How SMEs explore international opportunities by learning from failure: The effects of entrepreneurial risk-taking and normative institutions

This study examines how learning from failure shapes international opportunity (IO) exploration among small and medium-sized enterprises (SMEs) in emerging markets. Drawing on dynamic capability and organizational learning perspectives, we theorize that learning from failure fosters IO exploration through entrepreneurial risk-taking. Furthermore, we argue that the strength of this indirect relationship depends on the normative institutional environment in the SME’s home country. Using both symmetrical (PLS-SEM) and asymmetrical (fsQCA) methods, we analyse data from 146 Chinese SMEs. The results support our framework: entrepreneurial risk-taking is a key mechanism through which learning from failure is linked to IO exploration. Notably, we find that the stronger the home country normative institutions, the weaker the indirect effect. In addition, our configurational analysis reveals multiple pathways in which learning from failure, risk-taking, and institutional context combine to generate either high or low levels of IO exploration.