Abstract

Purpose: This study investigates how financial and entrepreneurial capability configurations differentiate internationalized from domestically oriented Thai SMEs. By adopting a decision-science perspective, the study identifies the capability patterns that shape firms’ strategic international orientation. Design/methodology/approach: This research, which utilizes survey and financial data from 179 Thai SMEs (2021–2023), employs an inductive machine learning approach based on Extreme Gradient Boosting (XGBoost). The analytical framework integrates profitability, liquidity, leverage, operational efficiency, international experience, team readiness, market knowledge, and institutional connectivity. Feature importance scores and confirmatory statistical tests are used to validate differentiating capability structures. Findings: Internationalized SMEs are characterized by stronger financial agility, higher profitability, disciplined leverage, and more efficient resource utilization, together with entrepreneurial preparedness reflected in international experience, risk tolerance, team coordination, and institutional embeddedness. Localized SMEs, by contrast, display liquidity-heavy but lower-dynamism profiles, weaker network engagement, and more limited organizational readiness. Practical implications: The findings suggest that SME support should move beyond finance-only assistance and address capability alignment. Programs that strengthen financial agility, team readiness, international market knowledge, digital channels, and institutional networks may improve SME readiness for international engagement. Originality/value: The study contributes to international business theory by reframing SME internationalization as a selective and configurational process rather than a linear or binary outcome. It extends the resource-based view by emphasizing capability bundles rather than isolated resources and contributes to the dynamic capabilities perspective by showing how financial, entrepreneurial, and institutional capabilities are associated with SMEs’ differentiated participation in international markets.

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