Explaining the Internationalization of iBusiness Firms

  • Keith D. Brouthers
  • Kim Dung Geisser
  • Franz Rothlauf
Part of the JIBS Special Collections book series (JIBSSC)


Information and communication technologies have given rise to a new type of firm, the ibusiness firm. These firms offer a platform that allows users to interact with each other and generate value through user co-creation of content. Because of this, ibusiness firms face different challenges when they internationalize compared with traditional firms, even those online. In this article we extend existing internationalization theory to encompass this new type of organization. We theorize that because ibusiness firms produce value through the creation and coordination of a network of users, these firms tend to suffer greater liabilities of outsidership when expanding abroad and therefore concentrate on network and diffusion-based user adoption processes as they internationalize. Based on a multi-case investigation of a sample of ibusiness firms, we develop new theory and testable hypotheses. Thus, we make an important contribution by expanding internationalization theory to a new set of firms.


Internationalization theory Network theory Diffusion of innovation theory Case theoretic approaches 


  1. Amit, R., & Zott, C. (2001). Value creation in e-business. Strategic Management Journal, 22(6/7), 493–520.CrossRefGoogle Scholar
  2. Anderson, E., & Gatignon, H. (1986). Modes of foreign entry: A transaction cost analysis and propositions. Journal of International Business Studies, 17(3), 1–26.CrossRefGoogle Scholar
  3. Arenius, P., Sasi, V., & Gabrielsson, M. (2006). Rapid internationalisation enabled by the internet: The case of a knowledge intensive company. Journal of International Entrepreneurship, 3(4), 279290.CrossRefGoogle Scholar
  4. Baer, M. (2010). The strength-of-weak-ties perspective on creativity: A comprehensive examination and extension. Journal of Applied Psychology, 95(3), 592–601.CrossRefGoogle Scholar
  5. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.CrossRefGoogle Scholar
  6. Bian, Y. (1997). Bringing strong ties back in: Indirect ties, networks bridges and job searches in China. American Sociological Review, 62(3), 366–385.CrossRefGoogle Scholar
  7. Benbasat, I., Goldstein, D. K., & Mead, M. (1987). The case research strategy in studies of information systems. MIS Quarterly, 11(3), 369–386.CrossRefGoogle Scholar
  8. Benito, G. R. G., & Gripsrud, G. (1992). The expansion of foreign direct investments: Discrete rational location choices or a cultural learning process? Journal of International Business Studies, 23(3), 461–476.CrossRefGoogle Scholar
  9. Brass, D., Galaskiewicz, J., Greve, H., & Tsai, W. (2004). Taking stock of networks and organizations: A multilevel perspective. Academy of Management Journal, 47(6), 795–817.Google Scholar
  10. Brouthers, K. D., Brouthers, L. E., & Werner, S. (2003). Transaction-cost enhanced entry-mode choices and firm performance. Strategic Management Journal, 24(12), 1239–1248.CrossRefGoogle Scholar
  11. Brouthers, K. D., Brouthers, L. E., & Werner, S. (2008). Resource-based advantages in an international context. Journal of Management, 34(2), 189–217.CrossRefGoogle Scholar
  12. Brouthers, K. D., Nakos, G., & Dimitratos, P. (2014). SME entrepreneurial orientation, international performance and the moderating role of strategic alliances. Entrepreneurship Theory & Practice. Advance online publication. 12 March. CrossRefGoogle Scholar
  13. Burt, R. S. (1992). Structural holes. Cambridge, MA: Harvard University Press.Google Scholar
  14. Burt, R. S. (2004). Structural holes and good ideas. American Journal of Sociology, 110(2), 349–399.CrossRefGoogle Scholar
  15. Calof, J. L., & Beamish, P. W. (1995). Adapting to foreign markets: Explaining internationalization. International Business Review, 4(2), 115–131.CrossRefGoogle Scholar
  16. Cennamo, C., & Santalo, J. (2013). Platform competition: Strategic trade-offs in platform markets. Strategic Management Journal, 34(11), 1331–1350.CrossRefGoogle Scholar
  17. Chandra, A., & Kaiser, U. (2014). Targeted advertising in magazine markets and the advent of the internet. Management Science, 60(7), 1829–1843.CrossRefGoogle Scholar
