Innovativeness as a Driver of the International Expansion of Developing Markets’ Firms: Evidence of Curvilinear eEfects

Purpose: The purpose of this paper is to examine the curvilinear effects of firm innovativeness (i.e. product, organisational and marketing innovation) on international expansion as well as the effect of expansion on performance in the developing countries (DCs) setting. Design/methodology/approach: Research hypotheses are tested using survey data obtained from firms located in four South-East European DCs. Covariance-based structural equation modelling is used to test the proposed conceptual framework. Findings: Empirical findings support the hypothesised U-shaped relationship between product innovation and organisational innovation and the level of international expansion of firms in developing markets. The authors found an inverse U-shaped relationship between marketing innovation and the level of international expansion. Furthermore, the existence of a strong positive link between the level of international expansion and firm performance is also confirmed. Research limitations/implications: While this research utilises a sample of firms from a homogenous group of DCs, further research could use a more heterogeneous sample and thus control the model for various contingency effects (e.g. environment turbulence, market structure and competitive dynamics). Practical implications: When it comes to product and organisational innovation, international expansion is achieved only with a higher level of innovativeness. On the contrary, beyond a certain level, further investments in marketing innovation do not have additional positive effects on international expansion. Originality/value: This study is one of the first that explicitly focuses on examining the non-linear effects of innovativeness on international expansion in the DC context.