Scaling, Fast and Slow: Business Models and the Internationalization of Digital Firms

Abstract

Since digital offerings can be delivered almost instantly throughout the world, digital ventures challenge established theories governing foreign market entry. But despite a seemingly effortless path to international markets, the degree to which new digital ventures internationalize is highly heterogeneous, suggesting that the underlying drivers of digital venture growth are more nuanced than is reflected in existing perspectives. We theorize that certain business model characteristics play a central role in explaining why some digital ventures internationalize faster than others. We analyze the pre-IPO internationalization of 169 US-based firms and find strong support for our framework linking business models to internationalization outcomes.