Abstract

A shortcoming of much extant research on the process of internationalization is an emphasis on either strategic exploration or exploitation while ignoring their duality. We examine exploration within SMEs through their efforts to expand their international scope. Internationally focused SMEs must expand their scale and scope to learn and iterate towards more sustainable competitive positions. However, this scope expansion is costly and may eventually provide limited returns producing an inverted U-shape relationship with international performance. Potential theoretical resolution of this tension with international scope expansion is offered in the literature on ambidexterity. Expansion of scope within SMEs demands a disciplined counterbalance, and thus corresponding strong emphasis on exploitation in tandem to capitalize on the increased knowledge inflows as scope expands. Therefore, we argue that SME exploitation efforts positively moderate the relationship between scope of internationalization and firm international performance.

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