Knowledge assets and firm international performance

•Distinguish between ex ante measures of knowledge generation (e.g. R&D activity) and ex post measures of knowledge assets.•Correlation between R&D activity and knowledge assets may be weak.•R&D intensity has a positive linear impact upon foreign sales intensity.•Knowledge assets and foreign sales intensity have an inverse quadratic relationship.•Externally-generated and internally-generated knowledge assets need to be used in combination to maximize foreign sales intensity.

This paper investigates how intangible knowledge assets impact upon firm international performance through the analysis of a sample of 290 European listed companies. We draw upon the knowledge-based view of the firm, and argue that more knowledge assets have a positive impact on foreign sales intensity, but only a up to a point. The inverse quadratic relationship found suggests that it is necessary to balance knowledge assets with complementary assets in order to achieve a higher degree of international performance. Furthermore we also suggest that externally-generated knowledge assets may have a positive impact upon international performance, but that the impact will be mediated by the possession of internally generated knowledge assets.