Small- and medium-sized enterprises (SMEs) play an important role in today's global economy. However, there are significant differences in how they respond to the opportunities and threats in international markets. This study suggests SMEs' ownership and governance systems significantly influence the development of knowledge-based resources necessary for internationalization. Using a sample of 384 US SMEs, we find a positive relationship between both the equity held by top management team members and venture capitalists and the development of these important resources. This positive association is further accentuated by the presence of independent outside directors on SMEs' boards, supporting their monitoring and enterprising roles.
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We appreciate the comments of Morten Huse, Lorraine M Uhlaner, Mike Wright, R. Isil Ya-vuz, and Patricia H. Zahra on earlier drafts of this paper. Data collection was supported by a grant from the Glavin Center for Global Management at Babson College.