Determinants of export and innovation management amongst British SMEs

Exporting presents an opportunity for SMEs to secure growth as they expand their activities into international markets. But there are also significant sunk costs associated with this strategic decision which are non-recoverable. In this paper we empirically examine what shapes the firms? decision to internationalise and question whether firms with (a) more resources, (b) higher capability levels, (c) higher planning intentionality, and (d) more innovative capacity, are more likely to internationalise and, when they do, secure a stronger presence in international markets. Drawing on the Department for Business, Innovation and Skills (DBIS) Annual Small Business Survey dataset of more than 5,712 UK SMEs for 2012, our results offer support for all hypotheses in that older and larger firms, those with higher internal capability, those with greater planning intentionality and a growth orientation, and those with more innovative products and services are more likely to operate in international markets. Importantly, the capability effect dominated the planning intentionality effect suggesting building up internal skills and resources are fundamental to being successful internationally. Our analysis provides new insights for both policy-makers and SMEs who seek to enhance the internationalisation process. We suggest that more initiatives should be focused on facilitating the firms? internal capabilities and innovation, which then shapes their competitiveness and ability to sustain activity in the international market. SMEs should take into account their available resources and capabilities before developing a strategic plan to cope with challenges in the internationalisation process