The mediation effect of innovation on the relationship between internationalization and firm performance

Cutting-edge technology transformed the world markets into a place where harbors a never ending fierce competition amongst the giant rivals. Although internationalization is a host of vast opportunities and high returns, challenges will present themselves. Firms undergo a number of organizational changes in order to adapt to each country's market they enter. During this process, they face many inconsistencies. Firms can overcome the challenges faced in international markets through strategic orientations and some specific capabilities, resources, and then meet their targeted performance outcomes. In this complex and fast-changing environment, organizations must be capable of learning and flexible in response to any unforeseen threats, unpredictable changes and opportunities. In addition to those requirements, they are bound to offer better products and services by their unique competitive advantages. Entrepreneurial orientation and organizational learning have a crucial role in firms' internationalization since they are considered as the drivers of firms into the international arena. Those two factors affect an organization's path to internationalize. On the other hand, innovation activities' importance cannot be undermined. Innovation is viewed as the solution for a sustainable competitive position in the international arena. The focal point of this study is to examine the mediation effect of innovation on the relationship between internationalization and business performance. Besides, the interrelations between entrepreneurial orientation, organizational learning, internationalization, innovation and firm performance were scrutinized through the application on 81 exporting firms operating in machinery, chemical, food and textile industry. The results put down to the fact that innovation partially mediates the relationship between internationalization and firm performance. In addition, having an entrepreneurial and learning flair drives firms to internationalize. However, the effect of learning is not as strong as entrepreneurial orientation. Lastly, there is a correlation between entrepreneurial orientation and organizational learning. Keywords: Entrepreneurial Orientation, Organizational Learning, Internationalization, Innovation, Firm Performance