Pursuing Innovation: An Investigation of the Foreign Business Relationships of Swedish SMEs*

Abstract

The aim of this study is to contribute to the international business field and research on the innovativeness of international SMEs, by addressing the following research question: To what extent and under which circumstances does relationship connectedness affect perceived innovativeness in international SMEs? To answer this question, the authors create a model that examines the mediating effects of two types of foreign business relationship strategies: relationship differentiation and relationship investments. In order to create this model, the authors draw upon behavioural internationalization process theory, network theory and research into SMEs. The findings reveal that relationship investments mediate the effect relationship connectedness has on perceived innovativeness. This study contributes to research about the innovativeness of international SMEs by showing that being connected to resources in the network is not, in itself, a guarantee of becoming or remaining innovative in foreign markets.