Can the internet serve as an alternative to physical internationalization?
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The document explores the role of the internet as an alternative path for small and medium enterprises (SMEs) in internationalization, focusing on its use as a sales channel and a substitute for physical presence. It highlights empirical findings related to the effectiveness of internet integration in reducing export barriers and its influence on firms' performance, noting that the relationship between internet use and international performance remains complex and contradictory. The research stresses the need for more empirical data to better understand the dynamics of internet-mediated internationalization.
Can the internet serve as an alternative to physical internationalization?
- 1. The Internet as an alternative path to internationalization? Noemi Sinkovics, Manchester Business School, UK Rudolf R Sinkovics, Manchester Business School, UK Ruey-Jer ‘Bryan’ Jean, National Chengchi University, Taiwan Internet - alternative path to internationalization? 1
- 2. 2 Agenda I. Background and motivation II. Conceptual background III. Methodology IV. Findings V. Conclusions VI. Limitations and future research Internet - alternative path to internationalization?
- 3. Background and motivation Internet - alternative path to internationalization? 3
- 4. Background and Motivation 4 Background Motivation • To contribute to the SME „internetalization“ literature by presenting empirical data to facilitate theorizing about two alternative internationalization paths: Internet as a sales channel and Internet as alternative to physical presence • Despite their unprecedented potential to reach customers and reduce trade barriers ICTs’ anticipated positive impact on firms’ performance could not be empirically supported to the expected degree There is little empirical and theoretical work on the role of the Internet in firms‘ internationalization process Internet - alternative path to internationalization?
- 5. Conceptual background Internet - alternative path to internationalization? 5
- 6. Conceptual Background • Existing empirical results on the contribution of ICT deployment to export performance are contradictory. • Dimensions that had a significant positive or negative impact on export performance were implicitly or explicitly connected to • capability development (Moon and Jain 2007; Morgan-Thomas 2009; Morgan-Thomas and Bridgewater 2004) . • or to the expectation that the Internet represents a resource-advantage (Lu and Julian 2007) The actual relationship between the Internet as an alternative internationalization path and firms‘ financial performance has not been sufficiently explored Internet - alternative path to internationalization? 6
- 7. Internet as an alternative to physical presence I • Smaller firms are regarded as inherently resource poorer than large firms (e.g. Hodgkinson, 2008). According to transaction cost economics theory (Williamson, 1975) » the Internet as an alternative to physical presence refers to the extent to which firms use electronic integration to replace functions previously conducted by foreign distributors or agents. Thus, electronic integration can serve as an effective interorganizational governance mechanism without ownership (Wang, Tai, and Wei, 2006). » TCE also argues that environmental uncertainties are key drivers of firms’ use of vertical integration (Williamson, 1975). • Hence, firms are expected to opt for the Internet as an alternative to physical presence if...: » ... the host country is perceived to be culturally different » ... the host country is perceived to have significantly different business practices » ... the host country is perceived to have a highly turbulent market environment » ... the firm is highly market oriented » ... the firm perceives the Internet as the right medium to attract customers Internet - alternative path to internationalization? 7
