International Business in the Information and Digital Age: Volume 13
Table of contents(19 chapters)
The digital economy, which heralds the start of the Fourth Industrial Revolution (IR4), is upon us. What can history teach international business scholars about how firms are likely to respond to this new form of technological change? Who are the likely winners or the likely losers? For 30 years, the author has lived through, studied, and written about the Third Industrial Revolution and other major environmental shocks, ranging from new entrants to academia to regional integration to outbreak of war, looking at the fundamental issues of how individuals, firms, communities, and countries respond to and are affected by life-changing events. In this chapter, the author tells seven brief stories about living through and studying “shocks and responses.” Perhaps, some of these stories may provide useful lessons to the scholars of IR4.
Part I IB Trends and Theory in the Information Age
Digitalisation has become a central theme in the current economic and policy debate. Large digital and tech multinational enterprises (MNEs) are gaining an outsized role in the global economy. Also, the adoption of advanced digital technologies across all industries is fundamentally changing production processes. Both these (interrelated) phenomena have profound implications for economic structures, employment, inequality and development and industrialisation opportunities. This chapter analyses the international production and investment (i.e., foreign direct investment [FDI]) implications of the digital economy. First, it empirically documents significant differences in internationalisation patterns between the largest digital MNEs and traditional MNEs; particularly, the tendency of digital MNEs to exhibit an asset-light international footprint. Second, it argues that the powerful transformational forces related to digital adoption and the new industrial revolution have the potential to change international production more broadly, favouring a shift towards internationalisation models characterised by decentralised production, accelerated servicification and extended disintermediation. The chapter concludes with investment policy implications and a number of questions for future research.
In this chapter, the authors undertake a systematic review of the literature to identify research exploring the use of new information and communication technologies (ICT). New ICT include the use of the Internet, mobile communications, and social technologies. The authors find that while interest in the area is increasing, especially among marketing and information systems scholars, there seems to be far less research interest among international business (IB) and strategy scholars. This chapter provides a summary of the research that has been done and discusses some potential future research areas that IB and strategy researchers might wish to pursue. Among these projects are investigating the use of ICT as a tool to aid the internationalization process, improve location choice and entry mode decisions, and identify and create a sustainable competitive advantage. The use of ICT in business is pervasive; As research scholars, we need to build these technologies into our theories and research to help managers determine what works and where certain technologies can help create better performing firms.
In this chapter, the authors review emerging literature on multidimensional, information age-related phenomena across different disciplines to derive common themes and topics. The authors then proceed to analyse recent developments in these fields to provide an interdisciplinary overview of the most disruptive challenges for multinational companies (MNCs) competing in the modern information age. These challenges include more efficient peer-to-peer communication between stakeholders, crowd-organisation, globalisation of value chains and the need to organise knowledge resources. The aim of the chapter is not to review all age research, but to identify fundamental uncertainties for MNCs and discuss strategies of tackling such information age phenomena from an international business perspective.
Scholars have examined, in various ways, the complexity of knowledge in innovation. Recently, research has begun to focus on the role of a continuous process of knowledge recombination in our understanding of a changing structure of knowledge complexity and knowledge accumulation. Furthermore, we also claim that this process may reflect changes in the underlying innovation paradigm, or in other words the arrival of the information age. Yet, little is known about how knowledge complexity is increasing in the broader context of globalization, in which the influence of a rising diversity of locational sources may feature more prominently. We consider how knowledge recombination that relies upon the global spread of innovation activities will affect our theory of the relationship through which earlier contributions to knowledge become inputs to subsequent knowledge building that generates more (or less) complex knowledge artifacts. We propose that knowledge complexity rises when recombined elements are sourced across two dimensions of distance simultaneously, namely when sources which are derived from (i) disparate knowledge fields and (ii) distinct geographic locations are combined. We thereby develop an international business perspective on knowledge complexity through recombination by better appreciating the processes that may be necessary when knowledge is combined along global value chains. We also suggest some implications for changing organizational forms by highlighting the value of connecting previously unconnected geographically distant elements, which suggests a greater potential for more informal and indirectly diffused knowledge-based connections.
Part II Entrepreneurial Strategies in the Information Age
This chapter examines the implications of blockchain ventures for international business. The author highlights the advantages blockchain technologies can create for firms seeking to access international markets for investors, customers, employees, and suppliers. Overall, the international character of initial coin offerings and their business models suggest several advantages over traditional internationalization methods.
