Foreign Market Entry and Internationalisation of Business Network

The focus in this paper is on the structure of relationships between business organisations across borders as explored in organisation science, network theory, and the theory of international business. The concept of business networks is thoroughly discussed in the context of the global operations of the firm, the formation of international alliances, the engagement in co-operative business relations, and the international procurement by governments. Conceptual models of different types of business links between firms and governments are constructed on the bases of two leading approaches: the relational approach developed by the Uppsala research group on industrial marketing, and the structural approach, established within the social network theory. The discussions on the internationalisation of network boundaries, and on the relationships, transactions and exchanges between business partners utilises various theories of internationalisation and modes of foreign market entry. The paper offers a review of different modes of foreign market entry as distinctive business practices and derives at four types of inter-organisational relationships that are established between firms across borders - market relationship, hierarchical relationship, representative relationship, and inter-dependent relationship. The control and co-ordination links between firms in business networks are displayed in diagrams and analysed for each type of relationship. The paper concludes with implications for management and governance structures of international business networks