- 8. H1a H2 H3H4 H5 + + + + Internet as alternative to phys. presence Market respon- siveness Environ- mental turbulence Internet as exp. barrier reduction Customer acquisition potential Business Practices distant Business Practices close National Culture distant National Culture close H1b H1c H1d + + - - Internet - alternative path to internationalization? 8
- 9. Internet as an alternative to physical presence II • According to the RBV, firms possess capabilities that are valuable, rare, inimitable and non-substitutable, which enable them to achieve a competitive advantage. • Information systems (IS) research has started to apply the RBV to examine how IT resources – either alone or in conjunction with non-IT resources – impact on firm performance (e.g. Wu et al., 2006). • The Internet as an alternative to a physical presence, a form of electronic integration, can be treated as a key IT resource that leads to better performance. Internet - alternative path to internationalization? 9
- 10. Export perf. H1a H2 H3H4 H5 H6 + + + + + Internet as alternative to phys. presence Market respon- siveness Environ- mental turbulence Internet as exp. barrier reduction Customer acquisition potential Business Practices distant Business Practices close National Culture distant National Culture close H1b H1c H1d + + - - Conceptual framework Internet - alternative path to internationalization? 10
- 11. Inernet as a sales channel (a complement to physical channels) • According to the RBV, the Internet as a sales channel can be defined as an IT resource stock, which is related to how advanced a firm’s IT is in supporting its export marketing. • The RBV also argues that organizational culture leads to higher capabilities. • Thus, entrepreneurial orientation can be expected to be a key organizational culture that leads firms to develop better IT resources in export marketing, by using the Internet as a sales channel. Internet - alternative path to internationalization? 11
- 12. Export perf. H1a H2 H3H4 H5 H6 + + + + + + + Internet as alternative to phys. presence Internet as sales channel Market respon- siveness Environ- mental turbulence Internet as exp. barrier reduction Customer acquisition potential Entrepre- neurial disposition Business Practices distant Business Practices close National Culture distant National Culture close H1b H1c H1d H7 H8 + + - - Conceptual framework Internet - alternative path to internationalization? 12
- 13. Conceptual Background II • Yamin and Sinkovics’ (2006) notion of the “virtuality trap”, argues that firms with stronger commitment to online internationalization may fall into the trap of generalizing their scant learning about foreign markets and customers from their online interactions, while actually not fully appreciating the complexities and thus retaining a physical and relational distance from the host markets. The virtuality trap may lead to a firm’s poor performance in foreign markets. • We control for born-globalness, industry affiliation, export experience and Internet experience Internet - alternative path to internationalization? 13
- 14. Export perf. H1a H2 H3H4 H5 H6 + + + + + + + Internet as alternative to phys. presence Internet as sales channel Market respon- siveness Environ- mental turbulence Internet as exp. barrier reduction Customer acquisition potential Entrepre- neurial disposition Business Practices distant Business Practices close National Culture distant National Culture close H1b H1c H1d H7 H8 + + - - Conceptual framework Born Globalness Low-tech/Hich-tech industry Internet experience Export experienceInternet - alternative path to internationalization? 14
- 15. Methodology Internet - alternative path to internationalization? 15
- 16. Methodology & research design • First order FA, constrained FA, reliabilityMeasure Purification Data Collection • Established scales & newly created • EO, Communication, Relationship building, IT- advancement, IT use, International barrier reduction, Performance • Partial Least Square Modeling (SmartPLS) • Convergent validity, Discriminant validity • Bootstrapping methodology for significance • Blindfolding for prediction ability Model Testing Questionnaire-Design • Population: 8,605 UK SMEs from FAME database with overseas turnover • Sample: random sample of 1000 firms • Response: 115, 11.5% Internet - alternative path to internationalization? 16
