Internationalisation of developing economy small and medium-sized enterprises: social capital and learning in Palestinian pharmaceutical firms

Abstract

PurposeThe paper examines the role of learning through social capital on the internationalisation process of small and medium-sized enterprises (SMEs) based within extreme contexts. The study focuses on the Palestinian pharmaceutical industry.Design/methodology/approachThe inductive, exploratory research used in this study adopts a case study approach. Data derived from semi-structured in-depth interviews held with senior management and companies' founders were analysed using content and thematic analysis techniques.FindingsThe findings suggest that accumulated learning by SMEs seeking international expansion is enhanced with stronger social capital ties and networks through structural, relational and cognitive mechanisms. Serendipity and liability effects enabled modes of foreign entry with higher degrees of commitment than efficacy-related factors.Practical implicationsThe Palestinian pharmaceutical industry presents a benchmark for other industries in comparable developing economy contexts. This study elucidates the important interrelationship between social capital and learning for SMEs seeking to expand internationally; the findings have implications for regional policymaking in developing economy regions.Originality/valueThe case study investigation focuses on the pharmaceutical industry and SMEs operating within the extreme context of Palestine, thereby contributing insights in an area of management enquiry that is under-represented in the extant literature.