Academic journal article Journal of Small Business Management

Cognitive and Information-Based Capabilities in the Internationalization of Small and Medium-Sized Enterprises: The Case of Croatian Exporters

Academic journal article Journal of Small Business Management

Cognitive and Information-Based Capabilities in the Internationalization of Small and Medium-Sized Enterprises: The Case of Croatian Exporters

Article excerpt

The purpose of this study was to explore the impact of information and cognitive-based capabilities on the international performance as the main rationale behind successful internationalization. The study was conducted on a sample of 125 Croatian exporting small and medium-sized enterprises (SMEs), and results indicate that there is a significant influence of the cognitive and information-based capabilities on the SME export performance. The results implicate the role of cognitive complexity as a platform for successful processing of foreign market intelligence which has value-added impact on the SMEs export performance.

Introduction

In the current internationalization literature, two research traditions have evolved: traditional and "born global." The traditional view stresses the importance of knowledge and tangible resources in the firm's path toward internationalization. The "born global" approach offers a rather unique perspective, stating that the main drivers of international involvement revolve around a managerial global focus. Earlier research efforts, both in the theoretical and empirical domains, have identified a global mindset as a driver of small and medium-sized enterprise (SME) internationalization, being directly related to international performance outcomes (Hsu, Chou, and Hsu 2008; Levy et al. 2007; Nummela, Saarenketo, and Puu-malainen 2004). Managerial cognition is part of the function of identifying international market opportunities that fulfill company objectives. The traditional approach emphasizes the importance of information-based factors in the internationalization process of a firm. On the other hand, information-based capabilities enable firms to leverage competitive advantage, through understanding the needs of foreign customer, the competitive Structure, and other decisive factors from the general business environment. Notably, information-based capabilities have been operationalized through the behavioral tradition of the market orientation (MO) concept (Jaworski and Kohli 1993). More recently, Foley and Fahy (2009) have proposed a capability perspective to the MO, defining its core role in the domain of intangible corporate resources. In such a manner, MO is manifested as an operative marketing capability of the firm, which enables them to identify and seize market opportunities, according to market intelligence. However, the foreign environment is far more complex than the domestic one and thus requires more resource commitment. Regarding these contextual specifics, researchers have called for the- conceptualization and application of an export market orientation (EMO) (Diamantopoulos and Cadogan 1995). Recently, a number of research efforts have confirmed the plausibility of the EMO concept in an export context, is it is significantly linked to international performance outcomes (Akyol and Akehurst 2003; Cadogan, Diamantopoulos. and de Mortanges 1999; Cadogan, Diamantopoulos. and Siguaw 2002; Murray el al. 2007). Nevertheless, there is evidently a need for further investigation of latent capabilities in the- international context and their role in a firm's internationalization path (especially in the case of SMEs, which generally lack tangible resources). Recently, intangible capabilities have proven to be important drivers of SME internationalization (Knight and Kim 2009). Accordingly, the main aim of this study is to examine the direction and extent of the HMO activities and global mindset (as latent SME capabilities) and their influence on the international performance of SMEs. Another question that arises revolves around the mediating role of global mindset in the previously validated EMO international performance link. Ultimately, this entails appraising the contribution of cognitive complexity in the internationalization process of SMEs. Alternatively, the integration of information-based and cognitive-based capabilities has an objective of integrating concepts from the traditional (information resources) and "born global" approaches (global mindset) to internationalization. …

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