A Comparative Analysis of Ethnic Networks and Internationalization of Latin American Agri-SMEs: The Case of Argentina, Brazil, and Chile

Abstract

This paper investigates the key drivers influencing the internationalization of agricultural small and medium-sized enterprises (agri-SMEs) in Latin America, with a particular emphasis on the role of social and ethnic networks. Focusing on Argentina, Brazil, and Chile—three of the region’s largest agricultural economies—this study examines how familial and cultural connections between descendants of European immigrants and European entrepreneurs facilitate the global expansion of agri-SMEs. Using a cross-sectional quantitative analysis, data from agri-SME managers reveal the importance of these networks in reducing market entry barriers by providing insider knowledge of foreign markets, regulatory conditions, and potential business partnerships. The findings demonstrate that ethnic networks significantly reduce market entry barriers, providing Latin American agri-SMEs access to essential insider knowledge on foreign markets and local regulations, thereby facilitating internationalization. Additionally, agri-SMEs that leverage these networks are better positioned to meet growing global demands for sustainable, traceable food products, gaining a competitive advantage in international markets. The strength and frequency of interactions within ethnic networks are positively correlated with the degree of internationalization, highlighting the importance of social capital in overcoming operational challenges. This paper contributes to the literature by highlighting the underexplored role of ethnic networks in shaping the international marketing strategies of agricultural firms and their capacity to adapt to evolving consumer behaviors. The study offers practical insights for supporting the global integration of agri-SMEs in Latin America, addressing both operational challenges and the increasing need for sustainable food production practices.

1. Introduction

In today’s rapidly evolving global economy, agricultural small and medium-sized enterprises (hereafter, agri-SMEs) are increasingly seeking opportunities to expand into international markets, a move that is not only strategic but essential for resilience and growth. These firms, particularly in emerging economies such as those in Latin America, are crucial drivers of rural development, generating employment, fostering innovation, and contributing to food security and sustainable practices [1]. In Latin America, where agriculture represents a significant share of national GDP, agri-SMEs account for over 70% of all agricultural businesses and play a pivotal role in maintaining rural livelihoods and meeting the growing global demand for sustainable and high-quality agricultural products [2]. However, the internationalization of agri-SMEs presents unique challenges. These firms often face barriers such as limited access to finance, outdated infrastructure, and a lack of managerial expertise to navigate complex global markets [3]. Unlike larger multinational corporations, agri-SMEs must overcome significant obstacles to meet the stringent standards of international trade, including quality control, technological innovation, and effective marketing strategies [4]. These challenges are particularly acute in Latin America, where institutional support for agricultural exports remains insufficient, exacerbating the difficulties faced by these firms. While economic factors undeniably play a critical role in the internationalization process, recent research emphasizes that social networks—particularly those rooted in ethnic and familial ties—can be a powerful tool for overcoming these challenges. Ethnic networks provide a unique advantage, enabling agri-SMEs to access insider knowledge about foreign markets, regulatory frameworks, and local business practices, all of which are crucial for reducing transaction costs and mitigating the perceived risks of international ventures [5]. In this context, Latin American agri-SMEs, particularly those with strong cultural ties to European markets, have demonstrated the ability to leverage these networks to gain a competitive edge in global value chains [6,7]. In addition to their strategic importance, these ethnic networks can be understood through the resource-based view (RBV) of the firm, which posits that internal resources, such as social and cultural networks, are essential for gaining competitive advantages in foreign markets. Ethnic networks, as intangible resources, offer significant benefits by reducing the costs of internationalization through shared knowledge, cultural familiarity, and trust. These networks are instrumental in accessing market intelligence, understanding regulatory frameworks, and fostering relationships with foreign partners. By embedding the study within the RBV framework, we can better understand how ethnic networks function as a strategic asset for agri-SMEs, enabling them to overcome the financial and operational challenges associated with international expansion. This theoretical approach provides a clearer foundation for analyzing the critical role of ethnic networks in facilitating market entry and enhancing the internationalization process.

Despite the recognized importance of these networks, the role of ethnic and social ties in the internationalization of agri-SMEs remains underexplored in the literature, especially in the context of Latin America. While much of the existing research focuses on the economic and strategic dimensions of international expansion, there is a gap in understanding how social and cultural factors—such as family connections and shared ethnic heritage—facilitate access to foreign markets. This study addresses this gap by examining the role of ethnic networks in the internationalization of Latin American agri-SMEs, with a particular focus on the role that family and cultural ties between agricultural entrepreneurs in Latin America and Europe play in facilitating international market entry and expansion. Ethnic networks based on familial and cultural ties to European markets significantly reduce entry barriers for Latin American agri-SMEs, easing access to market intelligence and regulatory knowledge. Using a cross-sectional analysis of agri-SMEs in Argentina, Brazil, and Chile, this research investigates the extent to which social and cultural networks influence the degree of internationalization among these firms. Firms that leverage ethnic networks show a higher degree of internationalization than those relying solely on economic strategies, as these networks provide essential social capital. Additionally, the strength and frequency of interactions within ethnic networks are positively correlated with successful internationalization, allowing agri-SMEs to mitigate risks and access critical resources in foreign markets.

The findings offer practical strategies for supporting the sustainable integration of Latin American agri-SMEs into global markets, addressing key financial, managerial, and operational challenges. By highlighting the interplay between social networks and economic factors, this study provides new insights into how agri-SMEs can successfully navigate the complexities of global markets, contributing to both the academic literature and practical policymaking in the field.

