The informal network of CEOs and managers –
performance implications for born globals
Thesis by:
Agnes Adriana Evelina van Oudenaren 6045855
March 23, 2018 – final version
Master of Science in Business Administration – International Management Track Amsterdam Business School, University of Amsterdam
Supervisor: dr. Vittoria G. Scalera Second reader: dr. Markus P. Paukku
2 Statement of originality
This document is written by Student Agnes Adriana Evelina van Oudenaren who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in
creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
3 Abstract
Born globals are discussed in prior research and examined because of their superior performance. Research in the area of networks shows how companies are connected in a globalizing world. This thesis makes an effort to contribute to the born global research field and network theory by examining the effect of the informal network of (top) management on the financial and innovation performance of a born global company. Also, the role of internationalization was investigated within the relationship between informal network and performance. This study used primary data from a survey. CEOs and other (top) managers of 104 born global small and medium-sized enterprises in the European Union (EU), which are active in high-tech and knowledge intensive industries, were included in the data analyses. I did not find a significant effect of the informal network of these managers on the internationalization and performance of born globals based on the sample. A possible explanation could be due to cultural differences between EU countries or the differences in use of informal networks in different industry types. Despite these results, this research contributes in a research area of born global firms especially in relationship to network theory, a research area where more research is still required.
4 “Wisdom cannot be taught –
it must come from one’s own experience and inner struggle.” Hermann Hesse
5 Acknowledgements
First, I would like to thank my father and sister for their unconditional love and support, and for always believing in me. Second, I would like to thank all my friends, because they are amazing. Especially the following friends, who were there for me while I wrote this thesis: Renée and Ilse, because I share so many beautiful memories with them, they make me happy, and they are always there for me no matter what. Esra, because her critical evaluation helped me write this thesis and I can always talk to her, at any time and about any subject. Marije, because she sends me positive vibes and cares for me. Giulia, because she has been so patient with me in the last weeks of the writing process and she motivated me by being my personal cheerleader. Also Cilia, without her and Giulia I would not have been able to graduate, we spend so many hours in the library together and shared the good times and the bad. And Thaisa, for studying and partying together, which is just as important. Third, I would like to thank everyone who participated in this research by responding to our survey. Without these responses, I would not be able to graduate. Fourth, I thank my fellow colleague Francesco, for the good collaboration in data collection and data cleansing. It was a lot of work and I was happy I could share it with someone. Fifth, I would like to thank all the other people who made me smile, happy, or who helped me forget about my thesis for a little bit. And finally, and most importantly, I would like to express my sincere gratitude towards my supervisor dr. Vittoria Scalera. I am extremely grateful that she was my supervisor for this master thesis. Because of her knowledge, guidance, energy, suggestions, patience, feedback, positivity, and motivation I was able to deliver this thesis. I could not have wished for a better supervisor and I am extremely proud of the end product.
6 Table of Contents Statement of originality... 2 Abstract ... 3 Acknowledgements ... 5 1. Introduction ... 8 2. Literature review ... 10 2.1 Born globals ... 10 2.1.1 Business context... 11
2.1.2 Characteristics of born globals... 12
2.1.3 International success of born globals ... 16
2.2 The firm’s network ... 18
2.2.1 Typologies of network actors... 20
3. Hypotheses development ... 22
4. Methodology ... 27
4.1 Sample... 28
4.2 Data gathering via survey ... 31
4.3 Variables ... 32
4.3.1 Dependent variable: Performance ... 33
4.3.2 Independent variable: Informal network ... 34
4.3.3 Mediating variable: Internationalization ... 37
4.3.4 Control variables ... 37 4.4 Empirical strategy ... 40 4.4.1 Data cleansing ... 40 4.4.2 Data analysis ... 43 5. Results ... 45 5.1 Reliability analysis ... 45
5.1.1 Reliability: Network actors ... 45
5.1.2 Reliability: Entrepreneurial orientation ... 46
5.2 Factor analysis ... 46
5.2.1 Factor analysis: Network actors ... 47
5.2.2 Factor analysis: Entrepreneurial orientation ... 50
5.3 Normality check ... 51
5.4 Correlations ... 53
7
5.6 Regressions ... 57
5.6.1 Hierarchical multiple regression for H1a ... 58
5.6.2 Hierarchical multiple regression for hypothesis 2a ... 60
5.6.3 Hierarchical multiple regression for hypothesis 2b-I ... 62
5.6.4 Negative binomial regression to test hypothesis 1b ... 64
5.6.5 Negative binomial regression to test hypothesis 2b-II ... 65
6. Discussion and conclusions ... 67
6.1 Findings and theoretical implications ... 67
6.2 Managerial implications... 73
6.3 Limitations and recommendations for further research ... 74
7. References ... 77
Appendix I: Industry types in NACE Rev. 2 classifications ... 84
Appendix II: Survey (English) ... 85
Appendix III: Correlation matrix of items of network actors ... 102
8 1. Introduction
The small and open economy of the Netherlands has a long history of overseas trade. The Dutch East India Company (VOC) which was founded in 1602 was known as the first global multinational company. The first ship left the Netherlands for trade in Asia in 1603 and returned within two years (Gaastra, 1976; Lucassen, 2004). The VOC showed its global strategy by going overseas directly after founding. Other organizations with a global strategy are born globals, which are: “business organizations that, from or near their founding, seek superior international business performance from the application of knowledge-based resources to the sale of outputs in multiple countries” (Knight & Cavusgil, 2004, p. 124). They are a particularly interesting subset of small and medium-sized enterprises (SMEs) and important because they are remarkably competitive against longer established organizations and they manage profitable global business systems in a high speed (Rennie, 1993). More specifically, the born globals’ founders view the world as their marketplace (Cavusgil & Knight, 2015). This phenomenon has challenged traditional internationalization theory (Knight & Liesch, 2016). Fast-growing and young firms are important for the economy, because they are innovative and therefore create employment (Centraal Bureau voor de Statistiek, 2016). Both small, and new firms especially have limited access to resources. Therefore, networks play an important role for these firms (Kiss & Danis, 2008). Their network can deliver information, knowledge and learning, which is used to improve resource allocation and to build new capabilities to enable internationalization (Han, 2006). Informal networks are the source of business networks (Freeman, Edwards, & Schroder, 2006).
