**3. Methodology**

introduce the valuable specifications and features required in their products or services to guarantee the feasibility of their business project. These arguments lead us to propose that: *H2: Greater absorptive capability in BGs leads to greater development of differentiation-based competi-*

*H3: Greater absorptive capability in BGs leads to greater development of cost-based competitive* 

A review of the conceptualisations of the competitive advantage concept shows that, by definition, a firm has a competitive advantage over another firm when it obtains a superior performance [82]. Therefore, the competitive advantage can be seen as a direct antecedent of a BG's international performance because the superiority arising from its attempt to provide value determines the purchasing performance of its target market [55], and consequently its performance [40, 72, 83]. When a firm achieves competitive advantages (differentiation-based and/or cost-based), it has a higher capacity to generate value for its clients and, in turn, greater levels of client satisfaction, business volume and market share and lower customer service costs [30, 84, 85]. As Snoj et al. [83] point out, sustaining competitive advantages is the basis for achieving superior business performance, survival and development. Therefore, the following hypotheses are proposed:

*H4: BGs' achievement of differentiation-based competitive advantages contributes to higher levels of* 

*H5. BGs' achievement of cost-based competitive advantages contributes to higher levels of international* 

**2.4. Competitive advantages and international performance in BGs**

**Figure 1** summarises the model of effects for the study.

*tive advantages*.

52 Knowledge Management Strategies and Applications

*international performance*.

**Figure 1.** Model of effects.

*performance*.

*advantages*.

### **3.1. Sample selection and data collection**

We started with 2012 Spanish firms, all under 7 years old and operating internationally, taken from the Dun and Bradstreet and SABI databases. To refine the sample and ensure that the firms selected were BGs, a total of six selection criteria were applied on two different occasions: prior to and during the field study. Thus, based on the filters available in the databases, the following criteria were applied: (1) the firms should be no more than 7 years old, thus guaranteeing that they are new firms; (2) they should make their own strategic decisions, thus excluding subsidiary or affiliated firms; (3) they should have a minimum of three employees and a maximum of 250, ruling out micro-firms, selfemployed individuals and big firms. This process of refinement resulted in a population of 1023 firms.

The questionnaire was drawn up, based on an in-depth bibliographical review, including the three remaining selection criteria (not available without direct consultation with the firm): (4) their international activity should have started in the first three years following their creation, thus showing their immediate incorporation into foreign markets; (5) they should generate a minimum of 25% of their annual sales abroad, thus providing evidence of a consolidated international presence and (6) they should form a part of a network of firms with a minimum of three members. Regarding this last criterion, in order to ensure that interviewees focused their responses on their main business network, as an introduction the following definition was included, in which business networks are understood as '*the set of relationships that the firm maintains with other agents such as customers, suppliers, competitors, consultants, government agencies, universities, research centres, market research firms, advertising agencies and sales or distribution agents with the aim of obtaining knowledge, information, technology, resources or skills'* ([86], p.24).

The questionnaire was then pre-tested with a pilot sample of 25 firms to ensure it would be correctly understood. An electronic version was then prepared for the field work, of which 303 valid responses were returned (29.62% of the total).

An analysis of the primary data revealed the principal characteristics of the sample (**Table 1**). The firms are SMEs, mostly from the industrial sector (61.2% of the total), notably the agrifood, metal and textile sectors. Commerce is represented by 31.6%, including firms that export and import products related to the aforementioned industrial sectors. Finally, less than 7.2% of firms come from the services sector, including mostly financial, tourism and communication agencies. The firms have on average 28.55 employees, 41.50% of their commercialisation work is abroad, and their average age is 3.90 years.

Regarding the networks to which the firms belong (**Table 2**), almost all of them became part of the network on their creation (96.4% after their first year of life), they are usually networks with marketing aims (in 92.5% of cases) and are composed on average of 5.81 firms, located near the firm (62.19% of the networks have a regional scope).


*Note:* \* Figures expressed as a percentage of total responses.

**Table 1.** General characteristics of the firms.


1 According to the location of most network members.

**Table 2.** General characteristics of the main networks of the studied firms.

### **3.2. Measurement instruments**

To measure the market orientation of the network we adapted the scale proposed by Helfert et al. [37]. These authors move away from the idea defended in previous studies of measuring the network's market orientation by simply adapting the dimensions used in the seminal scales of MO. Specifically, this scale includes a total of 12 items on the four dimensions that reflect the relational processes management of NMO: coupling (2 items), coordination (3 items), conflict resolution (3 items) and exchange (4 items).

To measure absorptive capability, we use the three-item scale of Ref. [87] that evaluates the degree to which the firm's management systems encourage the ability to acquire, assimilate, transform and exploit knowledge.

Competitive advantages are measured with the scale developed by Ling-Yee and Ogunmokun [71] and the proposals made by Morgan et al. [72] and Ha-Brookshire and Dyer [73]. This scale reflects the firm's position in relation to competition in terms of differentiation and costs when adapting its offer to international market needs.

Finally, we use an adaptation of the scale proposed by Jantunen et al. [81] to measure international performance. Specifically, we asked BG managers about their degree of satisfaction with their activity in terms of turnover, profitability, market share and global satisfaction.
