The role of distribution networks in supporting SMEs entering emerging markets. Some experiences from the Italian furniture sector

Despite their relevance in the world economy, Emerging Markets (EMs) still remain difficult to reach to many Western firms. Scholars underlined the many difficulties connected with the business expansion in these areas and especially, environmental uncertainty and institutional distance. When entering foreign markets, small and medium-sized firms (SMEs) rely on their partners’ resources and capabilities more than bigger firms do. SMEs’ business partners trigger and motivate firms to internationalize and influence their entry-mode decisions. Further, they allow entering firms to access supplementary marketing resources, such as foreign distribution channels and a better understanding of market dynamics. But what happen to SMEs when entering EMs? And to what extent SMEs business networks in EMs differ from the ones set up in advanced markets (AMs)? This paper aims at contributing in filling this gap by presenting and discussing the results of a qualitative analysis conducted on three Italian medium-sized firms operating in the furniture industry and that have recently approached the Indian and/or the Chinese markets setting up a distribution network. Results show that business networks are the most appropriate learning mechanism for managing the specificities of those foreign markets; the network approach to distribution allows a more sophisticated analysis of relational strategies applied by SMEs to overcame the dysfunctionalities of EMs.