Abstract
Existing research on small and medium-sized enterprises (SMEs) has emphasised that a firm's knowledge resources are a key predictor of its internationalisation. However, few studies have examined SMEs' knowledge development in foreign markets. The purpose of this study is to examine the effects of SMEs' knowledge intensity – the extent to which firms depend on the knowledge inherent in their activities and outputs as a source of growth – on their development of specific customer knowledge. The structural equation modelling technique LISREL was used to analyse data from 188 Swedish SMEs. The results contribute to SME research by showing that the knowledge intensity of a firm has positive direct effects on its development of in-depth knowledge about its foreign customers' needs, demands and ways of solving problems. Knowledge intensity also has positive indirect effects on the development of such specific customer knowledge when mediated by the SME's international knowledge.