Internationalization and Innovation in Small Firms: A knowledge based perspective

Building on the knowledge-based view and organizational learning theory, this paper examines the effects of inward and outward internationalization on small firm innovation to further our knowledge about the outcomes of internationalization in small firms. The results of the analysis carried out on a sample of small firms operating in the mechanical industry in Italy show that export intensity has a direct and negative effect on innovation. Additionally, the results show that import intensity exhibits a curvilinear effect (inverted U-shaped) on innovation. The study contributes to the international management literature by empirically linking inward and outward international strategies with innovation in small firms. This research provides evidence of the complexity involved with the effects of internationalization on innovation and has important practical implications for small firms manager