The extant literature on the relationship between innovation on one hand and internationalization on the other confronts scholars with two challenges. First, its theoretical grounding is somewhat weak - in particular, the extant scholarship treats innovation and internationalisation of SMEs with little reference to the theoretical debates in strategy research around the relative salience of resource based theory, network perspectives and on the linkages between strategy theory and internationalization theory. Johanson and Vahlne (1977) clarified that the typical internationalization path of an SME is characterized by gradual investments and a stepwise approach to market expansion. While such a widely accepted perspective in the literature exists, it tends to disappear when innovation is integrated into studies of SME internationalization.
