Effect of firm’s resources on international diversification: An application in the Iberian Ham industry

SummaryThis research tries to explain the importance of intangible resources in explaining the international diversification of small and medium sized enterprises (SMEs). Our starting position is that SMEs diversify to leverage their resources across different markets, and therefore a positive relationship is to be expected between technological, human and reputational resources, and diversification. These resources can be held internally by each firm, as proposed by the resource-based view, or, when the SMEs belong to a cluster, they also can be collectively created among neighbouring firms. Empirical evidence was obtained from a sample of 250 SMEs located in the Iberian Ham cluster. The results suggest that SMEs tend to rely on their technological resources and individual reputation to help them become exporters, but when it comes to their diversification through expanding into different overseas markets, collective reputation and human resources become more important.

► How intangible firm resources influence international diversification.
► The strategic importance of collective reputation for firms’ international diversification.
► The superiority of a hierarchical decision process over a single-stage process in the decision to diversify internationally.