The effect of global dynamic capabilities on internationalizing SMEs performance: Organizational culture factors as antecedents

Based on a dynamic capability (DC) view, the purpose of this paper is to explore whether market orientation (MO) (external) and learning orientation (LO) (internal) facilitate internationalizing small- and medium-sized enterprises’ (ISMEs) global dynamic capabilities (GDCs) – i.e., their global marketing and product-design capabilities – and promote firm performance.

Empirical data are randomly selected from Taiwanese ISMEs, yielding 206 valid responses. Informants’ (CEOs, vice presidents, senior managers) knowledge about and shouldering of firm responsibilities are explored.

A significant increase in global marketing and product-design capabilities is found to affect firm performance. MO and LO positively influence GDCs, which increase firm performance. Furthermore, LO and MO support GDCs’ development.

The sample is reasonably diverse in terms of demographics including firm location, size, industry, and market type. Disaggregation results are generally robust regarding model parameters. However, future research should target different countries to assess result generalizability.

The findings reveal two practical implications for managers. First, successful GDCs help firms spread the costs of designing products or components across many contexts and to offer appealing products to consumers worldwide. Second, it is important that managers foster development of MOs and LOs.

The study contributes to the literature in two ways. First, by conceptualizing GDCs of ISMEs, DC literature is expanded based on a global context. Second, the complexity of extending DC literature into ISMEs may arise from the fact that ISMEs, as separate and living entities, devise their own organizational culture, which significantly affects their GDC development.