Effectual control and small firms' international performance: the mediating role of partnership and gaining new knowledge

Abstract

PurposeExtant research has studied how entrepreneurial cognition influences firm international performance but what mechanisms translates entrepreneurial cognition into international performance remains a puzzle in the field. In this paper, the authors utilize effectuation theory to theorize this association.Design/methodology/approachUsing a survey of 164 internationalizing small firms from New Zealand, the authors examined a model of entrepreneurial cognition, action and gaining new knowledge as a framework to explain how effectual control, partnership for new opportunity creation and gaining new knowledge influence small firms' performance.FindingsThe authors found that partnership for new opportunity creation, and gaining new knowledge are two important mediation mechanisms in the focal association between effectual control and international performance.Research limitations/implicationsThis study is a cross-sectional design. Considering the importance of time in cognition and action, future research should utilize longitudinal research design.Practical implicationsThe authors’ findings provide implications for both small firms' managers and policymakers. These findings identify the critical importance of continuous knowledge development in internationalization process. Policymakers can help small firms gain more relevant and timely information about international markets and incorporate them in their decision-making to further develop international opportunities.Originality/valueThe authors contribute to international entrepreneurship research by delineating and verifying the important associations between entrepreneurial cognition, action and gaining new knowledge and their outcomes for firm's international performance. The authors also contribute to effectuation theory by elaborating on effectual control and how this logic leads to the development of new knowledge.