This research makes several important contributions. First, it integrates detailed social and commercial data from agricultural entrepreneurs in developing countries, offering a comprehensive view of the internationalization process from a social perspective. Second, it evaluates the impact of social networks, particularly those based on descent ties, on the success of agri-SMEs in international markets. Finally, the study proposes actionable strategies to help Latin American agri-SMEs overcome the unique challenges they face, particularly regarding access to managerial and financial resources. By filling a critical gap in the literature, this paper sheds light on the intersection of ethnic networks and internationalization, offering a new perspective on how agri-SMEs can thrive in an increasingly interconnected and competitive global market.

The next section will describe the theoretical and empirical aspects of the firm’s internationalization, followed by a section outlining the methods employed. The penultimate section presents results, and the final section discusses, concludes, and suggests new research avenues for this topic.

2. Background and Literature Review

2.1. The Role of Networks and Internationalization of Agri-SMEs

The agri-SMEs in emerging markets, particularly in Latin America, face unique challenges when engaging in internationalization. These challenges include limited access to financial resources, market knowledge, and technology, exacerbated by volatile commodity prices and unpredictable regulatory environments [8,9]. In this context, social networks and ethnic ties have emerged as crucial mechanisms through which agri-SMEs overcome their inherent limitations and successfully enter foreign markets. Social networks, encompassing both formal and informal connections, facilitate the sharing of knowledge, resources, and opportunities, while ethnic ties provide cultural familiarity and trust that can ease entry into foreign markets [10].

Drawing on the Uppsala model, which views internationalization as a gradual process driven by networks, it becomes evident that agri-SMEs rely heavily on these relationships to compensate for their lack of internal resources [11]. The Uppsala model has been adapted in recent studies to account for the accelerated pace of internationalization seen in smaller firms, particularly in the agricultural sector [12]. The model posits that firms learn about foreign markets and reduce uncertainty through ongoing interactions with external partners. This is especially important for agri-SMEs, which often lack the internal capacity to engage in extensive market research or independently establish distribution networks abroad.

As Latin America’s agricultural sector is deeply integrated into global supply chains, agri-SMEs must adopt innovative strategies to remain competitive, particularly in response to growing consumer demand for sustainable and traceable food products. Social networks enable these firms to access international markets by fostering partnerships with key actors in the agri-food sector, facilitating knowledge exchange, and ensuring adherence to sustainability standards [13]. For instance, agri-SMEs in Argentina, Brazil, and Chile have increasingly participated in global value chains by producing niche agricultural products, such as organic fruits and specialty crops, often through partnerships with European firms [7]. These partnerships are essential for firms seeking to align their operations with evolving [14].

Trust and mutual commitment within networks play a pivotal role in the internationalization process. The gradual construction of trust between agri-SMEs and their foreign partners is essential for reducing transaction costs and managing the risks associated with foreign market entry. Recent research underscores the importance of trust in sustaining long-term business relationships, particularly in sectors such as agriculture, where volatility and uncertainty are high [13]. For example, Latin American agri-SMEs have leveraged their social networks to form strategic partnerships with European buyers, using these networks to gain insider knowledge on market requirements, distribution channels, and regulatory conditions [15]. These connections are particularly valuable for firms that lack the resources to conduct independent market research or navigate complex regulatory environments.

Ethnic ties, characterized by shared ancestry, language, and cultural identity, further strengthen the internationalization process of agri-SMEs, especially in regions with significant immigrant populations. Immigrant entrepreneurs often rely on ethnic networks to share resources, identify business opportunities, and establish trust with foreign partners [16]. These networks help agri-SMEs navigate cultural barriers and establish legitimacy in foreign markets, which is crucial for overcoming the “liability of foreignness” that smaller firms often face.

The role of family networks in the internationalization of agri-SMEs has also been widely documented. Studies show that firms with strong family connections in foreign markets are more likely to engage in international business, as these networks provide access to critical resources such as capital, market information, and business contacts [17]. For instance, agri-SMEs in Latin America have used their familial ties to establish export channels to Europe, where trust in family networks helps secure favorable contractual terms and market access [18]. The importance of ethnic closeness and shared cultural heritage is particularly pronounced in the agricultural sector, where firms often rely on informal agreements and personal relationships to navigate the complexities of international trade [10].

Overall, the intersection of social networks, ethnic ties, and digital platforms provides a robust framework for understanding the internationalization of agri-SMEs in Latin America. These networks offer essential structural support, allowing firms to access external resources, reduce risks, and form strategic partnerships that enhance their competitiveness in global markets. By leveraging these networks, agri-SMEs can meet the growing consumer demand for sustainable and traceable agricultural products, thus ensuring their long-term survival and success in the competitive global agri-food sector.

2.2. Internationalization of Agri-SMEs: The Relevance of Social Networks

The internationalization of agri-SMEs in Latin America is hindered by several internal and external factors. These challenges include limited access to financial resources, underdeveloped infrastructure, and technological limitations that affect the competitiveness of these firms on the global stage. Moreover, agri-SMEs are highly vulnerable to global commodity price volatility, which directly impacts their revenues and operational sustainability. Compounding these issues are stringent regulatory frameworks that these firms must navigate, both domestically and internationally, which further increases transaction costs and operational complexity. In light of these factors, the role of ethnic and social networks becomes indispensable, as these networks provide access to critical resources, such as market knowledge and strategic partnerships, allowing agri-SMEs to overcome barriers to market entry and mitigate risks associated with international trade [2].

