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Impact of innovation on the internationalization-performance of SMEs
1.0 Introduction Internationalization refers to the process of improving the international presence and operations of a given firm (Zucchella & Siano, 2014). In some of the developed countries such as New Zealand, when large firms expand and become multinationals, the small to medium enterprises (SMEs) also benefit from the efforts of internationalization (Chatha & Jajja, 2014). Innovation has acted as the driving force behind the existence and reality of competitive advantage and performance in the international business environment. Economic growth and development rely on the introduction of new technology that can aid the process of production. Zucchella & Siano (2014) determines that the level of innovation controls the international performance of SMEs. The benefits associated with internationalization of operations have resulted in SMEs growing the interest to innovate. As a result of innovative activities, SMEs tend to deliver an increase in economic growth and employment thus becoming an essential aspect in explaining the competitive advantage and international performance of a firm. Innovations bring about new ways of production and service dispensation thus adds benefits to the economic prosperities of SMEs. In developed economies, SMEs have been recognized for the prominent role they play in adding value to the GDP and creation of employment; however, their full potential remains underexploited (Chatha & Jajja, 2014). This argument is also supported by Alexy et al. (2018) who conclude that developed economies thrive due to the existence of SMEs that constitute a considerable portion of business operations that considerably contribute to the GDP and employment levels. For that reason, developed economies provide support for the startup SMEs, for them to internationalize and become centers of innovation and technological advancement. To improve the performance of SMEs, developed economies ensure that they establish and
implement policies that will provide these entities get to utilize the technology available effectively. The incorporation of innovation in the operations of SMEs results in improved general performance concerning the durability and quality of products. The ability to innovate results in cost reduction enabled by the saving of materials, energy conservation or through the use of cheaper and alternative materials instead of conventional materials in the process of production. SMEs continue to apply the concept of innovation in their business activities. To compete internationally, SMEs are using new technology to produce more products, adopt effective marketing innovation techniques and create business innovation processes (Alexy et al., 2018).

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