Dynamic capabilities, internationalization processes and performance

Strategies of internationalization have long been the focus of international business and global strategy research. While the major theories - process theory and new venture theory - have substantially contributed to our understanding of internationalization processes, they have not yet fully explained differences in firms' growth and survival rates. Adopting a dynamic capability perspective, we argue that there are two opposing classes of explorative and exploitative capabilities differentially linked to output variables. We introduce the notion of third-order capabilities to balance trade-offs and maximize internationalization performance. A model with some testable propositions is developed which prepares the ground for future empirical research.

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