The relationship between innovation and internationalization of SMEs: a review of theoretical perspectives

The extant literature on the relationship between innovation and internationalization confronts scholars with two challenges. First, its theoretical grounding is somewhat weak – in particular, the extant scholarship treats innovation and internationalization of small and medium enter- prises (SMEs) with little reference to the theoretical debates in strategy research around the relative salience of resource-based theory, network perspectives and on the linkages between strategy theory and internationalization theory. Johanson and Vahlne (1977) clarified that the typical internationalization path of an SME is characterized by gradual investments and a step- wise approach to market expansion. While such a widely accepted perspective in the literature exists, it tends to disappear when innovation is integrated into studies of SME internation- alization. Outside of the International Business (IB) literature, where scholarship considers SME innovation processes explicitly, scholars frequently base their analyses on theoretically grounded paradigms such as open innovation (De Marco et al., 2020).