Opportunity novelty, improvisation and network adaptation in the internationalization of Swedish SMEs

Abstract

By deviating from previous ways of working and improvising new solutions to problems in the internationalization process, small and medium-sized enterprises (SMEs) will increase the likelihood of developing novel international opportunities. In this way, for instance, unforeseen customer demand, rather than following a specific plan, may govern market choice. Such novel opportunities, in turn, are likely to require network adaptation in order for the firm to reach an insidership position in the international business network. By integrating international opportunity theory with theories on improvisational behavior, three hypotheses are developed between the constructs of international opportunity novelty, improvisation, and network adaptation. The hypotheses were tested with Structural Equation Modelling on 258 realized international opportunities developed by Swedish SMEs (European Union definition: number of employees 10–250) and were observed through on-site visits. It is revealed that improvisation increases the degree of international opportunity novelty as well as the need for network adaptation. The degree of novelty of realized international opportunities positively influences the need for adaptation to a foreign network. Novelty can be seen as a proxy for opportunity's wealth-creating potential, and developing improvisation capabilities seems to be a way to increase the novelty of international opportunities developed. Managers that are risk averse and therefore refrain from improvisation risk missing valuable novel opportunities.