Abstract
Small and medium-sized enterprises (SMEs) use of business networks has grown significantly during the last decades, partly due to increasingly complex innovation processes. This article investigates how different kinds of networks, depending on location, contextualize innovation in specific foreign market business relationships. Building on internationalization, network, and innovation research we develop a model that views opportunity connectedness in specific host-markets, home-markets, and other international markets as prerequisites to innovative collaboration and innovation outcomes in foreign business relationships. The results of our linear structural relations (LISREL) analysis of Swedish SMEs provide empirical evidence that the effect of opportunity connectedness on innovation outcomes in foreign business relationships is mediated by the level of innovative collaboration. These results indicate that SMEs need a relatively higher level of innovative collaboration in their partnerships with foreign market customers to convert opportunities conceived in home- and international- market networks into innovative outcomes in comparison to opportunities conceived in host-market networks. This finding implies that as opportunities become increasingly contextually remote, the importance of collaborative business relationships increases. By showing these results, the study contributes to research in the international small-business domain that seeks to identify important prerequisites of SME innovation.
Highlights
Over the past decade, the focus on firms’ abilities to innovate has again become a key focal point owing to the rapid rate of technological change, shortened product life cycles, and the globalization of markets
We develop a model focused on the causal paths among relationship opportunity connectedness, innovative collaboration, and innovation outcomes in foreign business relationships of Small and medium-sized enterprises (SMEs)
We investigated the effect that opportunity connectedness related to three network dimensions have on innovation outcomes in foreign market relationships international SMEs as well as the mediating effect of innovative collaboration
Summary
The focus on firms’ abilities to innovate has again become a key focal point owing to the rapid rate of technological change, shortened product life cycles, and the globalization of markets. Even though the bulk of private research and development (R&D) spending still comes from a small number of very large firms, disruptive breakthroughs often emanate from small and medium-sized enterprises (SMEs) (Baumol, 2004). In light of these developments, the current discourse regarding the requisites for SME innovation is vigorous, and Technovation is a important forum for this debate The specific purpose of this study is to investigate how networks, depending on their location, contextualize innovation in particular foreign market business relationships
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