Innovation in tradition-based firms: Dynamic knowledge for international competitiveness

Purpose: The purpose of this paper is to propose a model of innovation and internationalization for small- and medium enterprises (SMEs) and at testing it on tradition-based firms. These are SMEs whose productions reflect their territory's cultural identity. They are often micro-firms and weak in global markets. Since these firms characterize the European and Italian offer, the scientific challenge is to verify whether there are possible strategic paths, mainly based on interfirm collaboration and dynamic knowledge, that can help them getting higher levels of competitiveness. More specifically, the proposed model aims at understanding if it is possible to overcome these firms' weaknesses through collaboration in networking perspective. Design/methodology/approach: Methodology uses theoretical backgrounds in order to define hypotheses. The main approach starts from contributions on RBT and dynamic capabilities and their possible linkages in the internationalization perspective. Thus, considering the aims, the paper analyze if according to resource-based approach, dynamic capabilities allow entrepreneurs to seek opportunities which become strategic resources for a sustainable competitive advantage. This issue is analyzed both in theoretical terms and in its empirical implications in artistic craft sector. The empirical research has been designed in order to explain knowledge creation and transfer processes, in terms of firms' competitiveness. Particularly, the analysis adopts multiple case studies methodology. Findings: Tradition-based "Made in Italy" SMEs, as depicted in the empirical analysis, are characterized by limited size and scarce financial resources. This situation determines a difficult access to innovation in order to compete in global market. Thus, the research has highlighted that the only internationalization path, useful for this kind of firms, is cooperation, in a networking perspective. Firms that succeed in this process not only set the basis for survival but even to gain competitive advantage. Practical implications: Through this analysis, the paper proposes a model of innovation and internationalization for SMEs' development. Particularly, the model will be replicable to all those firms that are expression of cultural identity (e.g. "made in") and of tradition, for which innovation and internationalization can represent useful keys to compete globally. Originality/value: The paper provides a connection between RBT, dynamic capabilities and internationalization theories applied to tradition-based sectors, such as craft, in search of innovation, in order to compete internationally. So the paper investigates also on the internationalization and networking processes, in order to verify if combined dynamic capabilities and resources are able to make these firms more competitive. Moreover, the research field is quite unexplored and represents an important step in the theoretical and empirical evolution. © Emerald Group Publishing Limited.