Born digitals entry mode choice from a target market institutional and digitalization perspective

Abstract

Purpose The rise of digital technologies has led to the emergence of born digitals, which are firms distinguished by their digital business models and an early digitalization of their value chains. Despite the growing importance of these firms, their internationalization strategies, including the crucial choice of the most-suited foreign entry mode, have only been analyzed marginally by the extant literature. This paper aims to examine how born digitals select their entry mode and which context-specific modes are preferred. Design/methodology/approach By advancing the institutional entry mode approach of Meyer et al. (2009) with the digitalization conditions of the target market, the authors propose a theoretical entry mode framework for born digitals, in which the institutional market support and the digitalization degree simultaneously affect the entry mode decision. Findings The authors conclude with two main propositions, arguing that a joint venture and a digital entry are preferable under weak institutions and acquisitions and greenfield projects otherwise. Depending on a high digitalization degree, digital and greenfield entry modes are beneficial. Originality/value This paper contributes to the literature by creating an entry mode framework for born digitals and by introducing a digital entry mode.