International entrepreneurial orientation and international performance: The mediating role of dynamic capabilities and business strategy

Abstract International entrepreneurial orientation (IEO) and its potential impact on business performance in foreign markets has attracted significant research attention in recent years. However, few studies have attempted to examine how, and under what conditions, IEO results in enhanced performance for international firms. The present study aims to contribute towards filling this gap by investigating the internal mechanism through which IEO influences performance, considering the mediating effects of dynamic capabilities and international business strategy. Using data collected from 258 small‐ and medium‐sized enterprises (SMEs) that engage in international business activities, we find that IEO contributes to the frequent use of sensing and reconfiguring, which in turn fosters international strategy comprehensiveness and implementation speed. Our results also indicate that international strategy comprehensiveness and implementation speed have a positive impact on international market performance. These findings suggest that research on the impact of IEO on performance should explore how it influences firms' dynamic capabilities and examine the effect of these dynamic capabilities on business strategy. For entrepreneurs and managers of emerging market SMEs, our results indicate that IEO should guide international expansion efforts.