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The international penetration of ibusiness firms: Network effects, liabilities of outsidership and country clout

Liang Chen (), Noman Shaheer (), Jingtao Yi () and Sali Li ()
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Liang Chen: University of Melbourne
Noman Shaheer: University of South Carolina
Jingtao Yi: Renmin University of China
Sali Li: University of South Carolina

Journal of International Business Studies, 2019, vol. 50, issue 2, 172-192

Abstract: Abstract The burgeoning of ibusiness firms in the modern digital economy challenges the received internationalization theory. Given that ibusinesses such as social networking sites create value by providing a digital platform for users to interact with one another, we employ a user-network perspective and externalization logic, suggesting that ibusinesses’ internationalization process depends critically on users’ collective interactions, instead of being solely driven by firms’ market commitments, as noted by the Uppsala model. However, ibusinesses may suffer from liabilities of outsidership due to the boundedness of international network effects. Drawing on social network theory, we demonstrate that such liabilities can be mitigated by first diffusing the ibusiness platform in countries with higher clout. Our analysis using a unique dataset of mobile ibusiness platforms finds empirical support for the hypotheses. We discuss theoretical implications for the network approach of the Uppsala model in the digital era.

Keywords: digital; network effect; platform; outsidership; internationalization; foreign market entry (search for similar items in EconPapers)
Date: 2019
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