Complementary or compensatory? The interaction between entrepreneurial social networks and institutions in the early internationalization of new ventures

New ventures often enter foreign markets before they have accumulated financial and organizational resources, which makes social networks an important source of support. However, the value of these networks may vary across institutional settings. Using Global Entrepreneurship Monitor data on 1,208 entrepreneurs from 37 countries between 2009 and 2013, we estimate multilevel logistic regression models to examine how entrepreneurial education, the availability of financial capital, generalized trust, and egalitarianism condition the relationship between social networks and early internationalization. Social networks are positively related to early internationalization. Entrepreneurial education and generalized trust strengthen this relationship, whereas the availability of financial capital weakens it. This result suggests that supportive educational and social institutions increase the usefulness of network ties, while financial resources reduce entrepreneurs’ reliance on them. The three-way interaction among social networks, generalized trust, and egalitarianism is not significant, providing no evidence that egalitarianism alters the moderating role of generalized trust. These findings identify the institutional conditions under which social networks are more or less valuable for early internationalization and help explain cross-country differences in the outcomes of similar network resources.