More research is needed in the area of networks and social capital of born globals (Knight & Liesch, 2016). A great deal of empirical research is conducted about larger firms (Knight & Cavusgil, 2004), theory and research on born globals is still underdeveloped and fragmented. Nevertheless, most network-related research focused on the business network of
9 the firm: customers, business partners, and suppliers (Burt, 1997; Chetty & Agndal, 2007; Johanson & Mattsson, 1987; Sharma & Blomstermo, 2003). Therefore, this study filled this research gap by focusing on the informal network of born globals and answering the following research question: What is the effect of the informal network of born globals on their performance? Also, the effect of internationalization was investigated.
How do born globals in the European Union (EU), an economic union that includes the Netherlands and other countries, utilize their informal network in business? To examine the research question, primary data was collected by surveying EU born globals, which were found via database Orbis and contacted via email. Respondents were (top) managers in these born globals and provided information about their informal network, business network, financial performance, innovation performance, and the internationalization of the company. Data gathered via this survey was cleansed, and analyzed in IBM SPSS.
This research contributes to the previously written literature in the field of born globals and made a connection between research on internationalization of born globals, their performance and research about network theory: how the informal network of a born global can assist in internationalization and performance. This research found no effect of the informal network on born globals’ performance in the context of the EU. Additionally, it showed how (top) managers utilize their informal network and the benefits that flow from it.
The structure of this thesis is the following: in section 2, the literature on the topics of born globals and networks will be discussed. In section 3, I will formulate the hypotheses that enable me to answer the research question. In section 4, I will describe the method of data gathering and analyses. In section 5, I will perform data analyses. Finally in section 6, I will discuss the results and implications of these results. Also, I will provide limitations and avenues for further research.
10 2. Literature review
In this chapter I will review the current literature on the topics of born globals and network theory. In section 2.1 I will discuss literature written about born globals including different definitions, the business context, characteristics, and performance implications of born globals. Following in section 2.2, the network view will be introduced, as well as the effect of networks on the company will be explained.
2.1 Born globals
Researchers have been writing about born globals for multiple decades now (e.g. Knight & Cavusgil, 2004; Rennie, 1993). Different definitions exist, one of which is that born globals are “business organizations that, from or near their founding, seek superior international business performance from the application of knowledge-based resources to the sale of outputs in multiple countries” (Knight & Cavusgil, 2004, p. 124). Another definition states that born globals “are companies engaged in intensive international activities immediately after start-up” (Eurofound, 2015).
In this thesis, the definition of a born global that internationalized “from or near its founding” was used and that this initial foreign market entry of a born global took place in their first three years, which is in line with prior research (Autio & Sapienza, 2000; Knight & Cavusgil, 2004; Madsen, Rasmussen, & Servais, 2000; Zhou, Wu, & Luo, 2007). Only a few born globals are operating on an international level directly from their founding (Knight & Liesch, 2016; Zucchella, Palamara, & Denicolai, 2007).
Additionally to the internationalization criterion, some researchers also used export conditions for the definition of a born global, where a born global firm’s revenue source is at least for 25% from exports (Choquette, Rask, Sala, & Schröder, 2017). However, for the definition of a born global in this thesis the export condition was not included.
11 In the research area of born globals, other definitions of terms exist which interface with born global. One of these terms is the international new venture (INV). An INV is defined as “a business organization that, from inception, seeks to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries” (Oviatt & McDougall, 1994, p. 49). Born globals are also referred to as global start-ups (Knight & Cavusgil, 2004).
In contrast, Fan & Phan (2007) argued that born globals or INVs do not have to be described as a specific unique breed, as internationalization decisions are influenced by home market size and production capacity (Fan & Phan, 2007). Along the same line of thought, other researchers claimed that rapid internationalization is not specific to born globals, but rather to small firms with high innovation levels (Chetty & Campbell-Hunt, 2004).
Born globals have existed for millennia, especially in countries characterized by small domestic markets (Cavusgil & Knight, 2009 in: Knight & Liesch, 2016). Whereas research on born globals can be traced back to the 1990s, it can be argued that the phenomenon already existed in the nineteenth century. Free-standing companies could be identified as born globals (Zander, McDougall-Covin, & Rose, 2015). These companies were British and engaged in foreign direct investment. They were unique in a way that the largest part of these companies did not start to expand abroad from domestic operations of existing companies. Therefore they are called “free-standing” (Wilkins, 1988).
2.1.1 Business context
The rapid internationalization of born globals was driven by globalization of markets in the second half of the 20th century (Ruzzier, Hisrich, & Antoncic, 2006), mainly by technological advances in information and communication technologies (Cattaneo, Gereffi, Miroudot, & Taglioni, 2013; Cavusgil & Knight, 2015; Knight & Cavusgil, 2004), lower
12 trade barriers, financial deregulation, and the opening of new markets (Ruzzier et al., 2006). These globalized developments reduced the transaction costs of foreign market expansion (Porter, 1990).
Globalization introduced global value chains which changed the strategic framework of countries and firms (Cattaneo et al., 2013; Chetty & Campbell-Hunt, 2004). Competitive strategies are now focused on trade (Cattaneo et al., 2013). This is especially valid now for born globals, whose founders project a global vision for their companies (Cavusgil & Knight, 2015; Knight & Cavusgil, 2004; Zander et al., 2015).
The firm’s domestic market context can be important in its decision to internationalize. Zander et al. stated that a small and open country has stronger push factors for expanding business international, compared to firms in large countries (Zander et al., 2015). However, other researchers suggested that born globals started to emerge in small home markets, but now exist in all major trading countries (Cavusgil & Knight, 2015; Knight & Cavusgil, 2004).
Additionally, in the business context, a shift can be identified in business from older firms who, in the past, mostly relied on their tangible resources, compared to born globals who leverage their intangible resources. Older firms mostly used their physical resources, for instance financial and human resources as well as plant and equipment to achieve international performance. In contrast, born globals use their intangible knowledge-based capabilities to achieve performance in foreign markets (Knight & Cavusgil, 2004).
2.1.2 Characteristics of born globals
Whereas traditional international business literature described a gradual approach towards internationalization of firms (Dunning, 2000), with firms that are first entering markets characterized by a small physical, administrative and economical distance
13 (Ghemawat, 2001; Ghemawat, 2003; Kim & Aguilera, 2015), born globals go against these traditional views by demonstrating an accelerated approach in their internationalization process (Weerawardena, Mort, Liesch, & Knight, 2007). Literature suggested that institutional pressures from the home country could lead to early internationalization of born globals, and explains their radical, rather than gradually developed activities on an international level (Cheng & Yu, 2008).
