The Importance of Global Business Hubs on Internationalizing SMEs: an empirical analysis of psychic and geographic distance.

1993; Mark Casson The neoclassical approach is based on an underlying assumption that firms are This article investigates the influence of psychic and geographic distance, as well as country and market-related variables, on the preference of high-technology small and medium-sized enterprises (SMEs) to connect with, and settle in major business hubs. Literature in the field of SME internationalization and international entrepreneurship increasingly emphasizes a network approach in which the characteristics and linkages of the internationalizing firm’s network are studied. We aim to contribute to this network-based internationalization research by integrating a further element present in complex social and technical networks: network hubs. Hubs are highly connected nodes within a network. In global business, hubs can be defined as business sites that have a high interconnection with the world economy through tremendous flows of goods and capital. The empirical findings of our research suggest that internationalizing high technology SMEs tend to connect with, or settle in to foreign market business hubs, when focal markets are more distant from their home market. These findings are significant for both geographic and psychic distances between home and focal markets. The new technical capabilities associated with ICT, and some components of the work of states, have together constituted scales other than the national as strategic today.