
Digital technology is transforming commerce, and the operational strategies of international businesses must change accordingly. HKUST’s Jiatao Li and colleagues assess this new business landscape in their editorial for the Journal of International Business Studies’ special edition on digitalization.
“Businesses are developing digital strategies to create new business models,” explain the researchers, “and shifting costs and activities from their own firm to complementors, customers, and other stakeholders at home and abroad.”
This yields substantial benefits for firms. “Digital transformation not only offers cost reduction for businesses crossing national boundaries,” the researchers explain, “but also enables them to develop novel products and business models.” However, barriers to conducting cross-border business persist in the digital age.
The researchers caution that a country’s institutions can “become an obstacle to implementing a global business model.” In terms of formal institutions, lawmakers may become aware of and close gaps in their regulatory frameworks that digital firms try to exploit. As for informal institutions, shifts in culture and consumer values can also “impact the ways firms use digital channels.”
Adaptation appears to be the key. The authors recommend that platforms “create and continuously upgrade their ecosystem-specific advantages” and traditional firms alter “their inherited processes, organizational culture, and business models” as global business responds to the impact of new technology.
Li and colleagues conclude their appraisal with recommendations for researchers. “Scholars face challenges in interpreting and operationalizing key theoretical concepts in the digital economy,” they note. “To enhance our understanding of actual business challenges, operationalization is key, and these operationalizations may have to be different than for traditional businesses.”
In other words, new research questions and theories may be needed to explain digitalization and its impact on international business. “As a final note,” say the authors, “we encourage IB scholars to relate their understanding of IB and digital technologies to develop new approaches to solving societal challenges.”