The Effect of Social Network on Small and Medium Enterprises’ Export Mode Choice

Abstract

A firm’s resources, tangible and intangible, are critical for formulating and developing domestic and international business strategies. Relative to Multinational Enterprises (MNEs), most Small and Medium Enterprises (SMEs) lack resources, especially tangible resources. Thus, many SMEs rely more on intangible resources and, among these, personal networks and social media become critical in SMEs business strategy formulation. This study aims to examine the effect of social networks (personal network & social media) on Thai SMEs’ export mode choice. Obtained from a sample of 350 Thai SMEs in the manufacturing export sector, the logistic regression results indicate that personal networking in terms of getting acquaintances from government organizations and social media networking affect the export mode choice. The more SMEs can employ networks based on acquaintances from government organizations, the more SMEs apply the direct export mode. It was also found that, the higher the level of SME social media usage in terms of getting export in target countries and creating brand awareness through social media networking, the more SMEs choose the direct export mode. Thus, SMEs’ intangible network resources have a significant effect on their international expansion strategy formulation.