Social networks play a pivotal role in facilitating the internationalization of agri-SMEs by providing access to critical external resources such as market information, financial capital, and strategic partnerships. These networks help to mitigate risks, particularly in agriculture, where market volatility and the perishability of products pose significant challenges. For instance, forming strategic alliances through social networks can reduce uncertainties regarding demand fluctuations and allow firms to better navigate the logistical challenges of exporting perishable goods [18]. Ethnic networks, particularly in Latin American countries where many agricultural businesses are family-owned, provide pathways to international markets. For example, agri-SMEs in Argentina, Brazil, and Chile have leveraged familial and cultural ties to Europe to enter the European market, benefiting from established trust and access to market intelligence [19]. These networks help to bypass traditional barriers to market entry, such as unfamiliar regulatory frameworks and differing business practices. Moreover, social networks enable agri-SMEs to outsource critical tasks such as legal services, logistical support, and supply chain management. For firms operating on thin margins, this ability to share resources and expertise is invaluable, allowing them to reduce costs while remaining competitive [20]. In particular, outsourcing supply chain management through trusted networks has enabled many agri-SMEs to focus on core operations such as production and innovation [21]. The works of [22,23] emphasizes the role of competence-based trust (related to technical skills and reliability) and integrity-based trust (focused on honesty and motives) in reducing transaction costs. Also, they highlight the role of innovation for the survival and growth of agri-SMEs in global markets, especially in the context of sustainability and productivity improvements. Given the limited resources available to these firms, innovation typically focuses on improving production processes, adopting sustainable agricultural practices, and leveraging digital technologies to optimize supply chain management. These studies emphasize that innovation in agri-SMEs is often facilitated through social and ethnic networks, which provide not only access to new technologies but also the market intelligence needed to adapt these innovations to local contexts. For instance, partnerships formed through these networks help agri-SMEs incorporate sustainability standards that are increasingly demanded by international consumers. This distinction is critical for understanding how networks facilitate access to foreign markets, especially for agri-SMEs that face significant operational risks. In this context, several standard practices have emerged among successful agri-SMEs to address the challenges of internationalization. These include the formation of strategic alliances within their social and ethnic networks, allowing for the sharing of resources such as legal expertise, logistical support, and access to finance. Outsourcing non-core activities through trusted partners has also become a standard approach, enabling firms to focus on core operations like production and innovation. Additionally, many agri-SMEs have adopted digital technologies to streamline their operations and enhance communication with international partners. These practices, facilitated by strong social networks, are crucial for reducing operational costs and increasing competitiveness in international markets [24].

Recent empirical studies have demonstrated the resilience of agri-SMEs that rely on strong social networks during periods of market disruption, such as the COVID-19 pandemic. These networks provided crucial support in maintaining supply chains and accessing new markets when traditional distribution channels were disrupted, allowing firms to pivot their strategies effectively [25]. In the early stages of internationalization, many firms prioritize geographically proximate markets, as these present fewer logistical challenges and lower perceived risks [26]. This pattern is evident among Latin American agri-SMEs, which often begin exporting to nearby countries before expanding to more distant markets. These findings align with recent studies that suggest firms initially focus on regional markets to leverage existing transportation networks and mitigate the risks associated with perishable goods [22].

While agri-SMEs face significant barriers to internationalization, social and ethnic networks provide critical support that helps mitigate these challenges. By leveraging these networks, firms can gain access to essential resources, build credibility with foreign partners, and reduce the risks associated with entering new markets. The ability of agri-SME managers to develop and sustain these networks is crucial to their success in the global market, making network strategy a key component of their internationalization efforts.

3. Materials and Methods

3.1. Materials

The present study focuses on agri-SMEs located in Argentina, Brazil, and Chile, the countries with the highest concentration of such firms in Latin America [2]. Data collection was conducted using structured surveys administered between 2021 and 2023. A total of 474 surveys were distributed: 156 in Argentina, 176 in Brazil, and 142 in Chile. These countries were selected due to their significant contributions to the agricultural sector in Latin America and their active engagement in global agri-food value chains.

Table 1. Latin America’s agricultural exports in tons (top five countries).

Year	Chile	Colombia	Mexico	Argentina	Brazil	Paraguay	Peru
2023	2997	4283	8961	103,010	255,501	12,885	2047
2022	2842	4717	10,989	71,133	239,496	12,441	2376
2021	2644	4613	14,718	105,426	208,281	10,335	2644
2020	2702	4635	13,323	105,265	185,483	12,269	2242
2019	2381	5233	13,942	104,115	191,124	13,181	2604

Source: own elaboration from FAOSTAT database.

presents agricultural exports of the main exporting countries in this region.

To ensure the representativeness of the sample, a stratified random sampling method was applied. This approach aimed to balance firm size, geographical region, and sectoral diversity, thus capturing a comprehensive picture of agri-SME activities. Firms were selected based on several criteria: operational activity in the agricultural sector, involvement in international trade, and availability of documented networks with European markets. These criteria ensured that only those agri-SMEs with a realistic potential for internationalization and network-based advantages were included.

