Pace of innovation and speed of small and medium-sized enterprise international expansion

Abstract

The literature emphasises that technological advances have enabled firms to expand internationally at accelerated speed. Yet, technological advances are treated as a contextual variable and little is known about how firm-level technological innovations influence the internationalisation speed of small and medium-sized enterprises (SMEs). To address this shortcoming, we draw on insights based on capability development theory to establish the effects of innovation timing and pace on SME international expansion speed. We test our conceptual model using a sample of 180 Swedish SMEs and show that the faster the innovation pace, the faster the internationalisation. We then address the boundary conditions of this relationship to show that the elapsed time between a firm’s founding and first innovation negatively moderates the positive effects of its innovation pace. Our findings have theoretical, managerial and policy implications.