The impact of resource slack on firm outcomes has been extensively studied in both the strategic management and entrepreneurship literatures. Yet scholars have only recently turned their research attention to the impact of resource slack on firm internationalization, and the implications for SMEs are less clear. Does slack promote or hinder SME internationalization? What type of slack is more strongly associated with SME internationalization and under what conditions?

To address these questions we integrate behavioral and resource based arguments with the international entrepreneurship literature. We suggest that the relationship between financial and human resource slack and international intensity is curvilinear: SME internationalization will initially fall as the level of resource slack increases, given that there is less pressure to find solutions to survive and grow. However, at moderate to high levels of resource slack, SMEs have the breathing room and ability to proactively pursue opportunities which positively affects internationalization. We further suggest the relationship is contingent upon whether or not the firms pursue product innovation.