The Influence of Inward Technology Transfers and International Entrepreneurial Orientation on the Export Performance of Egyptian SMEs
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This study examines the influence of inward technology transfers and international entrepreneurial orientation (IEO) on the export performance of small and medium-sized firms (SMEs). IEO and innovation are frequently cited as critical antecedents of export activities. Highly entrepreneurial and innovative firms seek to capitalize on their unique intellectual property by penetrating a niche global market quickly. Extant research primarily focuses on technology innovators, in countries well known for their technological advances and support of technology based start-ups. However, SMEs that do not have a technological niche also internationalize. This phenomenon is particularly prevalent in developing economies like Egypt, where horizontal flows of technology (the transfer of technology from one organization to another), especially from overseas companies, are more common than vertical transfers of technology (i.e., from researchers directly to organizations). The literature suggests that many SMEs, especially those in developing economies, rely on the horizontal inflow of technology to enhance their export potential. The hypothesis is that by importing technology, firms also develop an outward internationalization capability (OIC). A second hypothesis is that IEO contributes to creating such capability. The literature postulates that IEO is a dynamic capability that helps firms exploit and reconfigure their resources to pursue international opportunities. Thus, firms with a higher IEO are more likely to develop OIC than are their less entrepreneurially oriented counterparts. Also, firms with a higher IEO are more likely to be involved in inflow of technology processes than are their counterparts. Despite evidence of a link between innovation and export performance, there is a dearth of research examining how inward transfers of technology from other countries influence the development of capabilities and outward internationalization of firms. This research addresses this gap by using resource-based view of the firm, dynamic capabilities view, network theory, and the concept of entrepreneurial orientation, to develop an explanation of how inward transfers of foreign technology may influence the internationalization capability and export performance of firms. Hypotheses are tested in the context of horizontal transfers of foreign technology to SMEs located in Egypt. The research progressed in two stages. In the first stage, interviews with managers of firms having experience importing technology and with substantial export activity helped to identify and confirm relevant factors that comprise OIC. During the second stage, data on inflows of technology (IFT), IEO, OIC, and exports were collected from a sample of 214 SMEs by a survey. Research results identified capabilities that underlie the outward internationalization of SMEs, by developing an OIC scale. There are no measures for OIC in extant literature. Thus, this research contributes to the development of a valid and reliable measure of this construct. Findings support the hypothesis that IEO has a direct positive effect on export performance. The relationships between IEO and export performance is partially mediated by OIC. On the other hand, the relationship between inflows of technology and export performance is fully mediated by OIC, where this research found that IFT does not have a direct effect on export performance. The research results further suggest that the level of OIC development is mainly explained by IEO, but with some contribution from IFT. The research contributes to streams of literature in international business, international entrepreneurship and management of technology. In particular, it expands the understanding of linkages between inward internationalization (inward flow of technology) and outward internationalization (export activities). The linkage between inward and outward internationalization processes received limited attention in the literature, and such research is rarer still in the context of SMEs in developing economies. The research additionally investigates the influence of a 'firm's strategic orientation (IEO) on export performance. While IEO is suggested to have a direct effect on export performance, IEO is also suggested to be an antecedent of OIC, which in turn affects export performance. Studying the mediating effect of OIC contributes to clarifying the conflicting findings of previous studies that examined the impact of entrepreneurial behaviour on international performance. The results provide owners/managers of SMEs with guidance on how to lever technology transfers by building related capabilities. The research also provides SMEs with guidance on how to measure and assess their OIC, and understand how such capability can be built or enhanced. The results additionally clarify the role of a firm's strategic orientation (IEO) in the configuration of resources and the creation of capabilities. Finally, the research helps policy-makers structure export-support polices that explicitly take advantage of opportunities presented by technology imports.