Transforming International Knowledge to Innovation Values and Performance: The Role of Entrepreneurial Absorptive Capacity

Research has confirmed the positive impact of internationalisation on innovation performance but we still know little how newly acquired knowledge from international business activity engagement can be transformed into innovation value and improve firms’ innovation performance, especially in the context of small startups in emerging markets. Adopting multiple case study approach, this paper explores how international activities could improve firms’ innovation performance by unpacking the entrepreneurial absorptive capacity process of start ups in emerging markets. Our process model reveals the importance of human related facilitating factors which accelerate the learning process to enhance the entrepreneurial absorptive capacity. Trust with strategic international partners is found as the key factor facilitating the effective knowledge-innovation transformation. Supportive organisational culture for innovation, leading through enthusiasm and vision (transformational leadership style) enhances knowledge assimilation and transformation of knowledge learning from international activities to innovation. Reward and recognition mechanism promotes exploitative learning, converting innovative ideas into commercial applications. We contribute to internationalisation vs innovation literatures by unpacking the facilitating factors of the learning process underlining entrepreneurs’ level of absorptive capacity.