The data sources for this study were three key public institutions in each country: the National Institute of Statistics and Censuses (INDEC) in Argentina, the Brazilian Micro and Small Business Support Service (SEBRAE) in Brazil, and the National Statistics Institute (INE) in Chile. These institutions provided official databases of registered agri-SMEs, from which a randomized selection of firms was drawn. Each database was filtered to focus on agricultural firms that met the study’s criteria of internationalization potential, thus ensuring that only relevant firms were approached. The reliance on these institutional sources provided robust sampling frames, which were further enhanced by the stratified sampling method, ensuring representation across diverse regions and sectors.

In terms of data collection, potential respondents were contacted via telephone, email, and video-conference interviews, allowing for flexibility in participation. The survey employed a three-stage structure informed by existing literature on SME internationalization, market linkages, and social network analysis [11,27]. In the first stage, general information about the firms was collected, including their industrial activity, year of foundation, and number of employees. This allowed for the classification of firms based on size and operational scope. In the second stage, the degree of internationalization was assessed, examining entry methods into foreign markets, exporting frequency, and the percentage of revenue from foreign sales. Finally, the third stage focused on the firms’ family and ethnic networks, particularly descent ties with European immigrants, to explore how these networks influenced international business relationships. This stage was only applicable to firms with documented connections to European markets.

To ensure internal validity, the study followed a three-step protocol as recommended by [27]. First, preliminary reports were edited and sent to respondents to verify the accuracy of the collected data. Second, a replication protocol was established to ensure that the survey process could be consistently applied across different firms and countries. Finally, respondents were asked to approve interview transcripts to confirm the validity of their responses, minimizing the risk of misinterpretation. This methodology ensures the robustness of the data and its representativeness across diverse agri-SMEs in Latin America, addressing potential concerns about the selection and relevance of the sample.

3.2. Methods

In order to estimate the internationalization degree for agri-SMEs firms, the approaches of [13,16] were followed. The first step was to select the most appropriate variables into an agri-SMEs internationalization context. Among them, “international experience” (number of modes to enter foreign markets), “foreign sales on total sales” (export intensity), “physical dispersion of sales abroad” (number of countries of destination of exports) and the “export rate” were selected. The work of [28] was used to define export rate. They proposed the following taxonomy: continuous exporter (exports continuously for the period under analysis, not failing to export for over a year), non-continuous exporter (exports irregularly during the period under analysis, with up to a year without selling to parties abroad), quitting exporter (already exported during the period under analysis, but made no sales to parties abroad over the past 2 years), fresh exporter (exported for the first time after 2009) and non-exporter (never exported during the period under analysis). The degree of internationalization was estimated considering four categories: number of modes to enter foreign markets, geographic dispersion of foreign sales, export intensity, and export frequency. Each of them was ranked from 1 to 3 and scored from one (1) to twelve (12) points. In order to define the geographical dispersion of external sales, three categories were defined, namely: up to two countries, between three and six countries, and over six countries. Using the approach of [29] the diversity of modes of entry into foreign markets was defined. These authors consider direct export, indirect export, joint ventures, commercial subsidiary, production subsidiary and licensing. Variables having little application into an agri-SMEs context, such as: “foreign assets on total assets” and “number of overseas subsidiaries on the number of domestic subsidiaries”, were not included. Therefore, the model is depicted in

Table 2. Model of association between immigration networks and internationalization degree.

Variable 1—Number of Modes to Enter Foreign Markets
Modes of Entry Considered	Categories Adopted in This Study		Value
Indirect export by means of a trading company, LATAM exporting company, or international agent	Up to one mode of entry		1
Direct export using own structure of foreign sales joint-ventures or technology transfer arrangements with foreign companies international franchising		Low Diversification
Installation of offices abroad
Licensing production abroad Installation/acquisition of a distribution unit abroad
Installation/acquisition of a production unit abroad
	Between two and three modes of entry	Medium diversification	2
	Four or more modes of entry	High diversification	3
Variable 2—Export intensity
Category according to standard taxonomy	Adjusted category		Value
Up to 10% of total revenue	Low export intensity		1
Between 11% and 20% of total revenue	Medium export intensity		2
Between 21% and 30% of total revenue
Between 31% and 40% of total revenue
Between 41% and 50% of total revenue
Between 51% and 60% of total revenue Over 60% of total revenue	High export intensity		3
Variable 3—Geographic dispersion of foreign sales
Number of countries to which the company exported	Categories adopted in this study		Value
Up to two countries	Low geographic dispersion		1
Between three and six countries	Medium geographic dispersion		2
Seven countries or more	High geographic dispersion		3
Variable 4—Export frequency
Category according to standard taxonomy	Characteristics	Adjusted category	Value
Non-exporter	Has not exported during the period under analysis	Exporter with no experience	1
Fresh exporter	First exported after 2009
Quitting exporter	Has exported during the period under analysis, but with no sales to parties abroad for the past 2 years	Irregular exporter	2
Non-continuous exporter	Exported irregularly during the period under analysis, with up to 1 year without exporting
Continuous exporter	Continually exported during the period under analysis and has not failed to export within periods longer than 1 year	Regular exporter	3

.

