The development of firm’s knowledge during the internationalization process: empirical evidence from an Italian SME

Internationalization can be viewed as an evolutionary process, conducted by leveraging relationships with foreign partners, to access their knowledge and competences. At the same time, firms’ internationalization is driven by their knowledge. This is particularly relevant with reference to small and medium enterprises (SMEs), due to their resource constraints. This paper assumes that, under certain circumstances, the process of internationalization of SMEs can give rise to and benefit from enhancement of their knowledge base. Starting from the main literature on internationalization, and particularly International Entrepreneurship, as well as Knowledge Management and Organizational Learning, the purpose of this paper is to analyze the internationalization process of an Italian familiar firm operating in the fashion industry, the Gruppo Germani S.p.A., and to understand how it is related to the evolution of the firm’s knowledge, which constitute not only its driver, but also one of its outputs. More specifically, the empirical research attempts to explore the following questions: How is the internationalization process influenced by the organizational knowledge base? How does knowledge acquisition enhance the firm’s knowledge base? To answer these questions, a longitudinal case study is conducted. This methodology allows analyzing the internationalization process from the beginning, for a comprehensive period of five years, focusing on the evolution of the firm’s knowledge base. The results of this research highlight that knowledge base of the firm can constitute both a stimulus to and a driver of the firm’s international growth, if useful knowledge is continuously acquired during the process, thus becoming firm-specific. The main effect is the improvement of the firm’s performance over time. This suggests that the organization should not only leverage on its knowledge base to accelerate internationalization process and to extend the countries’ scope, but also identify and acquire useful external knowledge in order to increase its knowledge base. Although the methodology does not allow generalization of results, the paper presents some interesting findings about the relationship between the characteristics of the knowledge base of SMEs, the acquisition of useful external knowledge, and its effects on knowledge base of the SMEs.