Sharmin Nahar, Muntasir Alam
ABSTRACT Small and medium‐sized enterprises (SMEs) face significant institutional barriers when expanding across borders, including regulatory constraints, financial accessibility issues, and market entry challenges. Institutional theory provides a useful framework for understanding how external regulative, normative, and cognitive institutional forces shape SME internationalization. This study conceptualizes SME internationalization performance as a higher‐order construct composed of three key dimensions: market entry, financial accessibility, and regulatory compliance. It examines how the adoption of digital platforms, fintech solutions, and blockchain technologies enables SMEs to overcome institutional barriers and enhance their internationalization performance. Using secondary data from the Global Entrepreneurship Monitor (GEM), the OECD Digital Economy Index, and the World Bank's Worldwide Governance Indicators (WGI), the study applies regression and factor analysis to assess the effects of digital adoption and institutional environments on SME internationalization performance. The findings indicate that technology‐enabled SMEs achieve faster market access, improved financial liquidity, and more effective regulatory compliance than traditional firms. The results also show that the strength of regulative, normative, and cognitive institutions significantly moderates the relationship between digital adoption and overall internationalization performance. This research contributes to institutional theory by demonstrating that institutional alignment—not digital capability alone—is essential for leveraging technology to scale SME operations internationally across heterogeneous economic contexts, and offers policy insights for improving digital infrastructure, regulatory coherence, and institutional trust to foster SME competitiveness in the global economy.