Abstract
This paper explores how small and medium enterprises (SMEs) operating in Northern Italy and Slovenia used their innovative potential to expan business across the border while their home markets suffered from the great recession that started in 2007. The background of the study is an analysis of the antecedents to export performance and internationlization, which specifically asked whether innovating incrementally or innovating radically contributes to export performance in foreign markets and how this ultimately interacts with strategic considerations and the propensity to take risks. The findings of the study showed that export performance is positively influenced by incremental innovation and risk preference and that there is a relationship between innovation and export performance. These findings contribute to the question whether classical internationalization theories such as the Uppsala Internationalization Model and the Innovation-related Model, can be applied in contingency situations of economic crisis.
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