledge theory Firm- specific capabilities – Oranisational learning theory
Key questions• How to evaluate future value—customer lifetime value of a relationship?• How to create, manage and conclude relationships efficiently—from organizational and analytical perspectives?• How to manage relational episodes efficiently? (Halinen and Möller, 2008)
Complexity and distance• Complex products require high relationship investment in the relationship, ie. need for close cooperation• Low complexity requires low investment, ie. need for ”door-openers”• High cultural distance requires strong presence and close supervision
But what if it looks like this? Network = Interconnected relationships
Network capabilities• “The resources and activities of a company to generate, develop, and manage networks in order to take Networking capabilities advantage of single Relational capabilities relationships and the Relationa network as a whole” Firm- specific capabilities (Gemünden and Ritter, 1997)
What is a Business Network?• A business network consists of two ”building blocks”: – companies and business relationships• The companies and business relationships are interconnected, and together form a complex, web-like structure.
Questions for exporters• What is my relevant network?• What is the network that I want to be a part of? ?• Who can give me information about new possibilities?
• What role should I play?• What resources can I offer?• What actvities can I perform?• How can the network be strenghtened by my participation?
• What will happen to the network if strengthen my ties?• What ties will be weakened?
• If you want to take up new functions, this may imply replacing someone else. What will they do? Counteract you?
A seafood export network Norwegian seafood exporters facing new challenges in a changing Japanese market..
What did they do?• Redefining roles of existing importers• Finding new importers sharing their perspective• Challenge existing distribution stucturing using market power• Maintaining links with traditional network• Creating new ties to retailers and restaurants
Network strategies• Confront or Conform?• Create or Consolidate?• Coerce or Concede? (Ford, 2011)
Conclusion• The question is not to have relationships or not, but how to handle them!• The question is not to network or not, but how to network!