How Digitalization Changes the Internationalization of Entrepreneurial Firms: Theoretical Considerations and Empirical Evidence

Abstract

The internationalization of firms has mainly been analyzed and explained by considering observations in a pre-digital business environment. Thus, the applicability of the internationalization theories to digital ways of conducting business needs to be challenged. Recent research on the internationalization of digital firms attempts to adapt existing international business literature to the digital market. However, these studies consider internet-based companies predominantly as a homogeneous group. It is a popular opinion that digital internationalization is faster, cheaper, and easier for digital companies. The purpose of this article is to develop a comprehensive understanding of how internet-based companies internationalize in the digital market and why their internationalization processes differ from one another. Based on an overview of the specificities of the digital marketplace and their impacts on the applicability of the traditional international business theories, we develop a differentiated view of digital internationalization. Subsequently, the theoretical results are compared with primary data derived from six semi-structured interviews with representatives of digital companies. So far, the business internationalization theory has focused on variables such as efficiencies of the value chain, internal capabilities, and resource endowments. Our results show that even if these theories still have high impacts on the internationalization strategies of internet-based companies, in the highly dynamic digital markets, further variables need to be considered. In addition to the impacts of value creation and delivery infrastructure (e.g., firm-specific capabilities and resources), the specific way of creating value and the individual customer interface used by a digital business play key roles in digital internationalization.