This chapter contributes to the ongoing debate about how digitalisation affects the internationalisation of small- and medium-sized firms (SMEs). By applying the Uppsala Internationalisation Process model, this chapter examines the impact of e-commerce on the internationalisation of SMEs. The study uses a unique dataset, which includes 14,513 SMEs across several sectors in 34 countries. The results show that firms using the Internet as a means to provide information about the firm exhibit a higher degree of internationalisation, while using the Internet to facilitate transactions was found to have a positive impact on the ratio of foreign sales to the total sales; however, these foreign sales are likely to be concentrated in less regions/markets. Furthermore, perceived export barriers were found to be a significant moderator of the effects of e-commerce usage on international intensity and international diversification. This suggests that e-commerce does not automatically facilitate the internationalisation of SMEs.
The recent emergence of Chinese digital platform firms, whose size rivals that of the US platform giants, has attracted much popular interest. Given the size and increasing technical sophistication of these firms, there has been increasing interest in whether they have developed sufficient capacities and resources to become global-class competitors for the reigning US platform giants. The authors assembled a database of all overseas operations of the Chinese platform firms. Nine of them have foreign operations, with Tencent and Alibaba being the most important offshore investors. The authors describe the globalization patterns of these firms and analyze the strengths and obstacles to their globalization. Their globalization has proceeded on a number of vectors: first, these firms, with a few exceptions, when they have global strategies, have largely invested in firms with useful technology or content. One common strategy has been to follow Chinese customers abroad. Second, Chinese firms have made equity investments in a number of foreign Internet firms. And yet, in nearly all foreign markets, Chinese websites and apps still trail the US firms in market share and salience. Finally, Chinese investments are concentrated in proximate countries. Chinese platform firms, while having some state-of-the-art technologies, have a far smaller foreign presence than their US competitors do. Finally, the authors consider the implications of their research for discussions of whether emerging nation multinational firms require new theories for explaining their globalization.
Contemporary businesses face rapidly evolving changes and complexities that challenge their respective managerial responses and capabilities. The natures of information and communication systems, ways of doing business, knowledge-transfer methods, diffusion channels of innovation, and industrial habitus are shifting. Additionally, methods, concepts, and frameworks to study these challenges need to be in accordance.
Many of these features characterizing the new business environment influence not only the consumer business, but also the business-to-business (B2B) sectors and their ways of functioning. Interestingly, the influence also connects domestic with international business through the global connectedness. This is particularly visible in marketing communication, as the difference between domestic and international business communication has further diminished due to digital and virtual dimensions and applications. In this new age, it is assumed that new ventures and small- and medium-sized enterprises can turn their vulnerabilities and size constraints into competitive advantages by addressing these challenges with efficient social media usage. To address this technology-enabled dimension of B2B relations, the authors present a case study illustrating how a firm advances its relationship management and communication by introducing social media instruments. The study contributes to relationship management and international marketing communication and provides new insights into the workings of social media within the B2B context.
Part III Functional Strategies in the Information Age
This chapter discusses the phenomenon of online marketplaces for science, technology, engineering, and math (STEM) talent and highlights its effect on knowledge creation and innovation through on-demand contract employment and problem solving of scientific challenges by online communities of experts globally. In particular, the authors discuss the key dynamics and events driving the development of the online marketplaces for innovation. Relying on data from various online platforms, including novel data from one of the world’s largest online platforms, the chapter characterizes the phenomenon, including the geographic dispersion of users and distribution of income, and discusses important implications and challenges for research and development (R&D) and innovation management in organizations. These include the need to develop new organizational and managerial capabilities, intellectual property (IP) protection issues, the ability of balancing internal and external innovation processes, and implications on the changing identity of R&D workers.
This study explores whether machinery firms with a ‘hidden champions’ profile leverage Industry 4.0 practices to roll out smart services; whether this allows them to get a firm grip on their installed base; and whether it allows them to expand their international (service) business. The research is conducted based on exploratory, multiple-case study methods.
The author finds that the implementation of smart services can improve a machine tool builder’s hold on its installed base and expand the scope of its international (service) business. However, the study also finds that the ability to capitalise on this potential depends on a series of moderating variables. The study also concludes that there is a risk that smart services do not unlock a strong willingness-to-pay among potential customers.
It, therefore, calls into question several conventional wisdoms, such as the possibilities that Industry 4.0 offers for suppliers operating in business-to-business markets, and the receptiveness to smart services by buyers in such markets. Finally, it highlights the specific liabilities faced by hidden champions with regard to expanding their smart services business.
