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Business model innovation in international performance: the mediating effect of network capability

Networks and business models are two critical defining factors in the internationalisation of small- and medium-sized enterprises (SMEs). Although scholars have recently suggested that business model innovation be linked to dynamic capabilities, there has been limited research interest. This study aims to do so by linking business model innovation with dynamic networking capabilities and examining their role in SME internationalisation. Using a sample of 210 internationally operating Finnish SMEs and conducting regression and mediation analysis, we find that: 1) network capability predicts business model innovation in SMEs; 2) business model innovation predicts higher international performance; 3) business model innovation mediates the relationship between network capability and international performance. The study thus contributes by establishing network capability as an antecedent of business model innovation in achieving international performance.