Local networks’ facilitation of small wineries’ foreign market entry: A case study of a South African wine cluster

Abstract

Prior research has emphasized the role of networks for SMEs’ internationalization in order to successfully expand into foreign markets. Attention has mainly been directed on the importance of establishing contacts in foreign networks, where both business and social relationships have been seen to foster SMEs’ international expansion. However, less research has focused on the potential that local networks have on facilitating the internationalization for small firms. This study seeks to addresses this deficiency by investigating how local networks facilitate foreign market entry for small wineries located in a cluster region in South Africa. This is completed by a multiple case study including eight small wineries. The result shows that their insidership in different local networks have facilitated for their expansion into foreign markets. Yet, the findings indicate that being an insider in local networks does not per se result in entry into foreign markets. Instead, it is the interactional dimension, the networking aspect that appears to be of importance in order to grasp emerging opportunities resulting in foreign expansion. The main challenge identified in this study is related to the prevailing business environment within the cluster, where firms both collaborate and compete with each other. This is seen to hamper the utilization of the local networks’ full potential. The study contributes to the existing literature by enhancing the understanding of three interconnected theoretical fields; network theory, cluster theory and SME internationalization theory in terms of foreign market entry.