  18. Chetty, S., & Holm, D. B. (2000). Internationalisation of small to medium-sized manufacturing firms: A network approach. International Business Review, 9(1), 77–93.CrossRefGoogle Scholar
  19. Coleman, C. L. (1993). The influence of mass media and interpersonal communication on societal and personal risk judgments. Communication Research, 20(4), 611–628.CrossRefGoogle Scholar
  20. Coviello, N., & Munro, H. (1995). Growing the entrepreneurial firm: Networking for international market development. European Journal of Marketing, 29(7), 49–61.CrossRefGoogle Scholar
  21. Coviello, N., & Munro, H. (1997). Network relationships and the internationalization process of small software firms. International Business Review, 6(4), 361–386.CrossRefGoogle Scholar
  22. Denk, N., Kaufmann, L., & Roesch, J. F. (2012). Liabilities of foreignness revisited: A review of contemporary studies and recommendations for future research. Journal of International Management, 18(4), 322–334.CrossRefGoogle Scholar
  23. Dubé, L., & Paré, G. (2003). Rigor in information systems positivist case research: Current practices, trends, and recommendations. MIS Quarterly, 27(4), 597–635.CrossRefGoogle Scholar
  24. Dubosson-Torbay, M., Osterwalder, A., & Pigneur, Y. (2002). E-business model design, classification, and measurements. Thunderbird International Business Review, 44(1), 5–23.CrossRefGoogle Scholar
  25. Dunning, J. H. (2001). The eclectic (OLI) paradigm of international production: Past, present and future. International Journal of the Economics of Business, 8(2), 173–190.CrossRefGoogle Scholar
  26. Eisenhardt, K. M. (1989). Building theories from case study research. Academy of Management Review, 14(4), 532–550.CrossRefGoogle Scholar
  27. Eisenmann, T. R. (2006). Internet companies’ growth strategies: Determinants of investment intensity and long-term performance. Strategic Management Journal, 27(12), 1183–1204.CrossRefGoogle Scholar
  28. Eisenmann, T., Parker, G., & van Alstyne, M. W. (2006). Strategies for two-sided markets. Harvard Business Review, 84(1), 92–101.Google Scholar
  29. Ekeledo, I., & Sivakumar, K. (2004). The impact of e-commerce on entry-mode strategies of service firms: A conceptual framework and research propositions. Journal of International Marketing, 4(1), 46–70.CrossRefGoogle Scholar
  30. Ellis, P. (2000). Social ties and foreign market entry. Journal of International Business Studies, 31(3), 443–469.CrossRefGoogle Scholar
  31. Eriksson, K., Johanson, J., Majkgard, A., & Sharma, D. (1997). Experiential knowledge and cost in the internationalization process. Journal of International Business Studies, 28(2), 337–360.CrossRefGoogle Scholar
  32. Eroglu, S. (1992). The internationalization process of franchise systems: A conceptual model. International Marketing Review, 9(1), 19–31.Google Scholar
  33. Fidler, L., & Johnson, J. D. (1984). Communication and innovation implementation. Academy of Management Review, 9(4), 704–711.CrossRefGoogle Scholar
  34. Flynn, L. R., Goldsmith, R. E., & Eastman, J. K. (1996). Opinion leaders and opinion seekers: Two new measurement scales. Journal of the Academy of Marketing Science, 24(2), 137–147.CrossRefGoogle Scholar
  35. Forsgren, M., & Hagstrom, P. (2007). Ignorant and impatient internationalization? The Uppsala model and internationalization patterns for internet-related firms. In R. R. Sinkovics & M. Yamin (Eds.), Critical perspectives on international business (Vol. 3, pp. 291–305). Bingley: Emerald.Google Scholar
  36. Foxall, G. R., Goldsmith, R. E., & Brown, S. (1998). Consumer psychology for marketing (Vol. 1, 2nd ed.). Boston: Cengage Learning EMEA.Google Scholar
  37. Frederico, J. S., Kantis, H. D., Rialp, A., & Rialp, J. (2009). Does entrepreneurs’ human and relational capital affect early internationalisation? A cross-regional comparison. European Journal of International Management, 3(2), 199–215.Google Scholar
  38. Goerzen, A., & Beamish, P. W. (2005). The effect of alliance network diversity on multinational enterprise performance. Strategic Management Journal, 26(4), 333–354.CrossRefGoogle Scholar