- 17. Findings Internet - alternative path to internationalization? 17
- 18. Born-globalness: 1. Export ratio > 25% 2. Export to 3 continents 3. International within 3 years of inception (following Sundqvist et al., 2010) Company characteristics Dimension Number of firms Percentage of firms Born-globalness BG 58 50.43% non-BG 57 49.57% Industry Low-tech 54 46.96% High-tech 61 53.04% Employees 1-9 2 1.74% 10-49 27 23.48% 50-149 63 54.78% 150-250 22 19.13% Export ratio <10m 13 11.30% 10-24.99m 18 15.65% 25-49.99m 33 28.70% 50-74.99m 30 26.09% >75m 19 16.52% Revenue 1.00 < 1m 2 1.74% 2.00 1m - 4.99m 21 18.26% 3.00 5m - 9.99m 31 26.96% 4.00 10m - 24.99m 36 31.30% 5.00 25m - 50m 19 16.52% Internet - alternative path to internationalization? 18
- 19. Company characteristics organised by industry and born-globalness of firms Industry Born- globalness Internet experience (in years) Firm age (in years) Export experience (in years) Export ratio (%) Revenue (in million £) Mean Mean Mean Mean Mean Low-tech Non-BG 11 47 28 32.99% 10.70 BG 9 29 24 48.80% 11.85 High- tech Non-BG 10 60 29 32.22% 16.66 BG 11 31 31 63.08% 9.97 Internet - alternative path to internationalization? 19
- 20. Overall model evaluation AVE Highest squared correlation Composite Reliability R Square Cronbachs Alpha BP close 0.9514 0.5507 0.9833 0 0.9744 BP distant 0.8906 0.5809 0.9606 0 0.9386 EO 0.572 0.0567 0.799 0 0.6436 NC close 0.9091 0.6722 0.9756 0 0.9713 NC distant 0.7285 0.6722 0.9129 0 0.9387 alt phys pres 0.6359 0.0503 0.8741 0.1284 0.8061 barrier 0.9999 0.0503 0.9999 0.6602 0.9997 cust acqu 0.6069 0.0513 0.8209 0 0.6821 env turb 0.804 0.0210 0.8911 0 0.7693 market resp 0.7377 0.0503 0.848 0 0.6644 sales channel 0.9998 0.4436 0.9999 0.0567 0.9998 Export perf. 0.729 0.4436 0.9294 0.4664 0.9586 Internet - alternative path to internationalization? 20
- 21. Findings full sample I Internet - alternative path to internationalization? 21 • H1a and H1b is supported • when firms perceive a host country as psychically distant in terms of business practices, they tend to rely on the Internet to reduce export barriers, especially the cost of exporting through intermediaries • when firms perceive a host country as psychically close in terms of business practices they rely less on the Internet to reduce export barriers • H1c not supported and H1d significant but positive • Contrary to expectations, firms rely more on the Internet to reduce export barriers when exporting to a psychically close country in terms of culture • H2 (positive relationship between export barrier reduction potential of Internet and use of Internet as alternative to physical presence) not supported • H3 (positive relationship between firm‘s market responsiveness and use of Internet as physical presence) supported
- 22. Export perf. Born Globalness Low-tech/Hich-tech industry Internet experience Export experience Internet as alternative to phys. presence Internet as sales channel Market respon- siveness Environ- mental turbulence Internet as exp. barrier reduction Customer acquisition potential Entrepre- neurial disposition Business Practices distant Business Practices close National Culture distant National Culture close 0.7346* - 0.9762* -0.1880 0.7478* 0.062 -0.169* 0.247* 0.220* 0.151a 0.676* 0.238* R2=0.493 R2=0.128 R2=0.466 R2=0.057*... significant at 0.05 level a ... significant at 0.10 level Results of the PLS structural model for N = 115 H3 ✔ H2 H1a ✔ H1b ✔ H1c H1d ✔! Internet - alternative path to internationalization? 22
- 23. Findings full sample II Internet - alternative path to internationalization? 23 • H4 significant but negative • Contrary to expectations there is a negative relationship between market turbulence and Internet use as an alternative to a physical presence • H5 (positive relationship between customer acquisition potential and use of the Internet as alternative to physical presence) supported • H6 (positive impact of Internet as alternative to physical presence on performance) weakly supported • H7 (positive impact of Internet as sales chanel on performance) supported • H8 (positive relationship between EO and Internet as sales channel) supported
