Knowledge and capabilities: what are their roles in international business of SMEs?

PurposeEngaging in international business (IB) is a particular challenge to small and medium-sized companies (SMEs), representing a condition to ensure growth and longevity. Due to their limitations of tangible resources, these companies make use of their levels of knowledge and capabilities to reach new markets. This study seeks to ascertain the role, the typologies of the knowledge and capabilities required for access to IB, and how benefits may arise for SMEs from their international experience.Design/methodology/approachTo achieve these objectives, the authors ground the insights on a qualitative study that gathered data from ten semi-structured interviews with leading entrepreneurs engaged in IB. The data were analysed resorting to the QSR Nvivo software.FindingsThe results demonstrate how (1) knowledge and the development of dynamic capabilities all represent determinant facets to engaging in IB and that (2) the knowledge and learning capabilities acquired and developed in IB context also result in positive returns in domestic markets.Originality/valueDespite the rising of IB studies, the interaction between knowledge and capabilities from the perspective of accessing international markets has not received attention enough from scholars. The authors argue that both constructs must act together to reach and maximize the IB of SMEs and provide evidence that engagement abroad brings several other advantages beyond economic returns.