From Sanctions to Strategic Resilience: Institutional Theory and the Resource-Based View in Iranian SME Internationalization

This study examines how Iranian small and medium-sized enterprises (SMEs) navigate internationalization under sanctions through a cross-case analysis of five firms entering the UK market. Integrating Institutional Theory and the Resource-Based View (RBV), it explores how internal capabilities—particularly business relatedness and international experience—and external institutional barriers, such as sanctions, regulatory ambiguity, and financial constraints, shape firms’ entry modes, adaptation strategies, and market positioning. The findings reveal that firms with valuable, rare, inimitable, and non-substitutable (VRIN) resources achieve greater operational consistency and opt for more formalized entry channels, while those with limited experience and resources leverage dynamic capabilities and institutional surrogacy, notably diaspora networks, to mitigate institutional voids; however, reliance on these relational assets introduces compliance complexities and scalability challenges. Overall, this research contributes novel insights into SME internationalization strategies in high-risk environments, elucidates the concept and mechanisms of institutional surrogacy, and provides practical guidance for SMEs aiming to build resilience and competitiveness under sanctions.