Building social capital for internationalization

Social capital may be defined as social relationships that confer actual or potential benefits. It can therefore beunderstood as a particular type of resource. Recent research has drawn attention to how connections andrelationships (networking) both at home and abroad can be crucially important for small and medium-sizedenterprises (SMEs) seeking to export or invest abroad. However, relatively little is known about how SMEsinitiate, develop and maintain network relationships. This paper reports a study of 32 British SMEs exporting, orattempting to export, to Brazil and of domestic institutional agencies whose role was to facilitate businessconducted between British and Brazilian SMEs. The study explored both the functions of social capital for theSMEs and the process whereby it was developed. Its findings confirm the value of social capital in internationalentrepreneurship. It can provide information, interpretation, market opportunities, and some degree of protectionagainst the risks associated with foreignness, newness and smallness. The study also confirms the vitalimportance of personal trust in sustaining social capital between small firms.

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