The effects of manager market human capital on learning from international failures in small to medium-sized enterprises (SMEs)

Abstract

Small to medium-sized enterprises (SMEs) have increasingly used internationalization to grow their businesses, yet many international adventures fail. While organizational learning can help them better understand foreign market dynamics and thus improve future international performance, previous studies have primarily focused on learning from successful experiences. To provide more insights, this study examines whether and how SME managers’ market human capital can help them recognize the value of seeking feedback through learning from international failures, facilitating learning from those failed experiences. This study also argues that the environmental context, both in the home and the foreign markets, further influences how managers’ market human capital benefits an SME’s learning from international failures. Using both primary and secondary data, this study finds that market human capital can bring firms more benefits when the firm is faced with greater cultural distance in the foreign market or when the firm can benefit from a highly innovative climate in the home market.