Born globals tend to be small (Eurofound, 2012; Knight & Cavusgil, 2004). Therefore, a born global can also be identified as a type of small and medium-sized enterprise (SME). SMEs are defined as firms with a staff headcount smaller than 250 and sales lower than 50 million euros a year or a balance sheet totaling to no more than 43 million euros a year (European Commission, 2003).
Born globals are not constrained by administrative complexity which causes inertia, unlike larger firms who tend to be more complex and bureaucratic (Collis, 1991; Miller & Friesen, 1984). A distinctive difference between large multinational enterprises (MNEs) and born globals is that born globals are more flexible. This is because large MNEs suffer more bureaucratization which slows their innovative activities down, whereas born globals benefit from the circumstances that encourage innovation in the firm (Schumpeter, 1942 in: Knight & Cavusgil, 2004).
SMEs and younger firms are more flexible and tend to innovate more than larger firms (Knight & Cavusgil, 2004). The explanation for this is that in larger firms, employees with innovative ideas are not the owner of their idea: their firm is the owner. In smaller firms, the innovator has the ability to maintain the property rights and has thus an incentive to make radical innovations. This allows smaller firms to be better verhicles for innovations (Acs, Morck, Shaver, & Yeung, 1997). Also, large firms move away from innovation because of
14 bureaucratization (Knight & Cavusgil, 2004), whereas small organizations are less ponderous and more likely to change (Hannan & Freeman, 1984). However, larger firms are better off compared to SMEs when overcoming fixed costs of conducting international operations. This is due to their larger size (OECD, 2012).
Besides the large innovation ability, born globals are equipped with other special intangible resources and capabilities (Cavusgil & Knight, 2015; Knight & Cavusgil, 2004), for instance a high degree of entrepreneurial orientation (Zhang, Ma, Wang, Li, & Huo, 2016), persistence, and differentiated products (Cavusgil & Knight, 2015). Most of these capabilities are knowledge-based (Knight & Cavusgil, 2004).
Knowledge provides advantages to enable foreign market entry (Kogut & Zander, 1993). In order to have a sustainable business in foreign markets, the knowledge resources are inimitable and unique to the firm (Dierickx & Cool, 1989; Knight & Cavusgil, 2004). The ability of SMEs to innovate is an important driver for a rise in the economy, which allows SMEs to contribute to the global economy (Acs et al., 1997). Also, the entrepreneurial element of born globals is a major source of innovation and job creation in countries (Zander et al., 2015). This is demonstrated in research conducted about Danish manufacturing born globals, that shows a growth of employment, which also has a socioeconomic impact on the country (Choquette et al., 2017). Additionally, in the European Union context, two thirds of employees working in a non-financial business economy workforce were employed by an SME in 2008 (European Commission, 2011).
Approximately twenty per cent of young enterprises in the European Union are born globals (Eurofound, 2012), which are often high-technology start-ups (Zander et al., 2015). However, there are also large amounts of born globals in the European Union operating in
15 wholesale and retail trade, information, communication and basic manufacturing industries, and in professional, technical and academical fields (Eurofound, 2012).
The internationalization strategy of a born global is unique and can be explained by both the born globals’ entrepreneurial vision as well as their resource constraints (Zander et al., 2015). The specific resources the company has, are committed to international activities (Knight & Cavusgil, 2004) and are needed for early internationalization and superior international performance (Cavusgil & Knight, 2015; Knight & Liesch, 2016; Zhou et al., 2007).
Born globals experience scarcity in financial, human, and tangible resources (Knight & Cavusgil, 2004; Zander et al., 2015). Low levels of resources imply that born globals internationalize via export as their main entry mode (Cavusgil & Knight, 2015). Internationalization is thus a search of opportunities of growth by expanding into a new market whilst being high in risk and without international experience (Buckley, 1989). This high level of risk can be explained by the limited amount of resources available (Lu & Beamish, 2001). Foreign markets will be entered because of a foreign location advantage, which is provided by a great mobility of knowledge capabilities of born global firms (Oviatt & McDougall, 2005).
Besides a limited amount of tangible resources, born globals face alternative disadvantages. The first alternative disadvantage is that, due to their size, SMEs experience a disadvantage through their liability of smallness. These disadvantages are difficulties in raising capital, meeting the multiple government requirements and competing with larger companies for labor (Aldrich & Auster, 1986). The effect of liability of smallness is a high mortality rate for small companies.
16 The second disadvantage is that newly founded companies, such as born globals in their first years of business, suffer from liability of newness. New firms who compete with established firms face constraints because their access to resources is limited, for example in the workforce and internal policy regarding how to deal with external constraints. The experienced companies can benefit from this. Also, market characteristics give an advantage to established firms. Liability of newness creates a high mortality rate for new firms. However, this rate declines as the firm ages. A combination of liability of newness and smallness can thus result in a very high early dissolution rate (Aldrich & Auster, 1986; Freeman, Carroll, & Hannan, 1983).
The third disadvantage is the liability of foreignness, which born global firms experience when expanding business abroad. This is presented in the firm as having a lack of institutional market knowledge. This limitation costs time in order to overcome it (Johanson & Vahlne, 2009).
2.1.3 International success of born globals
Born globals are organizations that are market driven (Mascherpa, 2012). Internationalization and success after entering foreign markets can be explained by exploiting firm specific advantages, such as intangible resources (Rugman, Verbeke, & Nguyen, 2011). Benefits can be obtained via economies of scale and economies of scope (Lu & Beamish, 2004). Born globals’ strong innovation capabilities enable them to internationalize early and consequently achieve superior performance (Knight & Cavusgil, 2004).
A remarkable example of born global success comes from Danish manufacturing born globals, who have shown superior performance turnovers, (growth of) employment, and the number of export destinations when compared to control groups (Choquette et al., 2017). These born globals have at least 25% of revenues coming from export.
17 Research found that intangible skills are positively influencing the speed of internationalization with regards to e-commerce companies (Luo, Hongxin Zhao, & Du, 2005). If innovation is an exceptional intangible resource, then the degree of internationalization will be higher (Luo et al., 2005). Besides innovation, there are other aspects that lead to the success of born globals. One of these aspects are the technological intangible resources, which are positively related to the speed and degree of internationalization (Zahra, Matherne, & Carleton, 2003).