- 24. Export perf. Born Globalness Low-tech/Hich-tech industry Internet experience Export experience Internet as alternative to phys. presence Internet as sales channel Market respon- siveness Environ- mental turbulence Internet as exp. barrier reduction Customer acquisition potential Entrepre- neurial disposition Business Practices distant Business Practices close National Culture distant National Culture close 0.7346* - 0.9762* -0.1880 0.7478* 0.062 -0.169* 0.247* 0.220* 0.151a 0.676* 0.238* R2=0.493 R2=0.128 R2=0.466 R2=0.057*... significant at 0.05 level a ... significant at 0.10 level Results of the PLS structural model for N = 115 H4 ✔! H5 ✔ H6 ✔∼ H7 ✔ H8 ✔ Internet - alternative path to internationalization? 24
- 25. Control variables full sample control variables born globalness industry export experience Internet experience BG non-BG low-tech high-tech less 50% more 50% < 10 yrs > 10 yrs export performance N = 115 N = 58 N = 57 N = 54 N = 61 N = 65 N = 50 N = 46 N = 69 R2 = 0.4664 R2 = 0.1041 R2 = 0.4477 R2 = 0.4440 R2 = 0.0241 R2 = 0.9918 R2 = 0.1867 R2 = 0.9859 R2 = 0.0732 alternative to phys. presence 0.1512a -0.2925* 0.1972a 0.2116* 0.0685 -0.0105 0.3555* 0.0056 0.2247 a sales channel 0.6762* 0.1037 0.6555* 0.6533* 0.1331 0.9947* 0.2355* 0.9937* 0.1292 a sales channel N = 115 N = 58 N = 57 N = 54 N = 61 N = 65 N = 50 N = 46 N = 69 R2 = 0.0567 R2 = 0.2556 R2 = 0.1031 R2 = 0.1407 R2 = 0.0992 R2 = 0.1129 R2 = 0.1646 R2 = 0.1952 R2 = 0.1201 Entrepreneurial disposition 0.2381* 0.5056* 0.3210* 0.3752* 0.3149* 0.3360* 0.4057* 0.4418* 0.3465* alternative to phys. presence N = 115 N = 58 N = 57 N = 54 N = 61 N = 65 N = 50 N = 46 N = 69 R2 = 0.1284 R2 = 0.3167 R2 = 0.1416 R2 = 0.2523 R2 = 0.2025 R2 = 0.2398 R2 = 0.3238 R2 = 0.3199 R2 = 0.1192 cust acquisition 0.2204* 0.1435* 0.1836* 0.0723 0.4118* 0.0668 0.1299* 0.0653 0.1985* environmental turbulence -0.1695* -0.1246a -0.1627* -0.3399* -0.0166 0.1162* -0.0466 -0.1848a -0.1948* market responsiveness 0.2474* 0.3546* 0.2719* 0.2615* 0.2509* -0.2301* 0.0949 0.3811* 0.2017* barrier reduction 0.0622 0.4482* 0.0809 0.3043* 0.0931 a 0.3896 0.5084* 0.3042* 0.0690 barrier reduction N = 115 N = 58 N = 57 N = 54 N = 61 N = 65 N = 50 N = 46 N = 69 R2 = 0.4926 R2 = 0.0536 R2 = 0.6297 R2 = 0.0444 R2 = 0.9998 R2 = 0.9607 R2 = 0.0369 R2 = 0.0986 R2 = 0.5136 BP close -0.9762* 0.3012 a -0.9546* 0.1775 -0.9746 -0.4262a -0.2366 0.3446 -0.8974* BP distant 0.7346* 0.1133 0.6573 a -0.073 -0.0079 0.2281 -0.1966 -0.4917 0.6982* NC close 0.7478* 0.1439 0.9478* 0.1957 0.9682 0.6110* 0.5074 -0.6133 0.8952* NC distant -0.1880 0.1014 -0.1965 -0.0929 0.0035 0.7528* -0.3223 0.5156 -0.3564aInternet - alternative path to internationalization? 25
- 26. Findings control variables I • Born-globals don‘t seem to reap financial benefits from the Internet as sales channel • Born globals seem to even incur losses when they rely on the Internet as an alternative to physical presence » In contrast to non-born globals (and the results for the full sample), born globals tend to rely on the Internet as alternative to physical presence as a means of export barrier reduction » Rely on Internet for customer acquisition » Tend to follow a high market responsiveness strategy Internet - alternative path to internationalization? 26
- 27. Export perf. Born Globalness Internet as alternative to phys. presence Internet as sales channel Market respon- siveness Environ- mental turbulence Internet as exp. barrier reduction Customer acquisition potential Entrepre- neurial disposition Business Practices distant Business Practices close National Culture distant National Culture close 0.4482* -0.1246a 0.3546* 0.1435* -0.2925* 0.1037 0.5056* R2=0.0536 R2=0.3167 R2=0.1041 R2=0.2556*... significant at 0.05 level a ... significant at 0.10 level Results of the PLS structural model for born globals 0.1133 0.3012a 0.1439 0.1014 H1a H1b ✔∼ H1c H1d H7 H4 ✔!∼ H2 ✔ H5 ✔ H3 ✔ H6 ✔! H8 ✔ Internet - alternative path to internationalization? 27
