Empirical evidence how social capital effects the internationalisation process of SME in Zhejiang

SMEs (small and medium-sized enterprises) are taking the similar way towards internationalisation as large MNCs (multinational corporations). The two participants have similar problems in the internationalisation process, but the conditions for SMEs are completely different due to their limited resources. Social capital is influencing the process and can be a compensation for the disadvantages SMEs are confronted with. This study shows how social capital affects the internationalisation speed and performance of SMEs in China. Using the existing research as a framework, this paper proposes hypotheses concerning various aspects of social capital in terms of networks or ties to key institutions and discusses their effects on the SME’s internationalisation. The hypotheses are tested on a representative sample of 99 SMEs located in Zhejiang (China) with the help of a regression analysis. The findings indicate that some aspects of social capital contribute to a superior performance and a faster internationalisation speed. The results of this study can help managers and founders choose proper business strategies or representatives of political institutions setting policies.