Local Network Relationships and the Internationalization of Small Knowledge-Intensive Firms

Abstract

This paper discusses the role of network relationships in the internationalization of small knowledge-intensive firms (SKIFs) by highlighting their local, spatially concentrated network relationships, which can serve as a significant local resource. Little is known in this regard with respect to a developing economy context. Primarily on the basis of a study of four case-firms in the Bangalore software industry and available secondary data, two issues are dealt with: (a) how local network relationships – such as those within clusters or industrial districts – are developed and (b) the impact that these relationships have on the internationalization of SKIFs, specifically in respect to enhancing international competitiveness. Three effects of local network relationships on the internationalization of SKIFs, viz., reputation-related, quality-related and networking benefits, are noted. However, it also emerged from follow-up interviews with local academic experts that these benefits may be passively rather than actively accrued, suggesting that some valuable local resources may be overlooked or wasted.