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This study aims to examine in the context of high involvement exporting Mexican firms a model which suggests that a blend of absorptive and dynamic capabilities is necessary to build and sustain their competitiveness in international markets.

Data were collected from 119 high involvement Mexican exporting firms through informants. Formative and reflective constructs were validated through MIMIC models and confirmatory factor analysis using LISREL. The theoretical model was tested using partial least squares (PLS).

Results suggest that high involvement Mexican exporting firms' capacity to adapt through product design, technology management, manufacturing processes, and cooperative relationships impacts their innovation and market expansion-adaptation capabilities. Nurturing an entrepreneurship orientation is critical to build flexibility, transfer innovation to markets, and drive export performance. Ultimately, performance is determined by the firms' ability to design and develop products through the adoption of improved technologies, a deep understanding of international demands, and an ability to refocus exporting strategies as changes in competitive contexts require.

The design of exporting capabilities in this study only applies to high involvement exporting firms.

High involvement exporting firms sustain growth through the development of exploration (learning), exploitation (expansion-adaptation), and dynamic (innovation, entrepreneurship) capabilities as determinant of performance.

This is the first model that tests relationships among learning, manufacturing flexibility, and market expansion-adaptation and dynamic capabilities such as innovation and entrepreneurship and their impact on performance in high involvement Mexican exporting firms.