Against the backdrop of rapid technological iteration and deep restructuring of global value chains, high-tech small and medium-sized enterprises (SMEs) have become pivotal actors in driving regional innovation and industrial upgrading. However, the mechanisms through which firms’ internal capabilities are effectively transformed into internationalisation outcomes remain insufficiently articulated. Drawing on Dynamic Capabilities Theory and the Uppsala model of internationalisation, this study focuses on high-tech SMEs in Langfang and develops an analytical framework linking firm capabilities, international competitive advantage, and the degree of internationalisation. Using data from 392 valid questionnaires and applying partial least squares structural equation modelling (PLS-SEM), the study systematically examines the direct effects of technological innovation capability, absorptive capacity, policy support intensity, managerial international experience, and transnational network capability on firms’ degree of internationalisation, as well as their indirect effects mediated by international competitive advantage. The results indicate that all examined firm capabilities significantly enhance the degree of internationalisation, with technological innovation capability and absorptive capacity exerting both direct positive effects and serving as core endogenous sources of international competitive advantage. Whereas the effects of policy support, managerial international experience, and transnational network capability are largely realised through the mediating role of international competitive advantage. Further mediation analysis confirms that international competitive advantage plays a stable and pivotal bridging role in transforming firm capabilities into internationalisation outcomes. These findings demonstrate that firm capabilities do not automatically translate into internationalisation performance. Instead, such capabilities must be systematically shaped and externalised through competitive advantage to be effectively recognised by international markets. This deepens the process-oriented explanation of SME internationalisation from a dynamic capability perspective and provides empirical insights for optimising internationalisation pathways and policy support mechanisms for regional high-tech SMEs.
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Gao, F., Gan, W., Hashim, F. B., Ismail, F. R. (2025) Internationalisation Is Not a Natural Outcome of Firm Capabilities: The Pivotal Role of Competitive Advantage in High-tech SMEs’ Capability Transformation. Journal of Social Development and History, 1(3), 65-87. https://doi.org/10.71052/jsdh/GAVJ4943