Abstract

This study tests the underlying assumption that innovation is a necessary condition for internationalization in small firms. Specifically, I ask whether a knowledge-intensive business service (KIBS) firm’s service innovation influences its propensity and intensity of internationalization. Two sub- questions are posed in relation to this broader question. First, are certain innovation results or combinations thereof associated with internationalization? And second, are certain configurations of innovation inputs and results associated with internationalization?

I use both traditional statistical techniques as well as set-theoretic methods to assess how the results garnered from contrasting methodological approaches differ from one another. The results from the logistic regressions and fractional logistic regressions echo the findings from previous studies: they suggest that there is a positive relationship between service innovation and internationalization. Given the assumptions of linearity and symmetry, results from the traditional statistical analyses support the notion that service innovation is positively related to internationalization; that internationalization is unlikely without service innovation. The results from the QCA lend an alternate view to the one proposed by the traditional statistical analyses, suggesting that there can be internationalization without service innovation. The crisp and fuzzy set QCAs suggest there are multiple pathways of innovation attributes a firm may adopt, but very few paths lead to the consistent result of internationalization. While there are few consistent configurations that explain internationalization propensity or intensity, there are many more that explain remaining in the firm’s domestic market.

Overall, the findings from the study point to the strength of using alternative methodological perspectives to test theoretical models and nuance the current understanding of the role played by innovation as a driver of internationalization. They also point to the importance of allowing for asymmetry in explaining the presence and the absence of internationalization. Improper generalizations may be made when inferring that the absence of innovation implies the absence of internationalization. Moreover, they suggest that the import of a broader definition of innovation, including activities that precede an innovation result as well as external knowledge sourcing, offers insightful additions in understanding the behaviours adopted by firms that have internationalized.