The role of international R&D activities on SMEs’ performance

One of the main challenges for small and medium enterprises (SMEs) is how to leverage their R&D activities in the international markets but current literature offers mixed evidence and inconclusive models in this regard.  The relationships among SMEs’ international R&D activities, dynamic capabilities and performance are still not well understood, despite their importance for the managerial practices in SMEs operating in international markets in the increasingly global marketplace. The authors address this important research gap by arguing that a better understanding of the drivers of success and performance of SMEs’ international R&D efforts requires a comprehensive and exploratory approach. 

This study uses a qualitative approach to understand the challenges and opportunities faced by SMEs in their international markets, by interviewing SMEs that are recognized as particularly innovative firms in their own sectors. Five Italian SMEs were selected from different industry sectors (retail intelligence, business training, shoes, food, and sportswear). These SMEs are relevant for this research because of their brand heterogeneity, high level of innovativeness and internationally recognized exposure. The authors use semi-structured interviews to develop specific propositions and use interview transcripts and cross-case tables to support the analysis of the content around the three main themes of this research: performances, technology capabilities, and marketing capabilities. The interviewees have a wide range of educational and business backgrounds, roles in their respective SMEs that belong to different sectors. The authors present the key findings starting with the characteristics of the R&D in the five SMEs, followed by the possible relationships among their international R&D activities, collaborative innovation, and firm performance as well as their technological and marketing capabilities. 

Findings show that SMEs’ technological and marketing capabilities have dominant and positive effects on their performance in the international markets. Besides extending the literature on the internationalization of R&D by SMEs, these findings highlight the major challenges and opportunities for the managers of internationally active SMEs. Findings suggest that R&D diffusion depends on SMEs size, market adaptability and available resources for marketing support activities. 

This paper makes two specific contributions to the literature. First, by extending the narrow scholarly foundations of SMEs R&D processes and its underlying drivers in international markets, it helps resolve the inconclusive or marginally supported hypotheses reported in past research. Second, this paper clarifies the role and significance of internal dynamic (e.g., technological and marketing) capabilities in the mechanism that drives the success of SMEs international R&D activities. In doing so, this research sheds light on potential synergistic activities of technological and marketing capabilities, and their effects on SMEs’ R&D performance in the international markets. 

The research of Nebojsa Davcik.


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