The effects of social networks and a global mindset on Taiwanese manufacturing SMEs' ability to form alliances to increase international and financial performance

The Problem. In recent years, the global economy has shifted markedly in emerging markets. In Taiwan, small and medium-sized enterprises (SMEs), playing a very important role to the country’s economic growth, accounting for almost 98% of overall enterprises and employing almost 78% of all employees. However, SMEs still have to overcome resource limitations and barriers to the internationalization process. An SME may restructure its organization or re-formulate its operation strategy in order to maintain its competitiveness. The research questions in this study addressed the increasing external social networking behavior and global mindset of top managers, and how these constructs help manufacturing SME form alliances in order to overcome resource and capability constraints and to boost both international and financial performance in Taiwan. More specifically, the present study aimed to examine the effects of independent variables (i.e., social networks, global mindset, and alliances) on dependent variables (i.e., international performance and financial performance).;The purpose of this study was to empirically examine the impact of social networks of individual contacts, global mindset, and alliances on performance of Taiwanese manufacturing SMEs, in addition to critically reviewing the gaps between existing theoretical literature and current findings. Furthermore, the present study aimed to offer conclusions drawn from the empirical data analysis, as well as to integrate and highlight five theories: (1) social capital theory, (2) social network theory, (3) internationalization theory, (4) resource-based theory, and (5) transaction cost theory, which influenced the study’s theoretical model.;Method. A Qualtrics web-based survey was e-mailed to 2,000 firms, and 543 business owners or managers responded. However, only 365 responses were used in data analysis after 116 responses were dropped due to too much missing data and 62 responses were dropped because they were from large firms (outside of this study’s target population). Thirteen hypotheses were tested using multiple regression analysis to answer eleven research questions. In addition, multiple regression and Sobel tests were used to examine additional findings regarding possible mediation effects of global mindset and alliances.;Results. The empirical results of hypotheses testing revealed that eight of the study’s hypotheses (H1b, H1c, H2b, H3a, H3b, H3c, H3d, and H3f) were supported, and five hypotheses (H1a, H1d, H2a, H2c, and H3e) were not supported. The results of the data analysis showed that social networks and global mindset were significantly related to alliances in this study. Moreover, social networks and global mindset alone through alliances were significantly related to international performance and financial performance. Having alliances was found to be related to an SME’s international and financial performance. In particular, international alliances were found to be related to greater performance than were domestic alliances. Nevertheless, this study’s findings indicated that social networks and global mindset alone were not significantly related to international performance and financial performance. Domestic alliances were also not significantly related to financial performance. The results of additional findings revealed that alliances, rather than global mindset, had a mediator effect in this research model. These findings indicated that SME alliances, a key factor to increasing international and financial performance, are associated with the effect of extent of social network and global mindset on manufacturing SME top managers in Taiwan.;In order to successfully enter international marketplaces, SME owners or top managers need to develop strategic and marketing plans. The results of this study can therefore provide SMEs with suggestions (such as engaging in alliances) for how to expand internationally and to sustain competitive advantage in a highly dynamic and turbulent business environment. In particular, this study showed that international alliances increase performance more so than domestic alliances. These findings may provide SME owners and managers with a feasible path (such as engaging in international alliances) toward entering foreign marketplaces and expanding internationally.