Relationships between international entrepreneurship, dynamic capabilities, and competitive advantage in the internationalization of Japanese SMEs

Small and medium-sized enterprises often internationalize under severe resource constraints; however, some Japanese niche leaders sustain superior international performance. This study explains how international entrepreneurial orientation translates into dynamic capabilities that generate competitive advantages in international market. This study conducts a comparative qualitative analysis of ten Japanese global niche top small and medium-sized enterprises with high international market shares. We adopted an inductive, process-oriented analysis strategy that combined the coding. The analysis identifies six dynamic capabilities—market sensing, human resource management, core technological, target marketing, network resource management, and risk management—that recurrently support international operations. We further uncovered two equifinal pathways connecting international entrepreneurial orientation profiles to focused capability bundles and sustained advantage. In the market learning adaptive configuration, market- and learning-oriented behaviors stabilize into routines for field-based sensing, employee development, and customer-pulled incremental adaptation that sustain premium positioning in international niches. In the innovation core technological configuration, innovation- and learning-oriented behaviors stabilize into routines for experimentation, core technology renewal, and protection, complemented by selective network resource and risk management capabilities when regulatory exposure or imitation threats become salient. These findings contribute a micro-foundation mechanism that links international entrepreneurial orientation to capability formation and show that global niche leadership can be achieved through distinct orientation capability sequences rather than through a single dominant route.