Individual sensemaking and business model innovation in internationalizing SMEs: the mediating effect of network capability

Purpose This study examines how individual sensemaking relates to business model innovation (BMI) in internationalizing small and medium-sized enterprises (SMEs) and whether network capability mediates that relationship. Design/methodology/approach The hypotheses are tested with survey data from 187 internationally operating Finnish SMEs. Ordinary least squares regressions with bootstrapped mediation analyses are used to assess the relationships between communication-oriented sensemaking, cultural sensemaking, network capability and BMI. Findings Communication-oriented sensemaking is positively associated with BMI, whereas cultural sensemaking is not. Network capability is positively associated with BMI and mediates the relationship between communication-oriented sensemaking and BMI, but not the relationship between cultural sensemaking and BMI. Robustness checks support this pattern. Research limitations/implications The study is based on cross-sectional data from SMEs in Finland, which may limit causal inference and generalizability. Future research should test the model longitudinally and across cultural and institutional settings, especially in emerging markets contexts. The findings extend the dynamic capabilities perspective of SMEs by identifying sensemaking as a cognitive micro-foundation of BMI, thus integrating individual-level cognition with organizational-level relational capabilities. Practical implications SME managers seeking sustainable international growth should encourage open dialog and communication within and outside the firm, as that will help them align internal interpretations and strengthen relational learning with partners, subsequently facilitating business model development. Developing network capability is important for translating interpretive sensemaking into organizational growth. Managers should seek to complement cultural awareness with active sensegiving and collaborative sharing practices to maintain the viability of their business models across international contexts. Originality/value The study links sensemaking, network capability and BMI in SME internationalization literature, showing that the cognitive microfoundations of BMI depend less on cultural interpretation alone than on communicative sensemaking translated through network capability.