The impact of innovation and digitalization on the international performance of SMEs

Purpose The research identifies the causal pathways between SMEs’ innovation, digitalization and international performance of SMEs. It particularly explores the determinant of innovation and digitalization within Lebanese SMEs. Design/methodology/approach This research employed the SEM (structural equational modelling) technique to explore the links between innovation, digitalization and international performance of Lebanese SMEs. Findings Based on a sample of 208 SME executives, the results of SEM (structural equational modeling) reveal that digitalization is a key success factor of international development of SMEs. The results also show that digitalization boosts innovation namely in small firms; however, innovation does not significantly influence digitalization. Finally, the study confirms that SMEs’ internal innovation capabilities along with a favorable internal business environment are the determinants of their innovation. Originality/value This research advances knowledge in essential areas of digitalization, innovation and the organizational dynamics of SMEs, especially to the much under-researched organizational typology of SMEs operating in ambiguous and resource-constrained contexts; offering novel and valuable elucidations, as well as avenues for further research and implications to industry and governance.