On The Need Of Sme Organizational Adaption To The International Business Environment: A Competence-Based Perspective

In our paper we challenge the common notion that small and medium sized enterprises (SMEs) have to adapt to the international business environment to be successful when acting in an international context. Although we believe in a need for certain adaption, we claim that the possibility that SME are to a certain extent able to proactively shape outer conditions is not adequately considered in literature. Therefore we ask how far SMEs in international business need to adapt to the environment to ensure a state of international competitiveness. We understand SMEs as open systems (Sanchez and Heene, 1996) and employ the Competence-based Theory of the Firm (CbTF) (Foss and Ishikawa, 2007; Freiling et al., 2008) as theoretical frame of reference for our conceptual paper. Thanks to its moderate voluntaristic nature, this theory allows considering both social embeddedness and managerial discretion of firms. Besides, this perspective takes into account internal developments as well as developments in the business environment. This is particularly useful to understand interaction processes with the environment that aim at accessing so-called ‘firm-addressable assets’. Firm-addressable assets explain the resource dependence of international SMEs on third-parties. However, backed by ‘absorptive capacity’ (Cohen and Levinthal, 1990), firm-addressable assets fuel internal processes of learning as well as resource and competence building. Moreover, CbTF allows for considering the role of certain categories of resources. Following service-dominant logic (SDL) (Vargo and Lusch, 2004), the distinction between ‘operand resources’ and ‘operant resources’ becomes a centerpiece of our argument: SMEs need to adapt to the environment due to resource constraints by operand resources and shape the environment primarily driven by operant resources. Our paper advances research in three ways: (1) we reinforce the concept of moderate voluntarism in this stream of research and challenge the predominantly deterministic view on SME environmental adaption; (2) we introduce a rather new theory (CbTF) and develop an understanding that features the managerial discretion of SME’s in international competition; (3) we depart from the quite unspecific notion that intangibles matter in case of proactive SME management and specify the resource categories in this realm with more explanatory power in this regard.