¹College of Business, Florida State University, Tallahassee, FL, USA

Correspondence: G Knight, Florida State University, College of Business, PO Box 3061110, Tallahassee, FL 32306-1110, USA. Tel: +1 850 644 1140; Fax: +1 850 644 4098; E-mail: gknight@fsu.edu

Received 13 October 2005; Revised 19 December 2006; Accepted 10 September 2007; Published online 29 May 2008.

Abstract

The trend of increasing internationalization of small and medium enterprises (SMEs) is noteworthy, because such firms typically have far fewer financial and tangible resources than large multinational enterprises. As a result, international business is often more challenging for smaller firms. In this study we investigate the widespread internationalization of SMEs, and specific factors that support their superior performance abroad. We uncover a collection of intangible capabilities that are especially salient to these firms and their growing international involvement. We identify international business competence (IBC) as an intangible, overarching firm resource that engenders superior international performance in the international SME. Through case studies and a comprehensive literature review, we identify four dimensions of IBC. We devise and assess a model that links IBC to SME international performance. Results suggest that international orientation, international marketing skills, international innovativeness, and international market orientation are all significant dimensions of IBC, and that IBC is instrumental in SME international performance. We discuss resultant findings and offer managerial implications.