BEYOND RESOURCES: HOW DYNAMIC CAPABILITIES AND INSTITUTIONAL SUPPORT SHAPE SME INTERNATIONALIZATION - A SYSTEMATIC LITERATURE REVIEW

This systematic literature review examines how dynamic capabilities and institutional support-particularly government support-shape the internationalization of small and medium-sized enterprises (SMEs). While the Resource-Based View (RBV) has long established that firm-specific resources underpin competitive advantage (Barney, 1991), a growing body of research reveals that resources alone are insufficient to explain internationalization success. Synthesizing the extant literaturethis review advances three key arguments. First, dynamic capabilities-sensing, seizing, and transforming-serve as the critical mechanism through which SMEs convert resource endowments into international performance (Teece, 2007). Second, government support should be reconceptualized not merely as an external contextual factor but as an institutional strategic resource that firms can internalize and leverage. Third, the effectiveness of government support is contingent upon firm-level absorptive capacity and the alignment between support mechanisms and firm capabilities (Harmanci, Khalik, & Godinez, 2025; Chew et al., 2025). Building on the emerging conceptualization of state agencies as autonomous organizations with distinct institutional roles (Pinho & Pratas, 2025), this review develops an integrative framework that positions institutional support as a boundary-spanning resource, proposes a typology of government support mechanisms,and identifies four critical research gaps. The review concludes with an agenda for future research that emphasizes process-oriented,context-sensitive investigations of the dynamic interplay between internal capabilities and institutional support in SME internationalization.