Navigating networks: The differential impact of government and market ties on the performance of traditionally internationalized SMEs

Drawing on resource-dependence theory, this study investigates the relationship between international entrepreneurial orientation (IEO) and the time-lagged performance of traditionally internationalized small and medium-sized enterprises (SMEs) through their networking with external market partners and government entities. Using a sample of 243 traditionally internationalized SMEs in Finland, we examine how different types of networking influence the IEO-performance relationship. Our results reveal that government export support significantly enhances the IEO-performance link, while market networking does not contribute in the same way. Interestingly, as IEO levels rise, government networking becomes increasingly crucial for performance enhancement, while market networking holds more relevance for SMEs with lower levels of IEO. This configuration-based finding highlights the importance of aligning networking strategies with a firm’s entrepreneurial orientation. Taken together, these results provide a configuration-based explanation of how external ties shape the value of IEO. Notably, the negative moderating effect of market networking on the IEO-performance relationship becomes statistically significant only when governmental export support is included, underscoring the configuration-dependent nature of this substitution effect. The study also has practical implications for policymakers and managers, emphasizing the importance of government support for high-IEO firms and targeted market networking for those with lower IEO.