Service innovation and internationalization in SMEs: antecedents and profitability outcomes

Anna Vuorio (), Lasse Torkkeli () and Liisa-Maija Sainio ()
Additional contact information
Anna Vuorio: LUT University
Lasse Torkkeli: LUT University
Liisa-Maija Sainio: LUT University

Journal of International Entrepreneurship, 2020, vol. 18, issue 1, No 5, 92-123

Abstract: Abstract Both innovating and internationalizing can hold the key to survival and growth among small- and medium-sized enterprises (SMEs). Service innovation in particular is highly relevant in the increasingly digitalized and high-technology global trade. However, there have been until now few studies on service innovation in international entrepreneurship. Thus, in an effort to illuminate its role in entrepreneurial internationalization, the present study examines the profitability impact of service innovation in SME internationalization, while also outlining the differing impacts of entrepreneurial orientation and human capital as the antecedents of both. The empirical data were collected via an online survey of Finnish SMEs in the information and communications technology (ICT) industrial sector, the final sample comprising 104 companies. The data were analyzed through structural equation modeling. The results indicate, first, that entrepreneurial orientation underlies both degree of internationalization and service innovation, yet different dimensions of entrepreneurial orientation have distinct impacts on the two outcomes. Second, we find that the level human capital also determines the level of service innovation in as an antecedent and third, international expansion, but not service innovation, has a negative impact on profitability. We discuss the implications of these results, which imply that SMEs may face an internationalization-innovation paradox in that engaging in both activities may not be a feasible strategic option for them, and that prioritizing internationalizing in favor of innovating may incur costs and result in lower profitability.

Keywords: Internationalization of SMEs; Innovation in SMEs; Service innovation; Entrepreneurial orientation; Human capital; Profitability (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://link.springer.com/10.1007/s10843-019-00266-z Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jinten:v:18:y:2020:i:1:d:10.1007_s10843-019-00266-z

Ordering information: This journal article can be ordered from
http://www.springer. ... ip/journal/10843/PS2

DOI: 10.1007/s10843-019-00266-z

Access Statistics for this article

Journal of International Entrepreneurship is currently edited by Hamid Etemad

More articles in Journal of International Entrepreneurship from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().