This article starts from the premise that in an increasingly integrated market all enterprises are in effect international; whether or not firms' activities extend beyond national borders, the environment that tempers strategy, business models and performance is an international one. It follows that support for this argument will already be evident in those regions where integration is advanced, as is the case in the European Union area. Based on empirical data collected from 220 Italian firms, the article investigates the relationship between internationalization and performance. It suggests that performance is not determined by export intensity and the number of international agreements, but by the ability of firms to gain access to specific markets, such as North America. Moreover, the article finds that performance tends to suffer when SMEs internationalize through FDI, a finding that suggests a `liability of foreignness' effect at the outset of international expansion. However, this negative effect can be offset by the international competencies that SMEs develop through intense export activity.
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