International knowledge and the growth of the firm

Abstract

Previous research suggests that small and medium sized enterprises (SMEs) can acquire new knowledge when operating and in international markets and, thereby, enrich their limited resource base. In this study, we examine the growth implications of this new knowledge. Building on the internationalization literature, the knowledge based view (KBV) and Penrose’s theory of the growth of the firm we propose that the new knowledge is a malleable resource enhancing different growth outcomes. Our results indicate that the accumulated experiential knowledge in international markets contributes to a firm’s growth advantage in international markets and to further internationalization. In addition, the study shows that it provides the basis for entrepreneurial actions such as venturing into new markets and research new international customers. However, our results also suggest that this new knowledge has no, or very little, effect on SME growth in the domestic market.