- 28. Findings control variables II • Low-tech firms reap benefits from both Internet as a sales channel and Internet as an alternative to physical presence » Tend to rely on Internet as alternative to physical presence as a means to reduce export barriers » Tend to follow a high market responsiveness strategy » Only rely on the Internet as alternative to physical presence when there is no high market turbulence » Dont rely on Internet as a means of customer acquisition • High-tech firms » Dont seem to reap benefits from either Internet as physical presence nor Internet as sales channel Internet - alternative path to internationalization? 28
- 29. Control variables full sample control variables born globalness industry export experience Internet experience BG non-BG low-tech high-tech less 50% more 50% < 10 yrs > 10 yrs export performance N = 115 N = 58 N = 57 N = 54 N = 61 N = 65 N = 50 N = 46 N = 69 R2 = 0.4664 R2 = 0.1041 R2 = 0.4477 R2 = 0.4440 R2 = 0.0241 R2 = 0.9918 R2 = 0.1867 R2 = 0.9859 R2 = 0.0732 alternative to phys. presence 0.1512a -0.2925* 0.1972a 0.2116* 0.0685 -0.0105 0.3555* 0.0056 0.2247 a sales channel 0.6762* 0.1037 0.6555* 0.6533* 0.1331 0.9947* 0.2355* 0.9937* 0.1292 a sales channel N = 115 N = 58 N = 57 N = 54 N = 61 N = 65 N = 50 N = 46 N = 69 R2 = 0.0567 R2 = 0.2556 R2 = 0.1031 R2 = 0.1407 R2 = 0.0992 R2 = 0.1129 R2 = 0.1646 R2 = 0.1952 R2 = 0.1201 Entrepreneurial disposition 0.2381* 0.5056* 0.3210* 0.3752* 0.3149* 0.3360* 0.4057* 0.4418* 0.3465* alternative to phys. presence N = 115 N = 58 N = 57 N = 54 N = 61 N = 65 N = 50 N = 46 N = 69 R2 = 0.1284 R2 = 0.3167 R2 = 0.1416 R2 = 0.2523 R2 = 0.2025 R2 = 0.2398 R2 = 0.3238 R2 = 0.3199 R2 = 0.1192 cust acquisition 0.2204* 0.1435* 0.1836* 0.0723 0.4118* 0.0668 0.1299* 0.0653 0.1985* environmental turbulence -0.1695* -0.1246a -0.1627* -0.3399* -0.0166 0.1162* -0.0466 -0.1848a -0.1948* market responsiveness 0.2474* 0.3546* 0.2719* 0.2615* 0.2509* -0.2301* 0.0949 0.3811* 0.2017* barrier reduction 0.0622 0.4482* 0.0809 0.3043* 0.0931 a 0.3896 0.5084* 0.3042* 0.0690 barrier reduction N = 115 N = 58 N = 57 N = 54 N = 61 N = 65 N = 50 N = 46 N = 69 R2 = 0.4926 R2 = 0.0536 R2 = 0.6297 R2 = 0.0444 R2 = 0.9998 R2 = 0.9607 R2 = 0.0369 R2 = 0.0986 R2 = 0.5136 BP close -0.9762* 0.3012 a -0.9546* 0.1775 -0.9746 -0.4262a -0.2366 0.3446 -0.8974* BP distant 0.7346* 0.1133 0.6573 a -0.073 -0.0079 0.2281 -0.1966 -0.4917 0.6982* NC close 0.7478* 0.1439 0.9478* 0.1957 0.9682 0.6110* 0.5074 -0.6133 0.8952* NC distant -0.1880 0.1014 -0.1965 -0.0929 0.0035 0.7528* -0.3223 0.5156 -0.3564aInternet - alternative path to internationalization? 29
- 30. Findings control variables III • Export experience » Firms with more export experience (>50% of sales) benefit from both internationalization strategies • they use the Internet as alternative to physical presence as a means to reduce export barriers and • they rely on the Internet as to acquire customers • Internet experience » Firms with less Internet experience (<10 years) seem to benefit from the Internet as sales channel but not as an alternative to physical presence » Firms with more Internet experience (>10 years) seem to benefit from both strategies, however the results are only significant at a 0.10 level Internet - alternative path to internationalization? 30
- 31. Control variables full sample control variables born globalness industry export experience Internet experience BG non-BG low-tech high-tech less 50% more 50% < 10 yrs > 10 yrs export performance N = 115 N = 58 N = 57 N = 54 N = 61 N = 65 N = 50 N = 46 N = 69 R2 = 0.4664 R2 = 0.1041 R2 = 0.4477 R2 = 0.4440 R2 = 0.0241 R2 = 0.9918 R2 = 0.1867 R2 = 0.9859 R2 = 0.0732 alternative to phys. presence 0.1512a -0.2925* 0.1972a 0.2116* 0.0685 -0.0105 0.3555* 0.0056 0.2247 a sales channel 0.6762* 0.1037 0.6555* 0.6533* 0.1331 0.9947* 0.2355* 0.9937* 0.1292 a sales channel N = 115 N = 58 N = 57 N = 54 N = 61 N = 65 N = 50 N = 46 N = 69 R2 = 0.0567 