What Magical Roles Can Internationalization and Innovation Play for SMEs’ Performance in Wuhan, China?

Abstract

This research explores the interaction between internationalization and innovation and their collective impact on the performance of small and medium-sized enterprises (SMEs) in Wuhan, Hubei Province, China. Data from 404 SMEs were analyzed to examine the structural relationships between internationalization (INT), innovation (INN), and organizational performance (OP), highlighting how these factors contribute to SME success. The study draws on the Revised Uppsala Internationalization Process Model, the Innovation-Related Internationalization Model, and Resource-Based View Theory (RBV). Findings reveal that innovation significantly mediates the link between internationalization and organizational performance, emphasizing that global market entry alone is insufficient without innovative practices. The results suggest SMEs benefit from both internationalization strategies and the integration of innovation to achieve financial growth, operational efficiency, and market competitiveness. The study provides actionable insights for entrepreneurs and policymakers and addresses the gap in the literature regarding the internationalization-innovation relationship in Chinese SMEs. Future research avenues include broadening the industry scope, incorporating qualitative methods, and assessing external influences on these underlying forces.