The dual mechanism of social networks on the relationship between internationalization and firm performance: Empirical evidence from china

by Xin Cao, Peng Li, Xiaozhi Huang, Limin Fan

The effects of social networks on the relationship between internationalization and firm performance have been well documented in the international literature, and two dimensions of social networks have also been identified: business ties and political ties. However, few efforts have been made to examine whether there are different mechanisms of business ties and political ties. Based on social network theory and boundary spanning theory, we build a model of a dual mechanism of social networks, and the business ties and political ties of social networks that correspond with information processing and the external representation of boundary spanning theory. Using the data of Chinese listed companies in 2005–2013 and 2013–2017 to test the model, the results indicate that (1) in the relationship between internationalization and firm performance, the role of social networks has a dual mechanism. (2) Business ties play a mediating role in the relationship between internationalization and firm performance. Business ties are conducive to a company’s information acquisition and knowledge sharing and play the role of information processing. (3) Political ties play a U-shaped moderating role in the relationship between internationalization and firm performance and assume the role of external representation.