From innovation to internationalization

This chapter explores how microfoundations contribute to fostering innovation and, consequently, the internationalization of small- and medium-sized enterprises (SMEs). In an increasingly globalized and competitive market, innovation and internationalization are crucial for SMEs’ development, competitiveness and survival. Innovation is defined as the creation of new value propositions through products, services, processes or organizational strategies, while internationalization refers to expanding activities beyond local boundaries. Existing literature has suggested three primary views on the link between innovation and internationalization: innovation drives internationalization, internationalization promotes innovation or both are mutually dependent. However, studies often lack clarity on the mechanisms that drive this relationship. This research adopts a microfoundations approach to better understand the individual, structural and processual dimensions that promote or hinder SMEs’ transition from domestic to international innovation. The study aims to provide an integrative theoretical framework of the key factors that influence this dynamic, contributing to the resilience of SMEs in a globalized economy.