Evaluating Cross-Border Entrepreneurial Collaborations and their Effect on Knowledge Transfer and Innovation Diffusion

Abstract

Cross-border entrepreneurial partnerships are vital for SMEs looking to exploit the world’s resources, but high failure rates occur as a result of friction in the management of knowledge. Although the strategic importance of such collaborations is appreciated, there is a gap in the literature about how the distance in culture, institutions, and absorptive capacity affects the speed of knowledge transfer and innovation diffusion among sovereign nations. A sequential explanatory mixed-method approach to research was used in this study. The quantitative data were obtained through a web survey from 250 randomly selected high-growth international technology startups and SMEs involved in cross-border partnerships. Then, qualitative semi-structured interviews were conducted with 20 criterion-purposive samples of executive founders to saturate the themes regarding operational friction. From an empirical standpoint, it becomes evident that there exists asymmetry in the knowledge transfer process, whereby explicit knowledge transfers smoothly, while complex tacit knowledge necessitates strong internal capacity. The statistics reveal the huge difference between the performance categories; successful collaborations scored a relatively high average Absorptive Capacity score of 5.8/7.0, leading to fast innovation diffusion, and making it possible to introduce products into the secondary market within 12 months. Unsuccessful collaborations had a much lower average Absorptive Capacity score of 3.2, struggling with strict intellectual property management, huge cultural distance, and poor communication. This paper clearly shows that internal technical skills and relationship management are indispensable elements of successful cross-border knowledge internalization. The governments and global entrepreneurs should start paying less attention to geographic infrastructure and more attention to absorptive capacity and cross-cultural communication mechanisms. It is necessary to conduct longitudinal research in the future to see how these collaboration dynamics evolve through all phases of the alliance life cycle.