Although research argued that the innovation level and speed and degree of internationalization are positively related, other research did not find any relationship between technological innovation and export growth (Kundu & Katz, 2003). International innovativeness is an instrument of international performance of SMEs, as well as having an international strategy and international marketing skills (Knight & Kim, 2009).
Although being a born global has a positive impact on the size and the sales growth of the firm, there is a weak negative relationship between being born global and profits. This is probably due to innovation and research and development (R&D) costs. This was demonstrated by Halldin’s (2012) research of Swedish knowledge-intensive business service and manufacturing firms (as cited in: Eurofound, 2012).
Nevertheless, international experience of the management team strengthens the speed of internationalization and is important for foreign market entry (Kuivalainen, Puumalainen, Sintonen, & Kyläheiko, 2010; Luo et al., 2005). Additionally, this international experience is a significant determinant for the international performance of Finnish high-tech SMEs (Kuivalainen et al., 2010). This can be explained by knowledge, which is considered to be an important driver for successful internationalization (Knight & Cavusgil, 2004; Prashantham, 2005).
18 The early internationalization condition of born globals increases foreign market performance, as well as prior international experience of management, asset specificity and firm size (Schwens & Kabst, 2009). The international entrepreneurial capability of a born global has a positive influence on the global strategic performance, which also has a positive influence on the financial performance (sales, growth, profitability) when compared to traditional exporters (Zhang et al., 2016). Some researchers go further by formulating the performance of a born global as ‘outperforming’ their competitors (Mascherpa, 2012).
A major aspect of the success of born globals is, the set of intangible resources a firm owns, especially its network. As Zhou et al. (2007) asserted, interpersonal network ties and social interactions have shown to improve financial performance (Zhou et al., 2007). This key aspect enhancing the born global’s success will be discussed in the following section.
2.2 The firm’s network
Although a lot of born global research was conducted through a resource based view (Knight & Liesch, 2016), this thesis focused on the network view. In the network view, markets and organizations are viewed as elements that are linked to each other in different networks (Johanson & Vahlne, 2009).
A network can be defined as “a set of nodes and the set of ties representing some relationship, or lack of relationship, between the nodes” (Brass, Galaskiewicz, Greve, & Tsai, 2004, p. 795), where the nodes are the actors, such as individuals, work units or organizations. Ties represent the content of the relationships between the actors (Brass et al., 2004) and are crucial for the opportunities and their integration into society. Personal experience with other individuals, in a weak or strong form, is key in sociological theory (Granovetter, 1973).
19 Networks of relationships among firms are also defined as “industrial systems”, including firms’ production, distribution and use of goods and services. These relationships, established through activities in the network, secure the access to external resources and enable an increase in revenues (Johanson & Mattsson, 1987). Also, network ties can deliver information, knowledge and learning, which can be used for strategic planning, to improve resource allocation and build knowledge-based capabilities (Han, 2006).
The network is a necessity, also for organizations. Especially, for small firms and start-ups it is crucial to have networks and social capital, as these firms suffer from the aforementioned liability of newness and liability of smallness (Aldrich & Auster, 1986; Hannan & Freeman, 1984 in: Han, 2006). Social capital is “the sum of the actual and potential resources embedded within, available through, and derived from the network of relationships possessed by an individual or social unit” (Nahapiet & Ghoshal, 1998, p. 243). Thus, social capital represents the assets flowing from a network and enables the creation of intellectual capital. This capital is created and developed from existing knowledge, suggesting that network actors have knowledge that is transferred through their network (Nahapiet & Ghoshal, 1998).
Network relationships can be seen as intangible resources that are important for organizational growth. Additionally, these relationships are essential in the phases prior to internationalization, growth and commercialization: from the earliest element of firm development on (N. E. Coviello, 2006). In addition, Burt (1997) stressed the importance of network ties as an important source of information about a specific market. Also, inter-firm network ties influence the timing of information delivery into the firm. Another peculiarity of ties is their positive outcomes for the actor, such as referrals (Burt, 1997). Additionally, prior research showed that export initiations solely arise from the existence of prior network ties of the firm’s decision makers. Utilizing their known and long-established network ties, the
20 decision makers of small- and medium-sized enterprises are able to operate whilst minimizing their risks (Chetty & Holm, 2000).
2.2.1 Typologies of network actors
A distinction can be made between weak and strong network ties of born globals. Weak ties are low in amount of time, emotional intensity, intimacy and reciprocity (Granovetter, 1973; Sharma & Blomstermo, 2003). It is convenient for firms to maintain a large number of weak ties than strong ties, because strong ties imply strong interaction between firms, which is costly. Also, having weak ties compared to strong ties supplies more novel knowledge (Rogers, 1980 in: Sharma & Blomstermo, 2003). Weak ties provide a better position to search for new knowledge, firms have greater autonomy and adapt easier.
Ties are a common channel for knowledge transfer (Sharma & Blomstermo, 2003) and can be distinguished in economic or social ties. Nevertheless, it is not easy to categorize the network ties although they strongly assist the born global in its evolution and internationalization (Coviello, 2006).
Firms can develop knowledge and acquire information from their customers (Chetty & Agndal, 2007), who are part of the business network of a firm (Oparaocha, 2015). The firm increases its social capital by frequent interaction with the customers. The actors combine knowledge to adapt to each other’s needs. The context of this research is a small and closed economy, where the threat of isolation is present (Chetty & Agndal, 2007).
Besides customers, other actors that are part of the business network of an individual are: suppliers, competitors, strategic partners, shareholders and other comparable network actors (Oparaocha, 2015). Besides the business network, individuals also have a social network consisting of (other) individuals, family, friends, acquaintances, colleagues, and employees (Oparaocha, 2015). However, in this thesis I formulated a social network as an
21 informal network, because lately most literature focusing on social networks is about online social networks (Ellison, Steinfield, & Lampe, 2007). Therefore, in line with Batjargal (2003) and Oparaocha (2015), I define the firm’s informal network as: the utilization of ties with friends, (in-law) family, acquaintances, (former) colleagues, and employees of the firm’s decision makers. These decision makers are the firm’s CEO and (top) managers: the actors in the firm who decide over the firm’s (international) strategy.
The informal network delivers the following benefits to a firm: knowledge about international opportunities, advice, learning, and trust by a third party (Coviello & Munro, 1997; Zhou et al., 2007). The paramount characteristic of the informal network is its fundamental role in providing benefits to recover from liability of smallness and liability of newness (Aldrich & Auster, 1986). The informal network is the only means to achieve the aforementioned benefits (Zhou et al., 2007).
