A presentation that communicates the academic paper published in International Marketing Review (2013) regarding the viability of the internet as a new and effective path to internationalization.
HỌC TỐT TIẾNG ANH 11 THEO CHƯƠNG TRÌNH GLOBAL SUCCESS ĐÁP ÁN CHI TIẾT - CẢ NĂ...
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?
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?
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
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
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
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
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
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”
Theoretical model
Theoretical model
Theoretical model
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.
Theoretical model
Rudolf Sinkovics - http://www.personal.mbs.ac.uk/rudolf-sinkovics/
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
Distribution of BG and non-BG is almost the same in the subgroups
According to frequency measures
Theoretical model
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Non bg profitieren aus beiden alternativen/strategien
Bg verlieren aus der nutzung des internet, weil es ist negativ
Theoretical model
Industry affiliation
Low tech versus high tech
Export experience
Future research could look at this further
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