SMEs' internationalisation: When does innovation matter?

Abstract

The objective of this research is threefold: first, to investigate the role of goods, service, and process innovation on SMEs’ internationalisation (i.e., exporting); second, to investigate the association between innovation’s degree of novelty (radical innovation vs. incremental innovation) and SMEs’ internationalisation; and, third, to examine the combined effect of different types of innovation and the degrees of novelty of innovation on firms’ internationalisation and compare the findings with their individual effects. Data from 12,823 SMEs in the United Kingdom support the concept that innovative SMEs are more likely to export than non-innovative SMEs; however, the link between innovation and internationalisation differs according to the type of innovation introduced and the degree of novelty of the innovation. Of importance to managerial practice, the combined effects of different types and degrees of novelty of innovation are greater than their individual effects, creating a synergy or amplified effect.