Chapter 3 Acquisition of Knowledge in Networking for Internationalisation

Business networks are of critical importance to firms and essential to the internationalisation of born-global and international new venture firms. Networking literature focuses on what are, generally, co-operative relationships and their effects between actors, activities and resources and illustrate the importance of quality and change in the networking process. Utilising Fletcher and Harris’ (2012) framework for understanding knowledge acquisition processes in internationalisation, this study investigates the importance of direct and indirect roles played by third parties in the networking for internationalisation processes of three different firm types within the knowledge-based natural health products (NHPs) (pharmaceutical) sector in Canada. The research presented here examines nine case studies of Canadian NHP firms and reveals that they utilised all network-related internationalisation processes simultaneously to internationalise including Johanson and Mattsson’s (1988, 1994) network theory, Johanson and Vahlne’s (2003) updated the Uppsala Model and the resource-based perspective on network theory (Ruzzier et al., 2006). They networked with and extensively utilised third parties, including government bodies, trade associations, government advisors, consultants and other domestic networks with international ties, in Canada and internationally to gain technical, market and internationalisation knowledge, and direct and indirect experiential knowledge which contributed to the internationalisation process confirming the study by Fletcher and Harris (2012). In a departure from the literature, this study found that weak ties (Granovetter, 1973) developed with third parties who were new to the networks allowed the NHP firms to develop competitive advantages necessary for them to overcome the liability of outsidership in entering new international markets. The type of technical, market and internationalisation knowledge gained, its content and the direct and indirect sources of knowledge from third parties were all shown to contribute to the internationalisation process.