Abstract
The aim of this paper is to contribute to international entrepreneurship theory by adopting a foreign market perspective when examining the links between network development and knowledge creation. Network development is argued to enhance the understanding of regional market structures and make firms more inclined − and better able − to create knowledge in foreign market business relationships (business relationships represent focal points in networks). The basis of this argument is that networks provide a multitude of opportunities for the exploitation of previously unexploited combinations of knowledge. Data were gathered from surveys conducted with an effective random sample of 188 small and medium-sized enterprises (SMEs) in Sweden. A LISREL-based analysis was performed to test the three hypotheses deduced from theory. Findings showed that network development has a direct positive impact on knowledge creation and that knowledge combination functions as a mediating construct between network development and knowledge creation.