This study theorizes and empirically validates two international opportunity recognition modes: creation and discovery. It examines how internationalizing small- and medium-sized enterprises (SMEs) leverage international dynamic capabilities to engage in these modes and analyzes their impact on international performance. It finds that the propensity of an internationalizing SME to adopt a specific mode—whether creation or discovery—is influenced by specific organizational-level international dynamic capabilities (intelligence acquisition, inter-country coordination, reconfiguration). The strength of these relationships is moderated by industry globalization and cultural distance. Furthermore, the interaction between the two opportunity recognition modes reveals a significant negative effect. This interaction suggests that when internationalizing SMEs simultaneously engage in both modes, the effectiveness of each is diminished, leading to lower international performance outcomes. We use multi-informant, cross-industry data collected from 303 internationalizing SMEs in China and Tunisia and empirically test our model using structural equation modeling. This research contributes to the literature on international business and entrepreneurship by offering a more comprehensive understanding of the interplay between international dynamic capabilities, international opportunity recognition, and international performance, emphasizing the strategic trade-offs involved in SME internationalization.
Shi et al. (Tue,) studied this question.