Organizational learning capabilities, institutional knowledge, and FTA utilization of exporting SMEs in South Korea

Abstract

The formation and transformation of international trade institutions have significant implications for the competitiveness of firms, and the adept utilization of free trade agreements (FTAs) represents a critical leverage point for exporting firms. Despite the business opportunities provided by FTAs, some firms take advantage of institutional benefits while others fail to do so. To explain these differences, this research conceptualizes institutional knowledge (IK) in the context of FTAs as a key organizational condition to gain competitive advantages. This study proposes a research model in which IK has a positive effect on FTA utilization, and organizational learning capabilities (OLC) positively affect SMEs’ IK. Based on a survey of exporting small and medium enterprises (SMEs) in the agricultural and food sectors in South Korea, this study not only shows IK’s positive impact on FTA utilization by SMEs but also identifies OLC as an essential precursor to robust IK. This study fills a notable gap in international business research by underscoring the importance of IK in enhancing SMEs’ competitiveness internationally and offers fresh insights into the role played by OLC in enhancing IK to facilitate FTA utilization. JEL Classification: F14, F23, M16