Business model innovation and entrepreneurial orientation relationships in SMEs: Implications for international performance

Agnes Asemokha,Jackson Musona,Lasse Torkkeli,Sami Saarenketo

doi:10.1007/s10843-019-00254-3

Abstract

Academic research is increasingly emphasizing the critical role of business models (BMs) and business model innovation (BMI) in the international entrepreneurship (IE) domain, yet empirical studies on the topic are quite limited. This study demo0nstrates the role of BMI and entrepreneurial orientation (EO) in the internationalization of small-and medium-sized enterprises (SMEs). Specifically, we explored the mediating role of BMI in the relationship between EO and international performance among internationalizing SMEs. Drawing on a cross-industrial sample of 95 international Finnish SMEs, we empirically test the hypothesized relationships by developing a confirmatory factor analysis measurement model with subsequent application of ordinary least squares multiple regression. The results suggest that BMI positively and significantly mediates the relationship between EO and international performance. In addition, EO has a positive and significant effect on SMEs’ BMI. Thus, the findings of the study imply that both BMI and EO are important drivers of international performance for internationalizing SMEs. The study contributes to the IE literature by illustrating the dynamics of BMI and providing evidence of the linkages between strategic orientations and BMI in the international performance of SMEs.

Highlights

International entrepreneurship (IE) research is increasingly reflecting on the strategic issues and challenges that entrepreneurial firms face as they recognize and seize opportunities in foreign markets (Shane and Venkataraman 2000; Zahra et al 2005)
Contributions: The study contributes to the emerging discussion on the dynamics of business models, business model innovation (BMI), and international performance in international entrepreneurship and strategic orientation literature
We explore internationalizing small- and medium-sized enterprises (SMEs), by examining BMI as a mediating variable in the entrepreneurial orientation (EO)–international performance relationship

Summary

Introduction

International entrepreneurship (IE) research is increasingly reflecting on the strategic issues and challenges that entrepreneurial firms face as they recognize and seize opportunities in foreign markets (Shane and Venkataraman 2000; Zahra et al 2005). In corporate practice, small- and medium-sized enterprises (SMEs) strive to gain a foothold in markets across national borders, in a bid to remain profitable and grow (Schneider and Spieth 2013). They do so by modifying their products, services, and BMs to satisfy the requirements of these markets (Nummela et al 2004; Onetti et al 2012; Child et al 2017). There is a limited extant IE literature examining the combined role of strategic orientations and firm activities such as BMI, in the SME internationalization process (See Schneider and Spieth 2013; Hagen et al 2017; Acosta et al 2018). This study was aimed at answering the research question: What effect do BMI and EO have in the international performance of SMEs?

Objectives

Methods

Results

Discussion

Conclusion