1.
INTRODUCTION:
Garments SMEs plays an important role in
the economy of Gujarat state. Garments SMEs in Gujarat lacks international
knowledge and experience that affects its competitiveness to become pioneer in
India. International Knowledge is vital for sustainable process of
internationalization (1).
Several research related to SMEs in knowledge-intensive industries, network has
been seen as determinants of internationalization (2, 3).
Firms strategic focus such as knowledge, experience and network are the factors
of success aspect in the internationalization (4).
This study will contribute to the development of garments SMEs for
internationalization, by exploring the relationship of network with
international knowledge and international experience.
2. OBJECTIVES:
The main focus of this study is to analyze
the relationship of network on international knowledge and international
experience for internationalization of garments SMEs of Gujarat. As knowledge,
experience and network plays an important role for the success of international
business (4),
however SMEs face trouble for internationalization as of lack of international
knowledge and experience (5, 6).
3. LITERATURE REVIEW:
3.1
Network
Several studies have discussed the role of
international networks in firms’ internationalization process. International network
plays an important role in enhancing knowledge creation in business
relationships for small firms (7-9). In several studies it has been observed that
business relationships can play a critical role in the early
internationalization of SMEs firm (8, 10-12).
It has also been discussed that network constructs can be used effectively for
understanding and explaining SME Internationalization (13-15).
According to (16),
firms develop and distribute products in foreign markets through business
networks, which, through providing local market knowledge, lower uncertainty
and therefore allow for faster internationalization. Networks can provide SMEs
with resources which they would otherwise be unable to create or obtain on
their own.
The SMEs’ ability to conduct international
business is based on their experience in foreign markets and operations (17).
Internationalization increases the need for complex collaborative networks and
communication among SMEs in different geographic zones (18).
3.2 Internationalization
Internationalization itself entails
considerable risks and challenges that are discouraging to most managers,
particularly those who have partial knowledge of foreign markets and do not
possess the experience of conducting business in such market.(19).
As business viewpoint, use of network is
essential for the internationalizing SMEs based in developing economy – its
relationships with domestic clients, colleagues and even casual encounters can
provide firm with clients in new markts (20, 21).
International business opportunities can be found through a range of
network-supported system, thus SMEs should consider network building and the
use of social capital for internationalization (22).
Prior research identifies a variety of
factors that influences firms’ internationalization. Particular attention has
been paid to the roles of decision makers, and their international knowledge,
experience, formal and informal contacts (23, 24).
3.3
International Knowledge and International Experience
SMEs encounter significant challenges in
obtaining recourses, foreign market knowledge, overseas contacts and business
opportunities, and achieving organizational feasibility for developing foreign
business (5, 6).
SMEs overcome their resource constraint by forming business networks to acquire
these resources and to benefit from being larger in size as a result of their
networks. For example, firms that have incomplete foreign market knowledge and
experience seek this knowledge from their suppliers and customers (25).
The two important elements in
internationalization process are international networking and knowledge (15).
In SMEs manager plays an important role in identifying the stimuli for
internationalization. The manager may not have the knowledge, however, to recognise these internationalization stimuli when they
appear. It is the manager who decides whether the firm will pursue
internationalization opportunities that their network counterparts initiate. A
manager can inhibit internationalization of the firm although the network wants
to drive it into internationalization (10).
4. CONCLUSION:
After going through a thorough literature
we suggest following framework for internationalization of SMEs. Many studies
suggests that network has a positive relationship with internationalization (2, 15),
several studies describes network has a significant role with knowledge (7-9, 16)
and lack of experience can be countered by seeking information from network (25),
thus we assume that network would have positive relationship between
international knowledge and internationalization, as well as between
international experience and internationalization.
Figure 1 Role of
Network in Internationalization (Conceptual Framework)
This study will contribute to the
literature of internationalization, and its practical implementation will be
helpful to the garments SMEs to increase their international business, this
model might also be helpful to some other SMEs in same region or different
region furthermore it might be applied to industries other than garments SMEs.
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Small Medium Enterprises (SMEs)
particularly Garments industry in Gujarat has been internationalizing rapidly
during the last two decades. International knowledge and experience plays an
important role in internationalization, however some studies suggest that SMEs
lacks from these components and suffers difficulties in internationalization.
Besides, previous research claims that network has a significant role in
internationalization. Therefore the objective of this paper is to discuss the
moderating relationship of network to international knowledge and experience
for internationalization of garments SMEs. To conceptualize, thorough
literature review has been carried out. The paper highlights the importance of
network for SMEs to internationalize.