Skip to main content
Log in

The role of social networks and institutions in the internationalization of Russian entrepreneurial firms: Do they matter?

  • Published:
Journal of International Entrepreneurship Aims and scope Submit manuscript

Abstract

Drawing upon network theory and institutional theory, this paper examines the influence of networks on the internationalization of Russian entrepreneurial firms. Our case analysis suggests that within the context of the Russian environment, networks play a much less important role in the internationalization process than it is usually assumed in the literature. For the Russian entrepreneurial firms examined in our study, the most important factor in their internationalization was their engagement in honest business practices that established trust and commitment in their relationships with international business partners. This study underscores the importance of the institutional context of an entrepreneurial firm’s country.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Similar content being viewed by others

References

  • Ahlstrom D, Bruton G (2010) Rapid institutional shifts and the co-evolution of entrepreneurial firms in transition economies. Entrep Theory Pract 34(3):531–554

    Article  Google Scholar 

  • Andersson S (2000) The internationalization of the firm from an entrepreneurial perspective. Int Stud Manage Organiz 30(1):63–92

    Google Scholar 

  • Andersson S, Wictor I (2003) Innovation internationalization in new firms: Born globals—the Swedish case. J Int Entrep 1(3):249–276

    Article  Google Scholar 

  • Arenius P (2002) Creation of firm-level social capital, its exploitation and the process of early internationalization. Helsinki University of Technology, Helsinki

    Google Scholar 

  • Arenius P (2005) The psychic distance postulate revised: from market selection to speed of market penetration. J Int Entrep 3(2):115–131

    Article  Google Scholar 

  • Autio A (2005) Creative tension: the significance of Ben Oviatt's and Patricia McDougall's article ‘Toward a Theory of International New Ventures’. J Int Bus Stud 36(1):9–19

    Article  Google Scholar 

  • Autio E, Sapienza HJ, Almeida JG (2000) Effects of age at entry, knowledge intensity, and imitability on international growth. Acad Manag J 43(5):909–924

    Article  Google Scholar 

  • Axelsson B, Johanson J (1992) Foreign market entry—the textbook versus the network view. In: Axelsson B, Easton G (eds) Industrial networks: a new view of reality. Routledge, London, pp 218–234

    Google Scholar 

  • Ayios A (2004) Trust and Western-Russian business relationships. Ashgate, Aldershot

    Google Scholar 

  • Bashkirova E (2001) Russian society: changing values. Social sciences. Q J Russ Acad Sci 32:17–30

    Google Scholar 

  • Batjargal B (2003) Social capital and entrepreneurial performance in Russia: a longitudinal study. Organ Stud 24(4):535–567

    Article  Google Scholar 

  • Batjargal B (2005) Comparative social capital: networks of entrepreneurs and venture capitalists in China and Russia, Working paper, William Davidson Institute of the University of Michigan

  • Batjargal B (2006) The dynamic of entrepreneurs' networks in a transitioning economy: the case of Russia. Entrep Reg Dev 18(4):305–320

    Article  Google Scholar 

  • Beckerman W (1956) Distance and the pattern of intra-European trade. Rev Econ Stat 38(1):31–40

    Article  Google Scholar 

  • Bruton GD, Ahlstrom D, Obloj K (2008) Entrepreneurship in emerging economies: where are we today and where should the research go in the future. Entrep Theory Pract 32(1):1–14

    Article  Google Scholar 

  • Burt RS (1992) Social structure of competition. In: Mardsen P, Lin N (eds) Networks and organizations: structure, form and actions. Harvard Business School Press, Boston

    Google Scholar 

  • Caughey M, Chetty S (1994) Pre-export behaviour of small manufacturing firms in New Zealand. Int Small Bus J 12(3):62–68

    Article  Google Scholar 

  • Cieslik J, Kaciak E (2009) The speed of internationalization of entrepreneurial start-ups in a transition environment. J Dev Entrep 14(4):375–392

    Article  Google Scholar 

  • Coviello NE (2006) The network dynamics of international new venture. J Int Bus Stud 37(5):713–731

    Google Scholar 

  • Coviello NE, Jones MV (2004) Methodological issues in international entrepreneurship research. J Bus Ventur 19(4):485–508

    Article  Google Scholar 

  • Coviello NE, Munro HJ (1995) Growing the entrepreneurial firm: networking for international market development. Eur J Mark 29(7):49–61

    Article  Google Scholar 

  • Coviello NE, Munro HJ (1997) Network relationships and the internationalization process of small software firms. Int Bus Rev 6(4):361–386

    Article  Google Scholar 

  • Cumming D, Sapienza HJ, Siegel DS, Wright M (2009) International entrepreneurship: managerial and policy implications. Strateg Entrep J 3(4):283–296