The role of social networks in internationalization has been widely recognized, particularly for small and medium-sized enterprises (SMEs) operating within ethnic and familial networks. In this study, the impact of these networks was assessed by focusing on two key trust dimensions: competence-based trust and integrity-based trust. As established in prior literature, competence-based trust refers to trust derived from technical skills and the reliability of network partners, while integrity-based trust pertains to the honesty and consistency of partners’ motives [29]. Both types of trust are crucial for reducing transaction costs during the internationalization process, though integrity-based trust has been shown to be more effective in lowering risks and uncertainties associated with foreign market entry [30].

Building on these insights, the role of trust was analyzed within the ethnic and familial networks of Latin American Agri-SMEs. This approach aligns with previous studies, such as [16], which emphasize that trust in technical competence fosters reliable knowledge-sharing, reducing the need for costly formal contracts. Integrity-based trust, by ensuring the trustworthiness of partners, is essential for establishing long-term relationships that help firms navigate the complexities of international regulations and market conditions. By incorporating both trust dimensions, our study offers a comprehensive framework for understanding how ethnic networks support the global expansion of SMEs.

In terms of measurement, two critical factors were employed: “content of ties” and “strength of ties.” The content of ties encompasses the various attributes that define social and ethnic relationships, such as familial connections, shared cultural identity, language proficiency, and long-term business relationships. These factors, which have been shown to strengthen trust-based interactions, are crucial in facilitating market access and reducing regulatory challenges [30,31]. This variable was operationalized by using categorical measures that capture the presence of these elements, allowing for a more nuanced understanding of their role in the internationalization process.

The strength of ties, on the other hand, refers to the frequency of contact between the firm and entities located in the respondent’s country of descent. This factor is critical, as frequent interactions indicate a stronger, more reliable relationship that is likely to yield better market access and information flow. Following the methodology of [32], the strength of ties was measured through survey responses, where participants indicated the frequency of their interactions. A score was assigned based on the number of responses, with a total possible score of four points for maximum interaction frequency. This scoring system provides a structured way to assess the depth and reliability of social networks, ensuring that both quantitative and qualitative aspects of the relationships are captured.

The results of these measurements, summarized in

Table 3. Operationalization of the variable: social network relevance.

Variable 1—Content of Ties
Personal Ties	Value	Identification Ties	Value
Proficiency with the country’s language	1	Trust in the country’s companies	1
Residence in the foreign country	1	Trust in the country’s institutions	1
Friendship ties	1	Identification with the country image	1
Family ties	1	Identification with the country culture	1
Variable 2—Strength of ties
Frequency	Description		Value
Frequently	At least once a month		3
Occasionally	At least once every 6 months		2
Very frequently	At least once a week		4
Rarely	With no representativeness		1

, provide clear evidence of the importance of social networks in reducing transaction costs and enhancing the internationalization strategies of agri-SMEs. By categorizing ties into identification and personal connections, the heterogeneous nature of these networks and their varying impacts on business success were further highlighted.

The next step consists of a quantitative analysis to assess about the internationalization degree of agri-SMEs and the reasons that led these firms to opt for the international markets. This analysis was implemented by two stages: first, a set of correlation models, specifically Pearson correlation, to measure the degree of association between different variables under consideration. Second, a regression analysis to estimate the causal relationships between internationalization degree, strength of ties, exchange rate, cost of sales, and cash conversion cycle. The goal is to seek drivers (family networks and economic variables) fostering the process of internationalization for agri-SMEs.

4. Results and Discussion

4.1. Analysis of the Internationalization Degree and Descent Ties

The analysis of the internationalization degree across Brazil, Argentina, and Chile reveals a structured progression with distinct patterns across these countries. For instance, most firms in Argentina, Brazil, and Chile operate at intermediate levels of internationalization, while very few have reached the most advanced stages. This mirrors broader trends observed in agri-SMEs globally, where firms often experience constraints such as limited access to foreign markets, financial challenges, and administrative barriers, which slow the pace of international expansion [6]. In addition, the results reveal a clear connection between ethnic networks and the internationalization of agri-SMEs in Latin America, particularly in Argentina, Brazil, and Chile. Firms with descent ties to European immigrant communities demonstrate higher levels of export intensity and more frequent market entries into European markets. These findings align with existing trade literature that emphasizes the role of social capital and ethnic networks in reducing transaction costs, enhancing trust, and providing insider market knowledge. Specifically, agri-SMEs that leveraged these ethnic connections were able to navigate complex regulatory frameworks and gain access to local distribution channels in foreign markets, which are critical for sustaining long-term export relationships. In contrast, firms lacking these ethnic ties exhibited lower export frequencies and were more likely to rely on intermediary agents, resulting in higher transaction costs and reduced profitability. These results also emphasize the significant role of personal and identification ties in fostering international business relationships. These findings support the hypotheses put forward by this work and are consistent with [33], who argue that ethnic and familial networks play a pivotal role in reducing the barriers to international market entry. For agri-SMEs, especially those operating with limited resources, these networks provide access to critical insider knowledge about foreign market demands, legal requirements, and local business customs, allowing firms to navigate complex regulatory environments effectively. This is particularly relevant in agricultural sectors, where trade relationships are often based on trust, reliability, and long-term partnerships [22].

Moreover, the geographic proximity of export destinations, as highlighted in the results, aligns with the studies by [12,28], which underscore that agri-SMEs, in their early stages of internationalization, prioritize geographically closer markets. Proximity reduces transportation costs, minimizes perceived risks, and facilitates market entry for perishable goods, such as fruits and vegetables, that are typically produced by these firms. Thus, Latin American agri-SMEs often rely on nearby markets to minimize the logistical challenges associated with their exports [18].

