Stay or go? Exogenous shocks and <scp>small and medium‐sized enterprises</scp> ' export market portfolios

Abstract Research Summary How do small and medium‐sized enterprises (SMEs) respond to multiple exogenous shocks in export markets? Drawing on real options theory (ROT), we analyze a unique data set of 2975 French SMEs over the period 2015–2020. We show that, when facing low‐intensity shocks, SMEs expand the breadth of their export market portfolio, thereby enhancing switching options across regions. As shock intensity increases, they reduce the breadth while sharply increasing the depth of their export market portfolio, thereby strengthening growth options within their home region. Moreover, SMEs react more strongly to natural shocks (natural and climatic disasters, epidemics) than to human‐induced shocks (armed conflicts, terrorist attacks, and industrial disasters). We advance our understanding of SME internationalization under uncertainty and contribute to embedding ROT into international business research. Managerial Summary This study provides insights for SME managers on how to optimize export strategies in the face of exogenous shocks. Initially, diversifying export markets can offer SMEs the flexibility to switch and grow, effectively navigating uncertainties. However, as shock exposure intensifies, concentrating efforts on fewer, safer markets can mitigate risks and ensure business stability, making it essential to prioritize export market portfolio depth over breadth. Understanding that SMEs react more strongly to natural shocks than human‐induced shocks can guide managers in tailoring their export strategies based on the type of shock to enhance resilience. Integrating real options reasoning into international decision‐making processes can improve strategic planning, enabling managers to better assess and respond to dynamic market conditions.