Abstract
This study investigates how international inter-organisational relationship conflicts and absorptive capacity influence the development of innovativeness among small and medium enterprises in emerging market. The sample comprised small and medium enterprise exporters in the manufacturing sector. Quantitative data were collected via survey method, with analysis conducted on responses from 124 participants. Hypothesised relationships were tested using Smart-PLS software. Results indicate that absorptive capacity is a strong determinant of innovativeness and partially mediates the influence of functional conflict on export innovativeness. The positive effect of functional conflict on absorptive capacity is pronounced in the presence of dysfunctional conflict. The effect of absorptive capacity is weak and negative under the condition of dysfunctional conflict. The paper ends with a discussion, including theoretical and managerial implications and limitations of the study. In addition, areas for future research are proposed.