R2 = 0.2556 R2 = 0.1031 R2 = 0.1407 R2 = 0.0992 R2 = 0.1129 R2 = 0.1646 R2 = 0.1952 R2 = 0.1201 Entrepreneurial disposition 0.2381* 0.5056* 0.3210* 0.3752* 0.3149* 0.3360* 0.4057* 0.4418* 0.3465* alternative to phys. presence N = 115 N = 58 N = 57 N = 54 N = 61 N = 65 N = 50 N = 46 N = 69 R2 = 0.1284 R2 = 0.3167 R2 = 0.1416 R2 = 0.2523 R2 = 0.2025 R2 = 0.2398 R2 = 0.3238 R2 = 0.3199 R2 = 0.1192 cust acquisition 0.2204* 0.1435* 0.1836* 0.0723 0.4118* 0.0668 0.1299* 0.0653 0.1985* environmental turbulence -0.1695* -0.1246a -0.1627* -0.3399* -0.0166 0.1162* -0.0466 -0.1848a -0.1948* market responsiveness 0.2474* 0.3546* 0.2719* 0.2615* 0.2509* -0.2301* 0.0949 0.3811* 0.2017* barrier reduction 0.0622 0.4482* 0.0809 0.3043* 0.0931 a 0.3896 0.5084* 0.3042* 0.0690 barrier reduction N = 115 N = 58 N = 57 N = 54 N = 61 N = 65 N = 50 N = 46 N = 69 R2 = 0.4926 R2 = 0.0536 R2 = 0.6297 R2 = 0.0444 R2 = 0.9998 R2 = 0.9607 R2 = 0.0369 R2 = 0.0986 R2 = 0.5136 BP close -0.9762* 0.3012 a -0.9546* 0.1775 -0.9746 -0.4262a -0.2366 0.3446 -0.8974* BP distant 0.7346* 0.1133 0.6573 a -0.073 -0.0079 0.2281 -0.1966 -0.4917 0.6982* NC close 0.7478* 0.1439 0.9478* 0.1957 0.9682 0.6110* 0.5074 -0.6133 0.8952* NC distant -0.1880 0.1014 -0.1965 -0.0929 0.0035 0.7528* -0.3223 0.5156 -0.3564aInternet - alternative path to internationalization? 31
- 32. Conclusion & future Internet - alternative path to internationalization? 32
- 33. Conclusions • The Internet can be a lucrative alternative to physical presence under certain conditions (low-tech industry affiliation, high export experience, high Internet experience) • While using the Internet as a complement to other channels does not seem to bring about losses, using the Internet as an alternative to physical presence DOES, if not pared with the right capabilities • Born globals seem to be more susceptible to fall into the virtuality trap • Psychic distance seems to impact on the perception whether or not the Internet can be used to reduce export barriers. » HOWEVER, the barrier reduction potential of the Internet seems to drive pure online internationalization independently of psychic distance perceptions Internet - alternative path to internationalization? 33
- 34. Limitations and future research Internet - alternative path to internationalization? 34
- 35. Reference Internet - alternative path to internationalization? 35
Editor's Notes
- #2: STRUCTURED ABSTRACT: Purpose – While the Internet enjoys increasing interest regarding its potential to extend global reach of firms, especially small and medium sized firms, there is only little work on the viability of the Internet as a new and effective path to internationalization. Specifically, it is unclear how the Internet can successfully support export marketing. The study examines the drivers and performance outcomes of two patterns of Internet use supporting export marketing, i.e. the Internet as an alternative to physical presence and the Internet as a sales channel. Design/methodology/approach – Data was collected from 115 UK based SMEs, actively involved in “active online internationalization”. Relationships are explored in a “soft-modeling” PLS analysis. Findings – The findings suggest that online channel support positively enhances export performance for SMEs. Yet, the use of the Internet as an alternative to physical market presence does not lead to higher export performance. Specifically, born-global firms that are relying too much on the Internet are prone to fall into the “virtuality trap”. Entrepreneurial firms that use the Internet as a sales channel can improve their overall performance, however. Research implications – This paper provides some empirical evidence for the existence of the notion of the “virtuality trap”. The paper also shows that the Internet can serve a valuable complimentary role. Traditional exporters are likely to use the Internet as a complement and thus support existing physical operations. Practical implication – Managers should focus on relationship building and on-site learning, instead of putting too much emphasis on the Internet as a substitute to physical market presence. Originality/value – We develop a framework and explore previously untested relationships that suggest the Internet may serve a complimentary role in firm internationalization. KEYWORDS: born-global; SME; ICT; Internationalization; Performance; virtuality trap; psychic distance
