Examining the mechanism underlying performance advantages of rapid internationalization

Prior research has acknowledged the merits of firm’s post-entry speed of internationalization (PSI) for export performance. However, little attention has been paid to the underlying mechanisms that enable firms to convert their PSI into performance outcomes. Drawing on the dynamic capabilities perspective, this study examines the mediating effects of two firm-specific capabilities, i.e., adaptive capabilities (ADC) and knowledge capability upgrading (KCU), on the relationship between PSI and financial and non-financial export performance. Employing a sample of 211 New Zealand exporting SMEs, we found a positive relationship between PSI and both ADC and KCU and found support that PSI’s effect on export performance is conveyed through the dynamic capabilities of ADC and KCU. This study contributes to the international business literature by elucidating that the process of knowledge and capabilities creation and upgrading is a viable channel for SMEs to achieve the superior performance implications associated with rapid internationalization.