Rapid internationalization and exit of exporters: The role of digital platforms

Abstract

Digital platforms have been developing fast which transform the benefits and costs of rapid internationalization of firms on them. Employing transaction cost economics perspective, we argue that the transaction attributes of asset specificity, transaction uncertainty, and transaction frequency, have all changed fundamentally in digital platform-based transactions. They render the organizational learning in rapid Internet exporting to counterbalance the diseconomies of time compression caused by the lack of organizational absorptive capacity. By using the three attributes as underlying mechanisms, we hypothesize that the expansion speed of exporters on digital platforms reduces exit hazards of the exporters. We further hypothesize that digital signals on product quality strengthen the main effect. As for digital infrastructure, we recognize its competing effects and make curvilinear moderating hypotheses. Survival analyses based on 353,636 entries of real transaction records from a digital exporting platform have provided robust findings. This study highlights the importance of examining how the digital platform reshapes the transaction attributes and internationalization-performance relationship.