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Journal of International Business Studies

, Volume 42, Issue 1, pp 99–127 | Cite as

Social ties and international entrepreneurship: Opportunities and constraints affecting firm internationalization

  • Paul D Ellis
Article

Abstract

International entrepreneurship involves the identification and exploitation of opportunities for international exchange. Yet little is known about the entrepreneurial methods used for opportunity recognition. While previous work emphasizes effects operating at the level of the business network, I propose that the recognition of exchange opportunities is a highly subjective process, shaped by entrepreneurs’ existing ties with others. Based on interview data collected from 41 managers, I develop a comprehensive measure for classifying different methods of opportunity recognition. I then use this measure to classify 665 international exchange ventures set up by entrepreneurs in four Chinese cities. In contrast with past research I find virtually no role for blind luck. Although the majority of exchange opportunities were discovered rather than sought, these discoveries were intentional rather than accidental. I also find that entrepreneurs’ idiosyncratic connections with others both promote and inhibit international exchange. Tie-based opportunities lead to higher-quality and more valuable exchanges that are constrained in terms of geographic, psychic and linguistic distance. From this I conclude that entrepreneurial networks have distinct opportunity horizons that limit the reach of tie-based exchanges and potentially lead to sub-optimal internationalization trajectories.

Keywords

foreign market entry international entrepreneurship social network theory China 

Notes

Acknowledgements

I am grateful for the valuable research assistance provided by Ha Lau Ching, Kwan Loh Yien, Wong Pei Wai and Wilson Chan in Hong Kong; Zhuang Guijun in Xi’an; Chao Gangling and Li Huihui in Shanghai; Zheng Xian Yan in Guangzhou; and to the editor Anand Swaminathan, three anonymous referees, and Keith Brouthers, Sylvie Chetty and Pavlos Dimitratos for their constructive feedback on earlier drafts of this paper. The research reported in this paper was supported by an Internal Research Competitive Grant provided by the Hong Kong Polytechnic University (Project G-YF44).

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© Academy of International Business 2010

Authors and Affiliations

  1. 1.Department of Management & MarketingHong Kong Polytechnic UniversityKowloonHong Kong

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