- #7: Taken out from conceptual background: “If entrepreneurial disposition drives Internet adoption as a sales channel (e.g. Fillis, Johannson, and Wagner, 2004), and if high-technology industry affiliation is a valid proxy for the existence of entrepreneurial disposition (Kirchhoff, 1991), and at the same time if entrepreneurial disposition positively impacts on firm performance (Matsuno, Mentzer, and Özsomer, 2002), then it can be expected that firms with high-technology industry affiliations will benefit more from the Internet than firms affiliated with low-technology industries. Put in discussion somewhere”
- #9: Theoretical model
- #11: Theoretical model
- #13: Theoretical model
- #14: We control for firms’ born-globalness for the following reason. Born globals, by definition (Sundqvist, Kuivalainen, and Cadogan, 2011), span large geographical distances, ideally the globe, but if not at least three continents. In order to conceptually qualify as a born global, a firm needs to have internationalized within three years of its inception and to export at least 25 percent of its total sales. As most born globals fall into the category of SMEs, they are inherently more resource poor than large firms (Hodgkinson, 2008). Hence, as is also posited in the literature (e.g. Kotha, Rindova, and Rothaermel, 2001; Servais, Madsen, and Rasmussen, 2006), it can be expected that born globals will attempt to rely on the Internet – arguably even rely too much on the Internet – to meet the challenge of spanning these large geographical distances. We also control for Internet experience and export experience, as they are proxies for Internet and export capabilities, respectively. While the importance of export experience is well documented in the literature (Leonidou, Katsikeas, and Coudounaris, 2010), Internet experience (capabilities) needs to be controlled for, as Internet use alone does not constitute a capability (Wu et al., 2006). We also control for industry affiliation, as this too may affect how lucrative a firm’s reliance on the Internet would be. High-technology industry affiliation is sometimes used as a proxy for innovativeness (Kirchhoff, 1991) and consequently for entrepreneurial posture (Covin and Slevin, 1991). If entrepreneurial disposition drives Internet adoption as a sales channel (e.g. Fillis, Johannson, and Wagner, 2004), and if high-technology industry affiliation is a valid proxy for the existence of entrepreneurial disposition (Kirchhoff, 1991), and at the same time if entrepreneurial disposition positively impacts on firm performance (Matsuno, Mentzer, and Özsomer, 2002), then it can be expected that firms with high-technology industry affiliations will benefit more from the Internet than firms affiliated with low-technology industries.
- #15: Theoretical model
- #17: Rudolf Sinkovics - http://www.personal.mbs.ac.uk/rudolf-sinkovics/
- #19: Frequ 58 / 57 Low-tech and high-tech 54 / 61 In both subsamples approx the same number of BG and non-BG High-tech: healthcare, engineering, software, biotech Low-tech: furniture
- #20: Distribution of BG and non-BG is almost the same in the subgroups According to frequency measures
- #23: Theoretical model
- #25: Theoretical model
- #26: Non bg profitieren aus beiden alternativen/strategien Bg verlieren aus der nutzung des internet, weil es ist negativ
- #28: Theoretical model
- #29: Industry affiliation Low tech versus high tech Export experience
- #34: Future research could look at this further
- #36: Sinkovics, Noemi, Rudolf R. Sinkovics, and Ruey-Jer “Bryan” Jean (2013), "The internet as an alternative path to internationalization?," International Marketing Review, 30 (2), 130-155. (DOI: 10.1108/02651331311314556). http://dx.doi.org/10.1108/02651331311314556