Furthermore, the significant association between the degree of internationalization and the occurrence of personal ties demonstrates the importance of social capital in expanding into foreign markets. As confirmed by [10], these social networks reduce uncertainties, establish credibility, and facilitate access to resources, such as market intelligence and buyer networks. This is particularly crucial for agri-SMEs, which face resource constraints and competitive pressures from larger, multinational agribusinesses. In this sense, leveraging personal networks enables smaller firms to compete by providing a buffer against the inherent risks of international trade.

Additionally, the results show that personal and ethnic networks are instrumental in expanding into complex regulatory environments. For example, agri-SMEs in Latin America and Southeast Asia frequently use family and ethnic ties to navigate complex regulatory frameworks, reducing entry costs and enabling faster adaptation to new market demands. These networks provide a critical platform for understanding local regulations, market potential, and contracting practices [7]. In particular, the use of such networks allows for the rapid identification of potential buyers and partners, which is essential in sectors like agriculture, where market responsiveness is key to maintaining competitiveness [22].

In all three countries, export destinations are predominantly non-descent countries within geographical proximity. This aligns with findings from the literature, which suggest that in early internationalization stages, firms often target nearby markets due to lower transportation costs and reduced entry barriers [26]. Moreover, the association between the degree of internationalization and the presence of personal ties reinforces the notion that networks are vital for overcoming barriers to internationalization, particularly for smaller firms like agri-SMEs [4]. The insights provided by this study contribute to a better understanding of the critical role social and ethnic networks play in internationalization, particularly for agri-SMEs in Latin America. These networks not only reduce transaction costs but also facilitate trust-building, access to critical market information, and engagement in strategic partnerships. Future research could explore how these networks evolve as agri-SMEs progress through different stages of internationalization, providing further insights into the dynamic relationship between social networks and global market integration [17] (

Table 4. Comparison of exporting experience and geographic dispersion of companies in Brazil, Argentina, and Chile.

		Argentina	Brazil	Chile
Exporting Experience (%)	No exporting experience	50	39	35
	Started exports during period under analysis	15	11	18
	Quit export during the period under analysis	17	9	11
	Exported irregularly	14	15	21
	Exported continuously	4	26	15
Intensity of export activity (%)	Low intensity	51	44	39
	Medium intensity	27	54	55
	High intensity	24	2	6
Geographic Dispersion (%)	Up to two countries	44	25	33
	Between three and six countries	30	40	51
	Seven or more countries	26	35	16
Modes to enter external markets (%)	One mode	53	40	61
	Between two and three	44	51	21
	Four or more	3	8	18
Descent Bonds (%)	Yes	65	73	54
	No	35	27	46
Respondent’s country of descent (%)	1st	Italy	Germany	Spain
	2nd	Germany	Austria	Italy
	3rd	Spain	Portugal	Argentina
	4th	Brazil	Spain	Mexico
Countries receiving the exports (%)	1st	China	Argentina	Spain
	2nd	Netherlands	Netherlands	Argentina
	3rd	Italy	Spain	Mexico
	4th	South Korea	China	Italy

).

4.2. Correlations Between Descent Ties and Degree of Internationalization

The export destinations for agri-SMEs in Argentina, Brazil, and Chile include countries with geographical proximity but without descent ties. This pattern aligns with findings by [28], who argue that firms tend to enter geographically closer markets during the early stages of internationalization due to logistical convenience, lower transport costs, and reduced market entry risks. This is particularly important for agri-SMEs, whose operations are often sensitive to perishable products and transportation logistics. The reliance on proximate markets also reflects the firms’ ability to manage operational complexities like regulatory compliance and product standardization [34].

Further, the results reveal that personal and ethnic ties significantly influence the degree of internationalization. This is consistent with [6], who demonstrate that social networks, particularly those based on family or ethnic relationships, play a crucial role in establishing trust and securing insider knowledge about market conditions, legal frameworks, and potential buyers. Agri-SMEs benefit from these personal networks by gaining access to resources that would otherwise be difficult to obtain, especially in foreign markets where trust and credibility are essential for long-term success [18].

Additionally, agri-SMEs leverage these networks to enter challenging markets, particularly in Latin America, where the business environment is marked by complex regulatory structures and significant market barriers. Refs. [5,20], emphasize that ethnic and family networks offer a crucial advantage by providing culturally embedded market entry strategies, enabling firms to overcome the high costs and risks associated with foreign market entry. The correlation between the frequency of contacts and internationalization, as shown in this study, highlights the dynamic nature of these networks and their impact on sustained business relationships.

Agri-SMEs that have family or ethnic connections abroad, particularly in Europe, are better positioned to understand and navigate market requirements. These connections also reduce uncertainties in contract negotiations and government regulations, which are often cited as significant barriers for firms attempting to scale their operations internationally [35]. Furthermore, firms that maintain frequent contact with their foreign partners tend to perform better in international markets due to stronger relational ties and better access to market intelligence [36].