A decision maker’s social ties are the source of learning about foreign opportunities. Blind luck in opportunity discoveries is rare. The opportunities discovered via social ties lead to activities of better quality and more valuable if these opportunities are constrained by numerous types of distance (Ellis, 2011).
Network activities can create international social capital, which is the internationalization knowledge that flows from international relationships. If social capital is specific to the market, then it boosts the opportunity exploitation for international business (Lindstrand & Hånell, 2017).
22 3. Hypotheses development
In this section I will formulate the hypotheses that will be tested later on in this thesis in order to answer the research question. Two main hypotheses will be formulated, whereas the first consists of the direct effect between the informal network and performance and the second hypothesis consists of the mediating effect of internationalization between informal network and performance.
Research demonstrated that informal networks are fundamental at a small and medium-sized enterprise’s (SME) launch, leading to superior performance (Peltier & Naidu, 2012). Also, a connection with one or more networks is a requirement for a firm’s success (Johanson & Vahlne, 2009). As previously stated, social capital, flowing from an informal network, has been shown to have a positive effect on small firm performance (Stam, Arzlanian, & Elfring, 2014).
Additionally, the international network of the decision makers, which is geographically dispersed, is also of major importance to obtain superior performance (Musteen, Francis, & Datta, 2010). However, if this is too reliant on the informal network, then the performance will be weaker (Musteen et al., 2010). On the contrary, decision makers’ characteristics, instead of firm characteristics, are found to be strongly related to export performance (Kundu & Katz, 2003), and have an overall positive effect on an SME’s performance (Naudé, Zaefarian, Tavani, Neghabi, & Zaefarian, 2014).
The network itself is not necessarily important in achieving international growth for new firms, but specifically the use of the social capital which flows from the network (Prashantham & Dhanaraj, 2010). The utilization of a firm’s external network plays a significant role on the innovation process, especially if the firm has a weak entrepreneurial orientation. This is even more pronounced for smaller firms (Baker, Grinstein, &
23 Harmancioglu, 2016). Following the same line of thoughts, stronger network ties in the informal network lead to more knowledge sharing and therefore more creation of innovative ideas (Björk & Magnusson, 2009). The connectedness of these network ties lead to positive innovation performance (Tsai, 2001).
In this research in fact, I focused on how firms make use of the informal network, which I formulated as ‘informal network’. In addition, I focused on born globals, which, as previously explained, is a specific subset of SMEs (Eurofound, 2012; European Commission, 2003; Knight & Cavusgil, 2004). In line with prior research, I argued the following hypothesis:
H1a: There is a positive relationship between Informal network and Financial performance.
H1b: There is a positive relationship between Informal network and Innovation performance.
After having discussed the direct effect of the informal network on performance, I extended on its indirect effect via internationalization.
Networking could be more significant to performance of the internationalization process than internationalization (Zucchella et al., 2007). Effectively generating network ties can significantly increase a start-up’s internationalization performance (Han, 2006). Also, several dynamic internationalization capabilities that found their origin in the network positively affect international performance of the firm (Pinho & Prange, 2016).
In the Chinese context, for instance, social interactions are a crucial explanation for early internationalization of SMEs, and thus born globals. Informal networks entail rapid and experiential learning advantages and success in performance stemming out of internationalization (Zhou et al., 2007). The Chinese institutional context includes a specific type of informal network, best known as guanxi, which is used in business dealings as a
24 strategic response to and substitute of unpredictable government actions (Xin & Pearce, 1996).
Therefore, I formulated the following hypothesis:
H2: The positive relationship between Informal network and Performance is mediated by Internationalization.
The first element of this mediating relationship is the direct effect of the informal network on internationalization. The ties in informal networks are relationships of trust, an important ingredient for successful learning and the development of new knowledge (Johannisson, 1988). Trust, learnings and commitment which can be gained via relationships are essential elements of internationalization process (Johanson & Vahlne, 2009). A firm with no relevant network suffers from the liability of outsidership. Firms suffer from liability of outsidership when they are not included and able to utilize certain networks, useful for the firm’s success. This outsidership prevents the firm from developing business and makes it impossible to start the internationalization process (Johanson & Vahlne, 2009).
The importance of insidership in a network is explained by Ojala (2009). Ojala (2009) executed a case study on Finnish knowledge-intensive companies with lower than 500 employees. These companies make use of their informal network and additionally develop new relationships to accomplish internationalization (Ojala, 2009). In addition, Ellis & Pecotich (2001) found that the degree of social contact of decision makers is fundamental in informing about foreign opportunities and largely determining export initiation (Ellis & Pecotich, 2001). Also, if family, which is an informal network tie, is involved in the firm then it has a positive effect to the internationalization, for instance in the context of US manufacturing firms (Zahra, 2003). Additionally, prior research emphasized that the use of
25 informal networks facilitates the internationalization process (Ellis, 2011), also specifically of new ventures (Kiss & Danis, 2008) and of SMEs in the high-tech sector (Zain & Ng, 2006).
Therefore, I formulated the following hypothesis:
H2a: There is a positive relationship between Informal network and Internationalization.
The effect of internationalization on performance has been extensively discussed in current literature. For Japanese listed firms with lower than 500 employees, the first years of internationalization the performance decreased. Once the liability of foreignness has been overcome, there was a positive relationship between internationalization and performance. When complexity increased, because of the large amount of international operations, the performance declined again (Lu & Beamish, 2001). Also, Chiao, Yang & Yu (2006) found a positive relationship for SMEs in the electronics industry between internationalization and performance.
Other research found a positive relationship between internationalization and performance, in this case mediated by social networks (Zhou et al., 2007). For high-tech SMEs internationalization contributes to higher profitability of the firm (Qian & Li, 2003). Additionally, as Boermans & Roelfesma (2016) argued, internationalization has a positive effect on the sales growth. They also found that internationalization has a positive effect on innovation (Boermans & Roelfsema, 2016). Similar results were found by Kafouros et al. (2008), who had asserted that internationalization has a positive impact on performance by stimulating the firm’s ability to innovate (Kafouros, Buckley, Sharp, & Wang, 2008). This led to the following hypothesis:
H2b-I: There is a positive relationship between Internationalization and Financial performance.
