Paper info

Experiential Knowledge In International Business Relationships

Rauni Seppola

The paper was published at the 19th IMP-conference in Lugano, Switzerland in 2003.

Market-specific experiential knowledge plays an important role in internationalisation process models (Luostarinen, 1970, 1979, Johanson and Vahlne, 1977) and is central in these models explaining the internationalisation process of the firm. The market-specific knowledge can be obtained by personal experience, thus it demands individuals. The aim of this research was to find out factors explaining experiential business knowledge. This was done by building a model describing the role of social capital in international business relationships and its influence on experiential knowledge. The research analysed with the help of LISREL social capital in international business relationships between suppliers and buyers. Theory suggests that social capital will have a positive effect on experiential knowledge. Social capital framework is conceptualised on three dimensions: structural, relational and cognitive dimensions. With the help of a LISREL-program, using structural equation modeling technique, eight hypotheses were tested on a sample of 280 Finnish exporting firms. After empirical tests, the hypothesized structural equation model was developed further producing rival model, and finally a comparison between the hypothesized and the developed rival model was carried out. Based on this rival model, the new theoretical model was developed, which identifies factors influencing experiential business knowledge. This research support earlier research that social capital in international business relationships is an important factor influencing experiential business knowledge. There were not find support from for causal relationship between experiential institutional knowledge and social capital. The result is line with the proposition set out in this research, i.e. that actors involved in international activities are those who accumulate important experiential knowledge.