Internationalization of the Firm and Impacts of Videotex Networks

Abstract

Business applications represent one of the fastest growing areas for videotex. Due to the efforts to link national videotex systems, we analyse the potential uses and effects of videotex for international business applications. Using case studies of international videotex use by eight firms, we outline the key strategies firms use to exploit videotex internationally, as well as the major impacts of this use. Main strategies include: (1) adding value to basic transactions through the incremental addition of new services, (2) using the basic service as a product leader that draws customers into a relationship, (3) using the information byproducts of transactions to better manage relationships with system users and (4) linking videotex systems with other networks and information systems as a means of broadening reach. Impacts centered primarily on the ways firms related to their customers and suppliers including a shifting of costs of transactions away from the service provider, a more easily expanded base of partners and more standardized interactions with these. International connections via videotex helped to alleviate the high costs of international telecommunications, and in some cases, permitted companies to access foreign markets previously too expensive to reach. Theoretically, the case studies illustrate the use of telematic systems to enable marketing strategies that have characteristics of both market and hierarchy approaches as noted by Williamson (1975), and both cost/volume and product differentiation strategies pointed out by Porter (1980). Regarding international strategy, the case studies further illustrate that such telematic applications can help firms achieve the benefits of both global and multidomestic approaches discussed by Porter (1986).