26 H2b-II: There is a positive relationship between Internationalization and Innovation performance.
Figure 1 displays the hypotheses as stated in this section.
Figure 1. Conceptual model
Internationalization Informal network Financial performance H2 (+) H2a (+) H2b (+) H1b (+) Innovation performance H1a (+) H2b-II (+)
27 4. Methodology
In this section, I will explain the methods I used in order to answer the research question. First, in section 4.1, I will discuss the sample of this thesis. Then, in section 4.2, I will explain how I gathered data for this research. Third, I will elaborate on the measurements of the variables in section 4.3. In section 4.4 the empirical strategy will be central, where I will start with data cleansing and following will explain the steps of data analysis.
The objective of this study was explanatory. The aim was to understand the mediating role of internationalization of a firm on the relationship between the informal network of a firm and its performance. The study used cross-sectional data. Data was gathered via a survey in order to answer the research question. This type of data collection was used because information about informal networks of companies is not available in databases. Additionally, using interview techniques would have not been sufficient to examine the performance implications of networks, results could be biased. Using a survey for data collection is in line with prior research on networks and small and medium-sized enterprises (SMEs), of which born globals are a specific subset (Baker et al., 2016; Lindstrand & Hånell, 2017; Zhang et al., 2016; Zhou et al., 2007).
This thesis is a part of the thesis project “Alliances formation and internationalization strategies in small firms” of dr. Vittoria G. Scalera. Data for the thesis was collected and cleansed with a fellow student of this project group. Therefore, the survey consisted of questions about the network of the respondent and questions about strategic alliance partners and their home countries, which was used for the thesis of the fellow student.
We gathered data for this research via a web-based self-completed survey (Saunders, 2011). This was chosen because the size of sample is large and geographically dispersed in the European Union. This research used a 100% probability sampling technique (Saunders,
28 2011). The survey was created in Qualtrics and distributed for 1.5 months in the fall of 2017. The decision to use Qualtrics was based on an advice and lectures given by the University of Amsterdam. Qualtrics is a user-friendly platform and designed in a way that is suitable for scientific research.
Issues that arise by using a web-based self-completed survey are related to respondents who do not wish to provide information about their informal network. Another issue that can arise is that respondents do not want to share performance information about their company due to competition, although it is specified that data is solely used for this research. Additionally, there is a possibility that the email does not reach the targeted respondent (for instance the CEO) in the firm but solely an assistant, service desk employee, or intern. These issues result in a lower amount of (useful) respondents.
4.1 Sample
Data gathered for this thesis is from born globals in the European Union (EU). Although there are differences in countries in the EU due to various distances (Ghemawat, 2001), companies from these countries benefit from similarities due to their EU membership. Therefore, the survey was distributed to companies throughout the EU.
To start data collection, company data was extracted from the database Orbis, since it contains information about financial performance and patents about a large group of SMEs, as well as contact persons and addresses. Also, Orbis is very user friendly and enables to select companies with a certain profile: in this case SMEs and industry types. This company data enabled us to get in touch with the management of SMEs.
For this research, data used in the analyses came from an employee who had decision making responsibilities in the company, which in this research could be the chief executive officer (CEO), another C-level executive, a senior vice president, a director, or a (senior)
29 manager. This was crucial because an informal network is personal and thus it could have been assumed that an informal network of a CEO or the informal network of an intern differ. The informal network of the employee that replied to the survey was seen as the informal network of the company. Therefore, I have chosen to only include respondents with decision making power in the company: manager level or higher positions. This was in line with previous research of decision makers’ characteristics in international SME context (Francioni, Musso, & Cioppi, 2015).
The population of this research was all EU born globals, which in this research were companies with lower than 250 employees and maximum 50 million euros turnover per year (European Commission, 2003), and that internationalized within three years after founding (e.g. Zucchella et al., 2007). The sampling frame included born globals in the high-tech and mid-tech manufacturing industries, and knowledge-intensive service industries, based in the EU. These companies were selected by using the European Commission’s classification of industry types (European Commission, 2008). Firms in the high-tech industry are knowledge-intensive and able to leverage their social capital (Prashantham, 2005). Also, born globals are often active in the high-tech industry (Zander et al., 2015). Additionally, the subset of SMEs that can be called born globals was identified by questions in the survey through the year of founding and year of internationalization. Based on these criteria, only born globals were included in this research.
The sampling frame contained companies of which company information in Orbis was available and included a company email address, turnover figures, and number of employees for 2016. This was necessary to get in touch with these companies and to decide whether these companies met the requirements for being an SME (European Commission, 2003). Companies without aforementioned information were not included in the sample
30 frame. Filtering born globals was not an option in Orbis. However, SMEs that are not ‘born global’ were excluded after a data cleansing, as described in section 4.4.1.
57,408 companies were extracted from Orbis on October 16, 2017, based on the following criteria: first, all active companies, second, the number of employees in the year 2016 was minimal 1 and maximum 250, third, world region ‘European Union’, fourth, industry type selection by using the NACE Rev. 2 classification (for included industries, see Appendix I) (European Commission, 2008), fifth, turnover of 2016 in between 100 euros and 50 million euros, and finally companies with available email address.
Although these firms seemed to meet the requirement for SMEs, we conducted a scrutiny on the extracted dataset to identify if these SMEs indeed were independent companies without being a subsidiary of a global ultimate owner. The global ultimate owner is the highest parent company and the entity on top of the corporate ownership structure (Bureau van Dijk, 2017). We searched for turnover and employee numbers of the global ultimate owner of the SMEs, which was mostly available in Orbis. If the global ultimate owner did not meet the requirements for an SME, which are 1-250 employees and turnover of lower than 50 million euros, then this company was excluded from the dataset. 3,434 companies were excluded based on the global ultimate owners that did not meet SME requirements. If information about the global ultimate owner was unknown, we included this company in the dataset. However, in this research we also asked for information about the holding company and if the holding company did not meet the SME requirements (European Commission, 2003), then this company was excluded in a later stage from analysis, as mentioned in section 4.4.1. The companies included in our dataset were asked to participate in our research. This will be further explained in the following subsection.
31 4.2 Data gathering via survey
Data gathering for this research was executed by a survey. We spread the survey via Qualtrics separately in three languages: English, French and Italian, where the English survey is the source survey and the French and Italian are the target surveys (Saunders, 2011). Also, the emails in which the request to participate in the survey was stated were in these three languages. The reason to translate it into French and Italian was because the initial amount of companies was high in these countries and we are acquainted with these three languages. The survey in English can be found in Appendix II. The survey in French and Italian is available upon request at the author of this thesis.
