Based on the mentioned multidirectional relationships, we hypothesize a mediating mechanism of technological innovation on the relationship between IO and international firm performance and contribute to the literature by examining how internationalization influence the innovative capacity in the SMEs and suggests that there is a positive relationship between IO and technological innovation Acknowledging the need to further investigate this multidirectional relationship between internationalization and innovation, particularly in the SME context which has been rather neglected in the relevant literature, we examine the relationship between IO of UK SMEs and their technological innovation capacity. We expect and propose that there will be both a direct and an indirect effect between IO and technological innovation in SMEs; IO will be positively associated with technological innovation, which will further mediate the IO – international performance relationship, leading to higher overall firm performance.Taking all the above into account, we, therefore, propose that:Hypothesis 5. There is a positive relationship between IO and technological innovation in SMEs.Hypothesis 6. Technological innovation positively mediates the effect of IO on firm international performance.