The findings suggest that personal and identification ties are crucial in supporting the internationalization process for agri-SMEs. This is reinforced by the fact that firms that participate in export support programs or have family ties abroad are more likely to internationalize successfully. The ability to tap into these networks provides a competitive [27]. These results also confirm the role of personal networks in reducing the barriers to international expansion, as highlighted by [11]. Overall, the comparative analysis of agri-SMEs in Argentina, Brazil, and Chile reveals country-specific differences in how descent ties influence internationalization strategies. In Argentina, agri-SMEs with strong familial connections to European markets have leveraged these ties to overcome export barriers, particularly in niche sectors such as organic wine and specialty crops. These firms benefit from trust-based relationships with European buyers, which mitigate risks associated with regulatory compliance and market entry. In Brazil, descent ties have facilitated access to foreign capital and technological innovations, particularly through partnerships with European firms in the soybean and coffee industries. Brazilian agri-SMEs often rely on these ties to navigate complex logistics and supply chain management challenges, leading to higher export intensity. In contrast, Chilean agri-SMEs, particularly in the fruit export sector, demonstrate a less pronounced but still significant reliance on descent ties. These networks primarily provide access to market intelligence and distribution channels, enabling Chilean firms to align with the sustainability standards demanded by European markets. The varying degrees to which descent ties are utilized across these countries highlight the importance of both cultural and economic factors in shaping internationalization strategies, with descent networks serving as a critical resource for agri-SMEs in overcoming the barriers to global market entry. In conclusion, social and ethnic networks continue to be a key determinant in the internationalization of agri-SMEs, particularly in the context of Latin America. Future research should investigate how these networks evolve over time and adapt to the changing dynamics of global markets, particularly in terms of technological advancements and shifting trade policies [11] (

Table 5. Pearson correlations matrices between descent ties and degree of internationalization.

	Variables	1	2	3	4
	Degree of internationalization
	Personal ties	0.18	-
Argentina	Identification ties	0.35 *	0.71 **	-
	Strength of contacts	0.66 **	0.22	0.11	-
	Degree of internationalization	-
	Personal ties	0.29	-
Brazil	Identification ties	0.13	0.59 **	-
	Strength of contacts	0.44 **	0.41 **	0.25 *	-
	Degree of internationalization	-
	Personal ties	0.41 **	-
Chile	Identification ties	0.29 *	0.27 *	-
	Strength of contacts	0.51 **	0.33 *	0.22 *	-
	Approached by a local trading	(−) 0.17
	Increase productivity by seeking new partnerships	0.19
	We took part in export support programs	0.39 **
Driving Factors of Internationalization (all countries)	We had contacts abroad (family and/or friendship circles)	0.41 **
	We had previous knowledge of the target market (language, culture, customs)	0.33 *
	Exchange policy was favorable to exports at the time	(−) 0.04

** p < 0.001 and * p < 0.05.

).

4.3. Regression Analysis: Testing the Prediction Power of Contact Frequency in the Degree of Internationalization

The regression analysis utilized ordinary least squares (OLS) methodology to assess the predictive power of contact frequency, exchange rate, cost of sales, and cash conversion cycle in determining the degree of internationalization for agri-SMEs in Argentina, Brazil, and Chile. Specifically, the strength of ties was measured by the frequency of contact between respondents and business partners located in their country of descent, as an indicator of how embedded their operations were within their ethnic or social networks.

The model reveals a statistically significant positive correlation between the presence of descent ties and higher export performance across all three countries. For example, firms with familial connections to European markets reported a 20% higher likelihood of exporting to those countries compared to firms without such ties (p < 0.05). Additionally, the frequency of contacts within these networks—measured as the number of business interactions per year—was also found to significantly predict the depth of internationalization, with more frequent interactions leading to higher export revenues and greater market diversification. These results support the hypothesis that ethnic networks provide agri-SMEs with critical resources and market knowledge, facilitating a smoother and more cost-effective entry into foreign markets, particularly those with stringent regulatory standards, such as the European Union.

The results also indicate a significant positive relationship between contact strength and internationalization for all countries under study, aligning with recent findings by [10], which emphasize the critical role that cultural and ethnic ties play in facilitating smoother internationalization processes. These ties often provide agri-SMEs with insider information on market potential, regulatory requirements, and local business practices, thus reducing the risks and uncertainties associated with entering foreign markets [29]. Such networks are particularly relevant for agri-SMEs, which typically operate with limited managerial resources, making trust-based relationships essential for mitigating operational challenges and fostering market expansion [34]. In this sense, the findings from this research have significant managerial implications for agri-SMEs. First, the ability to leverage ethnic and social networks effectively is crucial for accessing international markets and overcoming the barriers associated with scale and resource limitations. Managers should focus on cultivating these networks to gain access to critical resources such as market intelligence, financial capital, and strategic partnerships. Additionally, managers need to adopt a network-based strategy for outsourcing non-core functions, which can significantly reduce operational costs and allow the firm to focus on innovation and production. Finally, a key takeaway for managers is the need to continuously adapt to global market demands, particularly by aligning operations with sustainability standards that are increasingly prioritized in global value chains (

Table 6. OLS estimation results between frequency of contact and degree of internationalization.

Regression		Constant	Strength of Ties	Exchange Rate	Cost of Sales	Cash Conversion Cycle
Argentina		0.0012	0.6155	−0.0097	−0.0088	−0.0875
	White Robust Standard Errors	(0.2234)	(0.0452) *	(0.0221) **	(0.0310) **	(0.0299) **
Brazil		3.01	1.77	0.84	−0.66	− 0.55
	White Robust Standard Errors	(0.0641) **	(0.0300) **	(0.6879)	(0.0004) ***	(0.1253)
Chile		−0.0118	0.2421	0.0128	−0.4561	−0.0499
	White Robust
	Standard Errors	(0.0132)	(0.0147) **	(0.5563)	(0.1369) ***	(0.0504)

*** p < 0.001, ** p < 0.01 and * p < 0.05.

).