    Article  Google Scholar 

  • Descotes RM, Walliser B, Guo X (2007) Capturing the relevant instutional profile for exporting SMEs: empirical evidence from France and Romania. Int Manag Rev 3(3):16–26

    Google Scholar 

  • Djankov S, Miguel E, Qian Y, Roland G, Zhuravskaya E (2005) Who are Russia's entrepreneurs? J Eur Econ Assoc 3(2/3):587–597

    Google Scholar 

  • Dubini P, Aldrich H (1991) Personal and extended networks are central to the entrepreneurial progress. J Bus Ventur 6:305–313

    Article  Google Scholar 

  • Eden L, Miller S (2004) Distant matters: liability of foreignness, institutional distance and ownership strategy. In: Hitt M, Cheng J (eds) Advances in International Management. Elseiver, New York, pp 187–221

    Google Scholar 

  • Eisenhardt KM (1989) Building theories from case study research. Acad Manag Rev 14(4):532–550

    Google Scholar 

  • Ellis PD (2000) Social ties and foreign market entry. J Int Bus Stud 31(3):443–469

    Article  Google Scholar 

  • Ellis PD (2011) Social ties and international entrepreneurship: opportunities and constraints affecting firm internationalization. J Int Bus Stud 42(1):99–127

    Article  Google Scholar 

  • Ermoshin AM (2007) Exportniy potencial malogo i srednego bisnesa v Rossii (Export potential of SMEs in Russia). http://www.aisme.ru/analitika.html. Accessed 1 June 2011

  • Estrin S, Baghdasarayan D, Meyer KE (2009) The impact of institutional and human resource distance on international entry strategies. J Manag Stud 46(7):1172–1196

    Article  Google Scholar 

  • Fendt J, Sachs W (2007) Grounded theory method in management research. Organ Res Methods 20(10):1–26

    Google Scholar 

  • Filatotchev I, Hoskisson RE, Buck T, Wright M (1996) Corporate restructuring in Russian privatizations: implications for US investors. Calif Manag Rev 38(2):87–105

    Google Scholar 

  • Ghannad N, Andersson (2012) The influence of the entrepreneur's background on the behavior and development of born globals' internationalization processes. Int J Entrep Small Bus 15(2):136–153

    Article  Google Scholar 

  • Global Entrepreneurship Monitor: Russia 2011 (National Report) (2011). Graduate School of Management SPbSU Press, St.Petersburg

  • Granovetter MS (1973) The strength of weak ties. Am J Sociol 78(6):1360–1380

    Article  Google Scholar 

  • Granovetter MS (1985) Economic action and social structure: the problem of embeddedness. Am J Sociol 91(3):481–510

    Article  Google Scholar 

  • Hakansson H, Snehota I (1995) Developing relationships in business networks. Routledge, London

    Google Scholar 

  • Harris S, Wheeler C (2005) Entrepreneurs' relationships for internationalization: functions, origins and strategies. Int Bus Rev 14(2):187–207

    Article  Google Scholar 

  • Höhmann H-H, Malieva E (2005) The concept of trust: some notes on definitions, forms and sources. In: Hohmann H-H, Welter F (eds) Trust and Entrepreneurship: a west–east perspective. Edward Elgar, Cheltenham, pp 7–23

    Google Scholar 

  • Holmlund M, Kock S (1998) Relationships and the internationalization of Finnish small and medium-sized companies. Int Small Bus J 16(4):46–63

    Article  Google Scholar 

  • Hoskisson RE, Eden L, Lau CM, Wright M (2000) Strategy in emerging economies. Acad Manag J 43(3):249–267

    Article  Google Scholar 

  • Hutchinson WK (2005) ‘Linguistic distance’ as a determinant of bilateral trade. South Econ J 72(1):1–15

    Article  Google Scholar 

  • Jansson H, Johanson RJ (2007) Institutions and business networks: a comparative analysis of the Chinese, Russian, and Western European markets. Ind Mark Manag 36(7):955–967

    Article  Google Scholar 

  • Johanson J, Mattsson LG (1988) Internationalization in industrial systems: a network approach. In: Hood N, Vahlne J-E (eds) Strategies in Global Competition. Croom Helm, London

    Google Scholar 

  • Johanson J, Mønsted M (1988) Internationalization in industrial systems—anetwork approach. In: Hood N, Vahlne JE (eds) Strategies in global competition. Croom Helm, New York, pp 298–314

    Google Scholar 

  • Johanson J, Vahlne J-E (2009) The Uppsala internationalization process model revisited: from liability of foreignness to liability of outsidership. J Int Bus Stud 40(9):1411–1431

    Article  Google Scholar 

  • Johanson J, Wiedersheim-Paul F (1975) The internationalization of the firm: four Swedish cases. J Manag Stud 12(3):305–322

