Pluripotent Dynamic Capabilities in the Internationalization of Firms Focus on Learning, Innovating and Networking in SMEs from Sweden

University dissertation from Linköping : Linköping University Electronic Press

Abstract: Internationalization of small and medium-sized enterprises (SMEs) has been a considerable concern for international business (IB) scholars. Particularly, for those economies such as Sweden with small local markets, internationalization of SMEs could be fundamental. The firm-specific advantages (FSAs), including what the firm has and does, are crucial for SMEs to overcome in the face of their numerous different obstacles such as liability of smallness (LOS) and liability of foreignness (LOF).Examining the extant literature on the evolution of IB theories indicates that over time, IB scholars have been reaching to dynamic-based FSAs (what the firm does) as the source of developing and protecting sustainable competitive advantages (SCA) across national borders in a changing business environment. The nature of dynamic-based FSAs could be similar to dynamic capabilities. But, when it comes to determining specific component factors  of dynamic-based  FSAs  (as dynamic  capabilities),  there has been little agreement between IB researchers. In other words, the room of the dynamic capabilities is still dark. In this respect, shedding light into this room, particularly in the area of IB studies, is crucial. In addition, after determining the component factors of the dynamic-based FSAs, it is also critical to know the likely relationships between the identified component factors as well as their impact on the SMEs’ international performance (IP) as an important outcome of the internationalization. This means that there is a potential theoretical gap associated with the conceptualization of the component factors of the dynamic-based FSAs on one hand, and a potential empirical gap on the other. Given both theoretical and empirical research gaps, the purpose of this study is to examine, from a theoretical perspective, the nature of the dynamic-based FSA and its related component factors in the IB context, as well as empirically explore how SMEs’ IP is influenced by the identified component factors of the dynamic-based FSAs.To perform this study, first of all, based on lenses of the resource-based view (RBV) and dynamic capability view (DCV), the literature on organizational capability in the context of the IB studies was systematically reviewed to fill the theoretical gap. Consequently, three component factors of dynamic-based FSAs including networking capability (NC) as a relational-based FSA, innovative capability (IC) as an innovative-based FSA and absorptive capacity (ACAP) as a learning-based FSA were identified, all of which are pluripotent and dynamic in nature. Then, a deductive approach was followed to develop several hypotheses and the associated conceptual model. Furthermore, a survey strategy, collecting data from 330 Swedish internationalized manufacturing SMEs, was applied to accomplish the purpose of the study. Then, the Partial Least Squares Structural Equation Modeling (PLS-SEM) as a quantitative method was used to analyze the collected data.The results of the PLS-SEM analysis show that the SMEs’ international performance (IP) is positively influenced by the three identified component factors, whether directly or indirectly. In this regard, ACAP and NC are the two reliable predictors (directly) of the SMEs’ IP. The results indicate that innovative capability (IC) does not have direct impact on the SMEs’ IP, and that its effect is fully transmitted on IP only by the mediating effect of the networking capability (NC). Further analysis showed that ACAP, as an endogenous latent variable, additionally has a positive indirect association with SMEs’ international performance (IP). Moreover, the results also indicate that innovative capability is directly and positively affected by ACAP (innovating-by-learning effect). It was also empirically revealed that ACAP is a very strong predictor for networking capability, which is labeled as the networking-by-learning effect. Another major finding was that in internationalized SMEs, NC is strongly, directly and positively affected by IC; this effect also is termed as the networking-by-innovating effect. The overall picture resulting from the PLS- SEM analysis indicates that ACAP in internationalized SMEs is a wellspring to develop both innovative capability and networking capability, as well as influence SMEs’ IP. Furthermore, these results suggest that the networking capability is a vital gateway to transmit the effect of the other two component factors on IP and, at the same time, directly influence IP.

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