Abstract
Strategies of internationalization have long been in the focus of international business and global strategy research. While two of the major theories – process theory and new venture theory – have provided substantial input into selected types of internationalization processes, they have only selectively explained the contradictory results of international growth and profitability. Adopting a dynamic capability perspective, we argue that there are two classes of explorative and exploitative capabilities differentially linked to these output variables. Consistent with the dynamic capability view, we introduce a framework of third-order capabilities in order to maximize internationalization performance. Findings from five case studies are used to examine this framework.