    Article  Google Scholar 

  • Jones MV, Coviello N, Tang YK (2011) International entrepreneurship research (1989–2009): a domain ontology and thematic analysis. J Bus Ventur 26:632–659

    Article  Google Scholar 

  • Kiss AN, Danis WM (2008) Country institutional context, social networks, and new venture internationalization speed. Eur Manag J 26(6):388–399

    Article  Google Scholar 

  • Kiss AN, Danis WM (2010) Social networks and speed of new venture internationalization during institutional transition: a conceptual model. J Int Entrep 8(3):273–287

    Article  Google Scholar 

  • Kogut B, Singh H (1988) The effect of national culture on the choice of entry mode. J Int Bus Stud 19(3):411–432

    Article  Google Scholar 

  • Kuznetsov A, Kuznetsova O (2008) Gaining competitiveness through trust: the experience of Russia. Eur J Int Manag 2(1):22–38

    Article  Google Scholar 

  • Latuhina K (2010) Strategiey po vziatke. Rossiyskaya gazeta 5158(79):2

    Google Scholar 

  • Learner EE (1974) The commodity composition of international trade in manufactures: an empirical analysis. Oxf Econ Pap 26:350–374

    Google Scholar 

  • Ledeneva AV (1998) Russia's economy of favours: blat, networking and informal exchange. Cambridge University Press, Cambridge

    Google Scholar 

  • Luo Y, Junkunc M (2008) How private enterprises respond to government bureaucracy in emerging economies: the effects of entrepreneurial types and governance. Strateg Entrep J 2(2):133–153

    Article  Google Scholar 

  • McDougall PP, Oviatt BM (2000) International entrepreneurship: the intersection of two research paths. Acad Manag J 43(5):902–906

    Article  Google Scholar 

  • Meyer J, Rowan B (1977) Institutional organizations: formal structure as myth and ceremony. Am J Sociol 83(2):340–363

    Article  Google Scholar 

  • Michailova S, Worm V (2003) Personal networking in Russia and China: blat and guanxi. Eur Manag J 21(4):509–519

    Article  Google Scholar 

  • Miles MB, Huberman AM (1984) Qualitative data analysis. Sage, Beverly Hills

    Google Scholar 

  • Miller CC, Cardinal LD, Glick WH (1997) Retrospective reports in organizational research: a reexamination of recent evidence. Acad Manag J 40:189–204

    Article  Google Scholar 

  • Morrissey O, Filatotchev I (2000) Globalization and trade: the implications for exports from marginalized economies. J Dev Stud 37(2):1–12

    Google Scholar 

  • Musteen M, Francis J, Datta DK (2010) The influence of international network on internationalization speed and performance: a study of Czech SMEs. J World Bus 45(3):197–205

    Article  Google Scholar 

  • North DC (1990) Institutions, institutional change and economic performance. Cambridge University Press, Cambridge

    Book  Google Scholar 

  • Oviatt BM, McDougall PP (2005) The internationalization of entrepreneurship. J Int Bus Studd 36:2–8

    Article  Google Scholar 

  • Ozgen E, Baron RA (1990) Social sources of information in opportunity recognition: effects of mentors, industry networks, and professional forums. J Bus Ventur 22(2):174–192

    Article  Google Scholar 

  • Peng MW (2003) Institutional transitions and strategic choices. Acad Manag Rev 28(2):275–296

    Google Scholar 

  • Peng MW, Lee S-H, Wang DYL (2005) What determines the scope of the firm over time: a focus on institutional relatedness. Acad Manag Rev 30(3):622–633

    Article  Google Scholar 

  • Pettigrew AM, Woodman RW, Cameron KS (2001) Studying organizational change and development: challenges for future research. Acad Manag J 44(4):697–713

    Article  Google Scholar 

  • PriceWaterhouseCoopers (2009) Russia. Economic crime in a downturn. The 5th Global economic crime survey. PriceWaterhouseCoopers, Moscow

    Google Scholar 

  • Puffer SM, McCarthy DJ, Boisot M (2010) Entrepreneurship in Russia and China: the impact of formal institutional voids. Entrep Theory Pract 34(3):441–467

    Article  Google Scholar 

  • Rasmussan ES, Madsen TK (2001) The founding of the born global company in Denmark and Australia: sensemaking and networking. Asia Pac J Mark Logist 13(3):75–107

    Article  Google Scholar 

  • Riaño J, Hodess R, Evans A (2008) Bribe payers index. Transparency International, Berlin

    Google Scholar 

  • Riaño J, Hodess R, Evans A (2009) The 2009 global corruption barometer report. Transparency International, Berlin

  • Rogers N (2006) Social networks and the emergence of the new entrepreneurial ventures in Russia: 1987–2000. Am J Econ Sociol 65(2):295–312