For all countries, the strength of ties plays an important role on the export strategies of agri-SMEs and contributes to explicate their internationalization degree. These results are in line with [14], who explain how the dynamics of communication between international counterparts who share similar cultural issues can influence the export performance. They found a positive correlation between the frequency of contacts among partners and the speed with which the internationalization of agri-SMEs is processed in markets with similar cultural behavior.

The estimation results of economic variables can be explained by the different components that drive the process of internationalization. In this sense, it is important to highlight that in this study, the firms present a statistically significant proportion of agri-SMEs (40%) that exports regularly, i.e., use more advanced modes of entry and not exporting continuously without foreign sales for over a year. For all cases, the analysis of the country of descent jointly with the countries to which products are exported, confirms the importance of the exchange rate. However, only for Argentina this parameter presents a negative significant value. This could be a result of the restrictive exchange control imposed by this government that affected the export activities of the agri-SMEs located on this country [13]. The cost of sales and the cash conversion cycle also demonstrated negative effects across all three countries, with the most pronounced impact observed in firms at the early stages of internationalization. This pattern mirrors the conclusions of [26], who argued that agri-SMEs with limited financial flexibility face higher operational costs and extended cash recovery periods, leading to greater difficulty in maintaining international operations. These challenges are particularly acute for family-owned agri-SMEs, which often struggle to secure external financing and rely heavily on internal cash flow to fund their international activities [16]. Moreover, the analysis highlights that agri-SMEs utilizing advanced modes of entry (such as joint ventures or direct sales operations) tend to exhibit a higher degree of internationalization. Approximately 40% of the firms in the study had regular export activities, indicating that the use of more sophisticated market entry strategies correlates with sustained international success. This aligns with [37], who found that agri-SMEs with access to advanced networks and market entry channels are better equipped to navigate the complexities of foreign market regulations and consumer demands. Finally, the role of family networks and cultural ties in supporting internationalization cannot be overstated. As demonstrated in this study, strong ties not only provide agri-SMEs with the necessary market intelligence but also facilitate access to critical resources such as financing and distribution channels. In line with [7], the trust established through these networks enables firms to build long-term relationships with foreign partners, reducing transaction costs and enhancing market credibility. This is particularly important for agri-SMEs operating in sectors with high levels of market volatility, where the ability to quickly adapt to changing conditions is key to sustaining international operations.

5. Conclusions

This study highlights the critical role of social networks in facilitating the internationalization of Latin American agricultural SMEs (agri-SMEs). It confirms that frequent contact and strong ties within these networks enable firms to overcome common entry barriers such as limited financial resources and lack of familiarity with foreign regulations. However, the research also identifies the need for more robust financial strategies and flexible operational models to mitigate challenges related to cash flow, cost of sales, and longer cash conversion cycles, which are particularly burdensome during the early stages of international expansion.

Furthermore, agri-SMEs that attempt to internationalize in distant markets, or that have limited social networks, face greater challenges in executing their export strategies. However, for firms that establish partnerships with culturally similar counterparts, there is a greater degree of trust and ease in navigating trade relationships. This factor is especially relevant in Latin America, where cultural affinities can help firms manage complex demands, such as registering intellectual property abroad, adhering to legal standards, and handling payment methods in international transactions.

Overall, the study partially confirms the hypothesis that descent ties, family connections, and cultural identification play important roles in the internationalization process of agri-SMEs. While these factors do contribute to the degree of internationalization, the frequency of social contacts is equally important, reinforcing the view that social networks are instrumental in overcoming the constraints of international market entry. Economic variables, particularly cost of sales and cash conversion cycles, also significantly affect the internationalization process. For Argentina, the negative influence of exchange rates on internationalization can be linked to the restrictive exchange controls imposed by the government, which presents a unique challenge in that context.

This study opens up new avenues for further research in this area. Ethnographic methods could enhance future research by providing a more nuanced understanding of how cultural meanings influence internationalization strategies. Moreover, future longitudinal studies could provide deeper insights into how these relationships evolve and how firms can strategically leverage them at various points in their international expansion. These approaches could help explore how organizational characteristics and operational strategies impact the internationalization process of agri-SMEs.

While the study focuses on three Latin American countries, the findings could be replicated in other regions with similar economic and cultural contexts, such as Southeast Asia or Sub-Saharan Africa. Such replication would help validate the model proposed in this research and provide a broader understanding of how social and ethnic networks operate across different cultural and geographical settings. The comparative analysis across regions could also lead to a more nuanced understanding of the role these networks play in fostering internationalization.

Finally, this study invites further academic debate on the evolving role of social and ethnic networks in the context of globalization and international trade. As global markets become more interconnected, the traditional models of internationalization may no longer fully capture the intricacies of these relationships. Researchers are encouraged to explore how new technological platforms, such as digital networks, could complement traditional ethnic ties and open up new avenues for agri-SMEs to integrate into global value chains. The findings presented here open several pathways for future research, particularly in understanding the intersection of social capital, internationalization strategies, and the shifting dynamics of global trade.