48,668 companies received our request to participate in our survey on their general company email address, of which 2,190 French companies receiving the French translation and 1,045 Italian companies receiving the Italian translation. Although translating a survey can cause validity issues, it can increase the response rate, especially in countries where English is not common, such as France and Italy. In translating the surveys, attention has been paid for idiomatic meaning, experiential meaning, and grammar and syntax by conducting translations by native and highly experienced speakers (Saunders, 2011).
After spreading the first email, we sent two reminder emails to the companies via Qualtrics. In order to ensure that the respondent filled in the survey for the correct company and not another company he or she could be involved in, the company name was written in the first line of the email. No prior consent was obtained from the respondents (Saunders, 2011). Besides sending three emails to the companies, another attempt had been undertaken to increase the amount of responses by using a systematic random sampling technique (Saunders, 2011). We selected 400 companies based on the relative amount of companies per country in the sample. We searched for additional information about the CEO (name and email address) of the company by visiting the company’s website, looking on LinkedIn, and
32 using Google. By doing so, we made an effort to get in touch with the CEO directly, instead of via the general company email address.
By spreading the survey via Qualtrics, we noticed that 5,306 companies did not receive our email. These emails bounced back to the Qualtrics mail server after sending the email. Also, some companies received our email in their spam filter. This was emailed to me by companies who emptied their spam box. For how many companies this was the case is unknown. Additionally, 33% of all email addresses used was an “info@companyname” email address, which complicated gathering a response from a C-level executive or manager in the company. However, by using email and stating who needs to fill in the survey (CEO or another C-level executive), the confidence that the right person responded was high (Saunders, 2011).
In the data gathering process, the survey collected a total amount of 977 responses. This gave the study a response rate of two per cent, which is low. This decreases the reliability of this research (Saunders, 2011). Due to the used approach (via a general email) and the low incentive for respondents (a summary of the results) a response rate of 11% or lower was expected (Saunders, 2011). The total amount of respondents was not the amount of respondents used in the analyses. First a data cleansing was executed, see section 4.4.1. In the following subsection more information on the survey can be found: the measures of the variables are described.
4.3 Variables
In this subsection I explain the measurements of the variables: the dependent variable performance, the independent variable informal network, the mediating variable internationalization, and the control variables.
33 4.3.1 Dependent variable: Performance
The dependent variable of this research is the performance of the born global. The performance was measured twofold: financial performance and innovation performance. Performance is often measured in financial terms. However, because born globals are small and tend to innovative more when compared to larger MNEs (Knight & Cavusgil, 2004), also the innovation performance of these companies was measured. To be more precise: the radical innovation of a firm has been taken into consideration (Janger, Schubert, Andries, Rammer, & Hoskens, 2017).
Financial performance. The measure for financial performance was adapted from
Zhou et al. (2007): export growth. The data source for this variable was the survey. Respondents were asked the following question: “What was the growth in export of your company for the year 2016?” The answer, in percentage, was the variable that was used in the data analysis for financial performance.
Innovation performance. Innovation performance was measured by the number of
new patents, new products, and new services of the company in 2016. These are the radical innovations of a firm (Janger et al., 2017). The variable was computed by the sum of these three innovation performance measurements.
Complementary to the data on financial performance and innovation performance extracted from the survey, more information on financial and innovation performance was extracted from Orbis. For around one third of the included companies this data was not available in Orbis. Therefore, due to this large number of missing values, no additional data from Orbis was used in the analysis.
34 4.3.2 Independent variable: Informal network
The independent variable of this research is the informal network of the born global firm. The source of this variable was the survey. A measure for the social network variable of previous research by Zhou et al. (2007) could not be used, because the Chinese guanxi-network is unique to the Chinese institutional context (Xin & Pearce, 1996; Zhou et al., 2007). Therefore, I created a measure for the informal network by developing rating questions. This new measure made it difficult to compare the results of this research with other research (Saunders, 2011). First, I measured the complete network of the respondent by two questions, of three and five items. These questions are stated in Table 1. Respondents answered to what extent these characteristics represent their network on a 6-point Likert scale. The type of rating that I used in developing the questions is “Agreement” (Saunders, 2011): Strongly disagree, Disagree, Neither agree nor disagree, Agree, Strongly agree, and Not applicable. Not applicable is treated as missing value. These network characteristics were formulated by Zhou et al. (2007).
35 Table 1. Survey questions about network characteristics
To what extent do you agree that the following statements represent your (social and business) network? 1. My network provides me with knowledge of foreign business opportunities.
2. My network provides me with advice and experiential learning.
3. My network provides me with contact with third parties which I can trust and which will meet their obligations.
To what extent do you agree that the following statements characterize your (social and business) network?
1. My network helps to stimulate awareness of foreign market opportunities. 2. My network influences initiation of export.
3. My network helps to identify foreign exchange partners.
4. My network provides me with unwritten knowledge about international business practices.
5. My network helps sharpen my international vision and managerial openness in conducting business abroad.
Then I asked specifically to make a distinction between 10 different network actors with the following question: “To what extent do you agree that the following actors characterize your answers in the previous two questions?” (NetwAc)1. These actors include both the informal and business network. Additionally, I asked respondents: “To what extent do you agree that you obtained information from network actors about business in a foreign market, before your company started expanding business international?” (NetwInfo)1
and “To what extent do you agree that this information from network actors influenced your internationalization strategies?” (NetwIS)1
. These questions were stated to investigate which specific network actors provided business information about foreign business opportunities and influenced the company’s international strategy. These three last mentioned questions were the source for informal network, the independent variable, and business network, a control variable.
36 Respondents answered these questions by giving a level of agreement for ten different network actors, as formulated in a network typology by Oparaocha (2015). In this research, the network actors were slightly differently formulated: for network actor ‘Family’ the actor was formulated in the survey as ‘(In-law) family’ and for ‘Colleagues’ the term in the survey was ‘(Former) colleagues’. I added these brackets in order to make it easier for the respondent to categorize its network contacts and to minimize errors. Table 2 displays these 10 network actors, which were subdivided in two groups: informal and business network.
