Purpose This study aims to investigate how open innovation contributes to export performance in small and medium-sized enterprises (SMEs) operating amid volatile institutional and trade environments. While openness is often viewed as a pathway to external knowledge, its effectiveness under fragmented and unpredictable global conditions remains underexplored. We reframe open innovation as a capability–governance hybrid and examine how it enables firms to adapt and thrive internationally through internal strategic mechanisms. Design/methodology/approach Anchored in dynamic capabilities theory and a paradox perspective, we develop and test a multi-stage model linking open innovation to export performance through two mediators: market agility and business model innovation. A structured survey was conducted with 162 exporting SMEs. Partial least squares structural equation modeling was employed to examine the hypothesized relationships and mediation pathways. Findings Our findings reveal that open innovation improves export performance by fostering strategic agility and enabling business model reconfiguration. These mechanisms operate both independently and sequentially. The benefits of openness are strongest when firms simultaneously enhance their responsiveness and transform their value creation systems. The model confirms that strategic orchestration of openness is especially valuable in volatile institutional environments. Originality/value This study reconceptualizes open innovation as an internally governed capability system rather than a purely external knowledge process. It contributes to the literature by identifying dual pathways – agility and business model innovation – through which openness leads to superior export outcomes in SMEs. The findings offer practical insights for firms navigating uncertainty and theoretical implications for understanding innovation in volatile institutional settings.
Kim et al. (Mon,) studied this question.