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A process of internationalization by digital born globals

‘Case study on fintech companies’

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Master Thesis


Business Administration>Finance




Master Thesis: The internationalization of digital companies A digital company can be described as an organization whose almost all business relationships with suppliers, employees, and customers are mediated or implemented digitally. In other words, the entire core business process is completed through the use of a digital network covering the entire organization. The different types of networks used by companies connect the entire organization with other businesses and basically connect with the entire world. (IGI Global, 2018). Bruthers et al. (2016) believes that the internationalization process of digital companies is significantly different from traditional internationalization theories. A distinctive feature is that the process of internationalization of digital companies can be passive or active. When a company has not changed its domestic quotations or actively tried to target overseas customers, but still has a website that serves foreign customers, it will take a passive approach. This does not require adjustments or additional investments by digital companies. On the other hand, companies with more active internationalization methods choose to directly target foreign customers by establishing operations in different countries. In addition, they adapt their products or services to foreign countries, for example by adding another language to their web pages (Hazarbassanova 2016). Various researchers have studied the company's active internationalization process (Mahnke & Venzin, 2003; Brouthers et al., 2016; Wentrup, 2016; Ojala, Evers & Rialp, 2018) and noticed some familiar patterns. For example, Ojala et al. (2018) It is observed that digital companies tend to enter countries far away from the domestic market at a very early stage in order to obtain important resources. Other studies have emphasized how digital companies tend to enter the high risk of fast entry rather than latecomers (Mahnke & Venzin, 2003. In fact, in a study on high-tech companies, the speed of internationalization is considered to be very important for the company’s long-term survival. Important (Gabrielsson, 2005). Digital companies quickly enter with little resource input through a model that allows a high degree of control over customer learning and sales processes (Mahnke & Venzin, 2003). Wentrup (2016) divides the entry process of digital companies into online Entry and offline entry. Online entry is defined as the entry process when a digital company chooses to provide its services only online, while offline entry refers to the company entering a new market by opening a local office. In addition, according to Wentrup (2016) Companies that want to succeed should concentrate their business in the domestic market as much as possible. In addition, companies that choose an online entry strategy will initially work overtime to develop offline business, such as 2.2 Internationalization under the background of digital globalization The phenomenon of early internationalization of small and young companies has aroused widespread attention in the academic circles in the theory of internationalization. These studies not only conceptualized this phenomenon, but also discussed whether these companies follow the traditional internationalization model of the company's gradual internationalization. In the incremental model, it describes how the company began to expand into nearby markets in terms of psychological distance, defined as "difficult to understand foreign environmental factors", and then expand further (Johanson & Wiedersheim-Paul, 1975; Vahlne & Wiedersheim- Paul, 1973). Some authors believe that the traditional model has nothing to do with the rapid internationalization process of natural globalization (Oviatt & McDougall, 1994; Moen & Servais, 2002; Moen, 2002). Other studies have shown that natural global talents follow the traditional incremental internationalization model, but pass them faster, proceed in the reverse order, and even skip some steps (Coviello & Munro, 1997; Loustarinen & Gabrielsson, 2006) . The literature describes born global companies as small and medium-sized companies (SMEs) that rapidly internationalize at the beginning of their establishment and can be found in most industries. Although small and medium-sized enterprises usually have limited financial, human and intangible resources, a large part of their income comes from sales in the international market. (Knight and Leisch, 2016, Cavusgil and Knight, 2009). There are many ways to describe fairly similar concepts in the literature. These companies are alternately referred to as Born Globals (BGs) (Knight and Cavusgil, 2004), International New Ventures (INVs) (Oviatt and McDougall, 2005), and Global Companies . Start-ups (Oviatt and McDougall, 2005) are slightly different in definition. Knight and Cavusgil (2004) defined “born global people” as “entrepreneurial start-ups that seek to obtain a large part of their income from product sales in the international market from the beginning of their establishment or near the beginning of their establishment.” A natural globalization is accelerated internationalization. (Weerawardena, Mort, Liesch & Knight, 2007) As the name suggests, these companies have a global vision from the beginning (Gabrielsson et al., 2005). Another feature often mentioned is that the founders have international experience (Oviatt & McDougall, 2005). They have achieved internationalization within two or three years after their establishment (Rennie, 1993; Knight & Cavusgil, 2004). During this time they It has entered multiple (at least two) international markets (Oviatt and McDougall, 2005) and has grown through alliances and partnerships (Freeman et al. 2006). In addition, they are usually located in small open economies with limited domestic markets (L uostarinen & Gabrielsson, 2006) Read Less