Table 2. Network actors
Informal network: Business network:
1. (In-law) family 6. Suppliers
2. Friends 7. Competitors
3. Acquaintances 8. Strategic partners
4. (Former) colleagues 9. Customers
5. Employees 10. Shareholders
In sum, three questions were asked about 10 different network actors. The variable for the informal network was computed by taking the mean of these three questions about the network of the respondent for the five items of informal network actors: (in-law) family, friends, acquaintances, (former) colleagues and employees, in total 15 items. However, after a reliability and factor analysis conducted in section 5.1.1 and section 5.2.1, several items were excluded from this variable. In the end, the variable informal network was computed by the mean of NetwAc2, NetwInfo2, NetwInfo3, NetwInfo4, NetwIS2, NetwIS3, NetwIS4, and NetwIS5. ‘NetwAc’ is the abbreviation of the question and ‘2’ the actor number, in this case ‘Friends’. This means that the informal network included the following network actors: friends, acquaintances, (former) colleagues, and employees. (In-law) family was excluded.
37 4.3.3 Mediating variable: Internationalization
Internationalization is the mediating variable in this research. The data source of this variable was the survey. The measure for this variable was the ratio of revenues from outside the home country against the total revenues of the company (Riahi-Belkaoui, 1998). In the survey, the following mandatory question was asked to obtain information about this variable:
“What are the sources of your company's revenues (in percentage 0-100%):
% from the domestic market % from the EU market
% from outside the EU market”
The total of these three fields had to sum up to 100%.
The variable Internationalization was computed by the percentage of revenues from the EU market, excluding the domestic market, plus the percentage of revenues from outside the EU market.
4.3.4 Control variables
The control variables I used in this research and its measures are described below.
Business network. The independent variable in this research is the informal network.
In order to be able to measure its influence, it was important to add other network actors (the business network) as control variable. This was added in accordance to the network typology of Oparaocha (2015). See section 4.3.2 for more details, as the business network was computed in a similar way as the informal network. The intention was to compute the mean of 15 items (five business network actors in three questions). However, as for the informal network, for the business network a reliability and factor analysis were also conducted. As described in section 5.2.1, the business network was computed by the mean of NetwAc6,
38 NetwInfo6, NetwInfo7, NetwInfo8, NetwInfo9, NetwIS7, NetwIS8, and NetwIS9. For more details on the specific questions and network actors, see section 4.3.2. In the end, network actor 10, the shareholders, was excluded from this research after the analyses. The business network included actors: suppliers, competitors, strategic partners, and customers.
Entrepreneurial orientation. The measure for entrepreneurial orientation was adapted
from De Clercq, Sapienza, & Crijns (2005). In their research it was measured on a 5-point Likert scale with 7 items and a Cronbach’s Alpha of 0.65, which could be expected for this type of variable (De Clercq, Sapienza, & Crijns, 2005). This variable was added because it is a distinct characteristic of a born global and could therefore also be of an influence on the born global’s performance. The source of this variable was the survey, of which the question and items for entrepreneurial orientation are displayed in Table 3. The items were measured on a 6-point Likert scale, ranging from: Strongly disagree, Disagree, Neither agree nor disagree, Agree, Strongly agree, and Not applicable. Not applicable was treated as missing value in further analysis.
Table 3. Items for entrepreneurial orientation
To what extent do you agree that the following statements characterize your company's activities? 1. My company spends more time on long term R&D (3+ years) than on short term R&D.
2. My company is usually among the first to introduce new products in the industry. 3. My company rewards employees taking calculated risks.
4. My company shows a great deal of tolerance for high-risk projects. 5. My company uses only “tried and true” procedures, systems, or methods. 6. My company challenges, rather than responds to its major competitors.
7. My company takes bold, wide-ranging strategic actions rather than minor changes in tactics.
Item number 5 was identified as a reversed item and was treated accordingly so in the data analyses. After a reliability and factor analysis, see section 5.1.2 and 5.2.2, the control
39 variable entrepreneurial orientation was eventually computed by calculating the mean of item number 1, 2, 4, 6, and 7.
Prior experience. Prior experience of the management team is one of the drivers in
the internationalization process, and specifically the international experience of the entrepreneur (Zucchella et al., 2007). Therefore, prior experience was added as a control variable. Prior international experience was measured by the amount of years that the respondent: worked abroad, worked abroad in a management position, studied abroad, and worked in a domestic position for an international company. The data source of this variable was the survey. The question in the survey was stated as following:
“Which is your prior international experience? Select all that apply. O None
O I studied abroad, for this amount of years (in numbers):
O I worked abroad in a management role, for this amount of years (in numbers): O I worked abroad, for this amount of years (in numbers):
O I worked in my country in an international company in a management role, for this amount of years (in numbers):”
The variable for prior experience was computed by the sum of the last four answer possibilities. If the respondent said ‘None’, then the value of the prior experience variable was 0.
Company age. The company age measure was the amount of years that the company
was in business (Zhou et al., 2007). The data source of this variable was the survey. The following question was asked in the survey: “In what year was your company founded? (e.g. 1994)”. The company age was the difference between 2017 and the provided answer to this question.
40
Industry type. As last control variable, industry type was added, as in research on
networks in SMEs by Zhang et al. (2016). The source for industry type was the Orbis database, which uses the NACE Rev. 2 classification (European Commission, 2008), as described in Appendix I.
4.4 Empirical strategy
In this section, the empirical strategy used for this research is discussed. After closing the survey in Qualtrics, the data was exported to Microsoft Excel. In this program, all text answer possibilities were transformed into categorical numbers for the English, French, and Italian responses. Additionally, a data cleansing was executed (Meade & Craig, 2012). The data cleansing is described in section 4.4.1, followed by the model specifications and strategy for data analysis in section 4.4.2.
4.4.1 Data cleansing
Useful respondents were identified after a data cleansing. When using survey data, it is important to exclude careless respondents from data analysis to enhance the validity of the research (Meade & Craig, 2012). Out of 977 respondents, 221 respondents were useful for research about SMEs. However, after additional data cleansing to solely include management members of companies that are born global (internationalized within three years after founding) (Knight & Cavusgil, 2004), 104 respondents were included. The steps of the data cleansing process are described next.
Respondents from companies with a home country outside of the EU were excluded, just as companies that did not meet the SME requirements of lower than 250 employees and lower than 50 million euros revenues for the holding company (European Commission, 2003). Also, respondents who were active in the survey for less than 5 minutes were excluded from the survey (Meade & Craig, 2012). These respondents were supposedly careless,