    Article  Google Scholar 

  • Rouse MJ, Daellenbach US (1999) Rethinking research methods for the resource-based perspective: isolating sources of sustainable competitive advantage. Strateg Manag J 20(5):487–494

    Article  Google Scholar 

  • Sala-i-Martin X (2009) The Global Competitiveness Report 2009–2010. World Econ Forum, Geneva

  • Sasi V, Arenius P (2008) International new ventures and social networks: advantage or liability? Eur Manag J 26(6):400–411

    Article  Google Scholar 

  • Scott R (1995) Institutions and organizations. Sage Publications, Thousand Oaks

    Google Scholar 

  • Sharma DD, Blomstermo A (2003) The internationalization process of born globals: a network view. Int Bus Rev 12(6):739–753

    Article  Google Scholar 

  • Singh RP (2000) Entrepreneurial opportunity recognition through social networks. Garland Publishing, Inc, London

    Google Scholar 

  • Smallbone D, Welter F (2001) The distinctiveness of entrepreneurship in transition economies. Small Bus Econ 16(4):249–262

    Article  Google Scholar 

  • Söderqvist A (2011) Opportunity exploration and exploitation in international new ventures: a study of relationships' involvement in early entrepreneurial and internationalisation events. Doctoral Dissertation, Hanken School of Economics, Vaasa, Finland

  • Spenser JW, Gomez C (2004) The relationship among national institutional structures, economic factors, and domestic entrepreneurial activity: a multicountry study. J Bus Res 57(10):1098–1107

    Article  Google Scholar 

  • Styles C, Ambler T (2000) The impact of relational variables on export performance: an empirical investigation in Australia and the UK. Aust J Manag 25(3):261–282

    Article  Google Scholar 

  • Timmons J, Spinelli S (2003) New venture creation: entrepreneurship for the 21st century, 6th edn. McGraw-Hill/Irwin, New York

    Google Scholar 

  • Welch LS (2004) International entrepreneurship and internationalization: common threads. In: Dana L-P (ed) Handbook of research on international entrepreneurship. Edward Elgar, Cheltenham

    Google Scholar 

  • Wiedersheim-Paul F (1972) Uncertainty and economic distance. Studies in international business. Almquist and Wiksell, Uppsala

    Google Scholar 

  • Wright LL, Lane HW, Beamish PW (1988) International management research: lessons from the field. Int Stud Manag Organ 18(3):55–71

    Google Scholar 

  • Wright M, Filatotchev I, Hoskisson RE, Peng MW (2005) Strategy research in emerging economies: challenging the conventional wisdom. J Manag Stud 42(1):1–33

    Article  Google Scholar 

  • Wright M, Westhead P, Ucbasaran D (2007) The internationalization of SMEs and international entrepreneurship: a critique and policy implications. Reg Stud 41(7):1013–1029

    Article  Google Scholar 

  • Yamakawa Y, Peng MW, Deeds D (2008) What drives new ventures to internationalize from emerging to developed economies? Entrep Theory Pract 32(1):59–82

    Article  Google Scholar 

  • Yin RK (2003) Case study research: design and methods. Sage Publications, London

    Google Scholar 

  • Yiu DW, Lau C, Bruton GD (2007) International venturing by emerging economy firms: the effect of firm capabilities, home country networks, and corporate entrepreneurship. J Int Bus Stud 38(4):519–540

    Article  Google Scholar 

  • Zaheer S (1995) Overcoming the liability of foreignness. Acad Manag J 38(2):341–363

    Article  Google Scholar 

  • Zhu H, Hitt MA, Tihanyi L (2007) The internationalization of SMEs in emerging economies: institutional embeddedness and absorptive capacities. J Small Bus Strategy 17(2):1–26

    Google Scholar 

  • Zhuplev A, Shein V (2008) Small and medium sized enterprises in Russia. In: Handbook of research on European business and entrepreneurship—towards a theory of internationalization. Edward Elgar Publishing, Northampton, pp. 544–563

  • Zhuplev A, Kiesner F, Zavadsky I (2004) Impediments to small business development in Russia. Proceedings of the 18th Annual Conference of the U.S. Assoc Small Bus Entrep, Dallas

  • Zoidov K, Morgunov E, Bidzhamova K (2009) Characteristics of the crisis economy small and medium-sized innovative business evolution in the post-Soviet zone. CEMI RAN, Moscow

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Patricia McDougall-Covin.

Additional information

We would like to thank the three anonymous reviewers who each provided constructive feedback that enabled us to significantly improve our work. We would also like to give special thanks to the editor who has given us helpful guidance throughout the review process.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Shirokova, G., McDougall-Covin, P. The role of social networks and institutions in the internationalization of Russian entrepreneurial firms: Do they matter?. J Int Entrep 10, 177–199 (2012). https://doi.org/10.1007/s10843-012-0091-8

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10843-012-0091-8

Keywords

Navigation