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The role of the market sub-system and the socio-technical sub-system in innovation and firm performance: a dynamic capabilities approach

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Abstract

Organizational learning has been studied as a key factor in firm performance and internationalization. Moving beyond the past emphasis on market learning, we develop a more complete explanation of learning, its relationship to innovation, and their joint effect on early internationalization. We theorize that, driven by the founders’ international vision, early internationalizing firms employ a dual subsystem of dynamic capabilities: a market subsystem consisting of market-focused learning capability and marketing capability, and a socio-technical subsystem comprised of network learning capability and internally focused learning capability. We argue that innovation mediates the proposed relationship between the dynamic capability structure and early internationalization. We conduct case studies to develop the conceptual framework and test it in a field survey of early internationalizing firms from Australia and the United States. Our findings indicate a complex interplay of capabilities driving innovation and early internationalization. We provide theoretical and practical implications and offer insights for future research.

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Acknowledgments

The authors would like to acknowledge the financial assistance of the Australian Research Council Discovery Grant DP0558337 for this research and the guidance provided by the editor and anonymous reviewers during the review process.

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Authors and Affiliations

  1. UQ Business School, The University of Queensland, St. Lucia, 4072, Australia

    Jay Weerawardena & Peter W. Liesch

  2. School of Management, La Trobe University, Melbourne, 3086, Australia

    Gillian Sullivan Mort

  3. Australian Centre for Entrepreneurship Research (ACE), QUT Business School, Queensland University of Technology, Brisbane, 4001, Australia

    Sandeep Salunke

  4. Atkinson Graduate School of Management, Willamette University, Salem, OR, 97301, USA

    Gary Knight

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  1. Jay Weerawardena
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Correspondence to Jay Weerawardena.

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Weerawardena, J., Mort, G.S., Salunke, S. et al. The role of the market sub-system and the socio-technical sub-system in innovation and firm performance: a dynamic capabilities approach. J. of the Acad. Mark. Sci. 43, 221–239 (2015). https://doi.org/10.1007/s11747-014-0382-9

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