Geographical pathways for SME internationalization: insights from an Italian sample

The purpose of this paper is to examine the determinants of two distinct geographic pathways to internationalization for small and medium-sized enterprises (SMEs). Regional and global pathways are juxtaposed to study the influence on export performance of selected key intangible resources, namely, innovation, human resource management, networking and the firm's experience. Building upon a resource-based view of the firm, Tobit regression models are used to test the hypotheses on a sample of 2,657 Italian manufacturing firms. The paper provides empirical evidence that the determinants of SME export performance vary in line with the geographic scope of internationalization. While product innovation (innovation) positively impacts on SME export performance, irrespective of export destination, other factors do so selectively. For example, location in industrial districts (networking) and the deployment of external managers (human resource management) exclusively exert their positive impact respectively on regional and global export performance. The firm's age (experience) does not seem to guarantee success on regional or global export markets. Investing in product innovation and hiring specialist non-family executives are associated with success on global export markets. Industry clustering provides the resources that are useful for internationalization up to a point (export growth in regional markets), but it is not effective in the case of expansion on distant international markets. Exporting beyond the regional market exposes firms to the liability of foreignness to a greater degree, thus requiring more dedicated and specialized resources and competences. This paper supports the hypothesis that export drivers differ between regional and global markets and calls for a definition of export performance that distinguishes between them.