The chapter provides practical insights into the hurdles that industrial suppliers must overcome in their attempts to achieve uptake of smart services by customers, particularly within a cross-border context.
Additive manufacturing (AM) has the potential to transform the organisation of all the activities carried out by firms. The growing diffusion of these technologies is increasingly challenging multinational enterprises to reinvent their businesses. Accordingly, many scholars argue that AM may reduce countries’ participation in global value chains (GVCs) or, at least, affect GVCs’ geography, length and further developments. However, so far, the lack of available data on the real worldwide diffusion of these technologies has precluded the possibility to study this phenomenon from an empirical standpoint.
This study investigates AM technologies, with a particular focus on their possible impact on GVCs, in the framework of the current debate in international business. In order to examine this relationship and overcome the lack of adoption data, the authors identify a potential proxy of AM diffusion – that is, patenting activity. Coherently, the authors employ this proxy and a country-level measure of GVC participation (i.e., the Share of Re-Exported Inputs on Total Imported Inputs) to empirically investigate the role of AM in influencing countries’ participation to GVCs. This country-level analysis is focussed on three specific industries and the aggregate economy in 58 countries for the period 2000–2014.
The results show that AM decreases a country’s participation in GVCs, both at the country level and, in particular, in the sectors which are more likely to be affected by AM technologies. This evidence suggests that this phenomenon might be induced by a decreasing reliance on intermediates processed abroad, hence an increasing importance of domestic goods, manufactured via AM.
Part IV Industry 4.0
In the digital economy, what are the strategies of multinationals from developed countries and emerging markets? How do regulations in the home country affect their growth? Recent digital multinationals in diverse national and institutional contexts raise questions that require new approaches in international business (IB) studies. This chapter examines two leading firms in the global e-commerce industry: Amazon and Alibaba. We compare their digital capabilities and physical asset-building strategies over the past two decades and we connect the Internet governance environment in the United States and China with their business models and internationalization patterns. We argue that despite the platform and global nature of Amazon’s and Alibaba’s activities, the recent moves of governments across the world to regulate Internet governance poses an important challenge for digital multinationals. This research features a comparative analysis of two prominent digital multinationals and identifies a promising area for future IB strategy studies.
The contemporary dynamics impose companies to both innovate and internationalize at the same time while remaining competitive in the international marketplace. With this context in mind, Industry 4.0 technologies have the potential to increase the competitiveness of companies, leading to a new era of “Manufacturing Renaissance.” Recently, conceptual studies have speculated on possible impacts of the adoption of Industry 4.0 technologies in terms of international business. However, empirical studies on this topic are still lacking. Through a multiple case study approach, this study presents exploratory qualitative research investigating the relationship between Industry 4.0 and the internationalization of companies. The analysis of 16 Italian manufacturing exporting companies, which have adopted some of these technologies, has revealed a more intriguing relationship compared to the one presented in current literature, and thus has opened avenues for future research on this issue.
This chapter focuses on the junction of space and technology, place and context, on the one hand; and modern industrial systems, on the other hand; as well as the relevance of clusters and Industry 4.0. The authors will first briefly present the basics of cluster, as well as the fourth industrial revolution concepts. Then, the authors will speculate about the possible contribution of clusters to the development of Industry 4.0. This chapter demonstrates that the mechanisms and functionalities provided by clusters seem to be well aligned with the features of modern manufacturing, the industrial Internet and the integrated industry. Hence, it is reasonable to claim that clusters and Industry 4.0 are compatible, not contradictory, terms.
Internationalisation became an important component of science parks (SPs) practices. In recent years, they have started to include, among the portfolio of their services, the support and fostering of their tenant firms’ internationalisation, such as soft-landing programmes and international immersion experiences for start-ups. Thus, the main aim of this chapter is to analyse these internationalisation practices in the light of the network and internationalisation theories. Based on an exploratory multiple case study the authors conducted in three Brazilian SPs located in the South of Brazil (Rio Grande do Sul State) – Tecnopuc in Porto Alegre, Tecnosinos in São Leopoldo and Feevale Techpark in Campo Bom. The authors provide evidences on how cohesive internal and external ties, networks as well as the level of specialisation are the key drivers of the internationalisation process of SPs and their tenant firms.
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- Progress in International Business Research
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- Emerald Publishing Limited
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