Network knowledge and business-relationship value in the foreign market

• We review 29 empirical articles on networks and internationalisation and identify four research gaps.
• These gaps concern the lack of studies on the link between the structure of the network and future development of the firm in the foreign network.
• The study addresses these four gaps by developing a structural model based on six hypotheses.
• We test the model on a sample of 494 SMEs from Denmark, New Zealand and Sweden.
• The study gives supports five of the six hypotheses.

Based on the key assumptions that firms are opportunity seeking and that they gain critical knowledge operating in a network of relationships, this paper focuses on early expansion in foreign market networks. In particular, the paper examines the relation between experience and business-relationship value in a foreign market. While experience and experiential knowledge are central concepts in international business, little has been written about their effects on the value of business relationships. The paper formulates a set of interrelated hypotheses on the effects of international experience, experiential network knowledge and importance of customer and competitor knowledge on the value of business relationships in a foreign market. They are combined in a structural model, which is tested on a sample through LISREL. The main conclusion drawn from the study is that experiential network knowledge and knowledge about the importance of customers and competitors in the network influence the value of business relationships in a foreign market in different ways.