Radical Product Innovation and Export Behaviour in Small and Medium Enterprises: The Roles of Growth Expectation and Customer Portfolio Breadth

Abstract

Drawing on the theory of the growth of the firm, this study examines the relationship between radical product innovation and export behaviour in small and medium‐sized enterprises (SMEs). Utilising data from the UK Longitudinal Small Business Surveys (LSBS) for the period 2015–2017, this study shows that SMEs that engage in radical product innovation develop heightened growth expectations, which in turn drive export behaviour. The findings reveal a nonlinear moderation effect of customer portfolio breadth on the relationship between radical product innovation and growth expectation. This effect is strongest when SMEs target either a single customer group or a highly diversified customer base. The study contributes to the literature by elucidating the mechanisms through which innovation influences SMEs' internationalisation and highlighting customer portfolio composition's vital role. These insights offer valuable theoretical contributions and practical implications for SME managers seeking to leverage innovation for international expansion. This research also emphasises the importance of strategic customer targeting for innovation outcome optimisation.