Digital technologies reshape international business strategies, study finds

As international companies face increasingly volatile conditions around the world especially in the face of rapid technological change, a study in the European Journal of International Management has looked at how they might systematically understand the way in which digital technologies are reshaping business strategies.

The research introduces the concept of Digital International Value Creation, a model that explains how businesses can use their digital capabilities to create added value in their international operations. Far beyond improving back-end efficiency, digitalization, defined here as the transformation of an organization’s products, services, and processes into internet-compatible formats, is now an integral component of corporate activity.

Information and communication technology has, of course, supported international firms for many years by enabling more coordinated and efficient global operations. However, the current study argues that recent digital advances represent a structural shift. The new tools are creating new modes of international expansion, particularly for firms that were once limited by their geographic or organizational constraints.

The researchers outline three pathways already being taken by companies. The first involves enhancing existing operations with digital tools. The second considers how digital-native firms have been expanding globally from the outset. This involves historically parochial firms now using digital platforms to enter global markets for the first time.

The research shows that whichever path is being taken, digital adoption alone is insufficient for ongoing global success. Rather, success depends heavily on how well firms align their technological strategies with their internal structures and the external environments in which they operate. The researchers add that political stability, legal frameworks, and cultural compatibility can all affect how well digital tools perform in different regions.

The team suggests that companies need to re-imagine digitalization not as a supporting function but as a central component of their international strategy. This perspective is especially pertinent for small and medium-sized enterprises (SMEs), which often face significant barriers to digital adoption but also stand to benefit from the agility and reach these technologies offer.