The Importance of Strategic Fit Between Host-Home Country Similarity and Exploration Exploitation Strategies on Small and Medium-Sized Enterprises' Performance: A Contingency Perspective

The impact of host-home country similarity on firm performance has long been debated in the international marketing literature with inconclusive, if not contradictory, findings. Taking a contingency perspective, this study proposes that a small or medium-sized enterprise's (SME's) global market performance depends on the strategic fit between its exploration and exploitation strategies and its host country choice. The results of a survey of chief executive officers and senior international marketing managers of SMEs in the United States show that the impact of host-home country similarity on SMEs' international performance is moderated by their choice of exploration and exploitation strategies. Specifically, host-home country similarity has a positive impact on an SME's international performance when the firm adopts an exploitation strategy. Conversely, host-home country similarity has a negative impact on an SME's international performance when it adopts an exploration strategy. Directly addressing the long-standing host-home country similarity debate in the international marketing literature, this study sheds additional light on the drivers for SMEs' internationalization success.