The Complex Interplay of Firm Innovation, Internationalization, and Learning Capability

Abstract

This study presents a holistic perspective on how the complex interplay of different facets of innovation, internationalization, and learning capability is associated to firm performance. Academics have traditionally tested one-way cause-effect of one of these key strategic activities on the other, thus employing traditional multivariate methods which are less appropriate to capture the interconnectedness of factors as complex systems. We use a configurational approach, more specifically a qualitative comparative analysis over a sample of 2,844 manufacturing firms over the period 2008–2014, a suitable method to obtain new insights into complexity issues. The results point to a general complementarity between high process innovation, export breadth, and high organizational learning capability, and a substitutability between R&D and employee training as sources of learning capability. The analyses by firm size suggest that, contrary to SMEs, large firms do not require high export breadth to render their innovations profitable, likely because they enjoy adequate economies of scale and scope through their strong domestic presence and multiple business units. The results bring new insights to the importance of temporal concepts in the internationalization literature, and have relevant implications for scholars, managers, and policymakers.