  39. Goldfarb, A., & Tucker, C. (2011). Online display advertising: Targeting and obtrusiveness. Marketing Science, 30(3), 389–404.CrossRefGoogle Scholar
  40. Granovetter, M. S. (1973). The strength of weak ties. American Journal of Sociology, 78(6), 1360–1380.CrossRefGoogle Scholar
  41. Hadley, R. D., & Wilson, H. I. M. (2003). The network model of internationalisation and experiential knowledge. International Business Review, 12(6), 697–717.CrossRefGoogle Scholar
  42. Hagel, J., & Armstrong, A. G. (1997). Net gain: Expanding markets through virtual communities. Cambridge, MA: Harvard Business School Press.Google Scholar
  43. Harris, S., & Wheeler, C. (2005). Entrepreneurs’ relationships for internationalization: Functions, origins and strategies. International Business Review, 14(2), 187–207.CrossRefGoogle Scholar
  44. Haucap, J., & Heimeshoff, U. (2014). Google, Facebook, Amazon, eBay: Is the internet driving competition or market monopolization? International Economics and Economic Policy, 11(1), 49–61.CrossRefGoogle Scholar
  45. Helsen, K., Jedidi, K., & DeSarbo, W. S. (1993). A new approach to country segmentation utilizing multinational diffusion patterns. Journal of Marketing, 57(1), 60–71.CrossRefGoogle Scholar
  46. Hollensen, S. (2009). Essentials of global marketing. London: Prentice Hall.Google Scholar
  47. Huberman, A. M., & Miles, M. B. (1994). Data management and analysis methods. In N. K. Denzin & Y. S. Lincoln (Eds.), Handbook of qualitative research (pp. 428–444). London: Sage.Google Scholar
  48. Iacovou, C. L., Benbasat, I., & Dexter, A. S. (1995). Electronic data interchange and small organizations: Adoption and impact of technology. MIS Quarterly, 19(4), 465–485.CrossRefGoogle Scholar
  49. Johanson, J., & Mattsson, L. G. (1988). Internationalization in industrial systems: A network approach. In N. Hood & J. E. Vahlne (Eds.), Strategies in global competition (pp. 287–314). London: Croom Helm.Google Scholar
  50. Johanson, J., & Vahlne, J. E. (1977). The internationalization process of the firm – A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8(1), 23–32.CrossRefGoogle Scholar
  51. Johanson, J., & Vahlne, J. E. (2009). The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership. Journal of International Business Studies, 40(9), 1411–1431.CrossRefGoogle Scholar
  52. Johanson, J., & Wiedersheim-Paul, F. (1975). The internationalization of the firm – Four Swedish cases. Journal of Management Studies, 12(3), 305–322.CrossRefGoogle Scholar
  53. Katz, M. L., & Shapiro, C. (1994). Systems competition and network effects. Journal of Economic Perspectives, 8(1), 93–115.CrossRefGoogle Scholar
  54. Knight, G. A., & Cavusgil, S. T. (2004). Innovation, organizational capabilities, and the born-global firm. Journal of International Business Studies, 35(2), 124–141.CrossRefGoogle Scholar
  55. Kotha, S., Rindova, V. P., & Rothaermel, F. T. (2001). Assets and actions: Firm-specific factors in the internationalization of U.S. internet firms. Journal of International Business Studies, 32(4), 769–791.CrossRefGoogle Scholar
  56. Lam, L. W., & Harrison-Walker, L. J. (2003). Toward an objective-based typology of e-business models. Business Horizons, 46(1), 17–26.CrossRefGoogle Scholar
  57. Laudon, K. C., & Traver, C. G. (2007). E-commerce: Business, technology, society. New York: Pearson Education.Google Scholar
  58. Lee, F. S. L., Vogel, D., & Limayem, M. (2003). Virtual community informatics: A review and research agenda. The Journal of Information Technology Theory and Application, 5(1), 47–61.Google Scholar
  59. Loane, S., & Bell, J. (2002). A cross-national comparison of the internationalization trajectories of internet start-ups. Irish Journal of Management, 23(1), 53–74.Google Scholar
  60. Loane, S., McNaughton, R. B., & Bell, J. (2004). The internationalization of internet-enabled entrepreneurial firms: Evidence from Europe and North America. Canadian Journal of Administrative Sciences, 21(1), 79–96.CrossRefGoogle Scholar
  61. Luo, Y., Zhao, J. H., & Du, J. (2005). The internationalization speed of e-commerce companies: An empirical analysis. International Marketing Review, 22(6), 693–709.CrossRefGoogle Scholar
  62. Mahadevan, B. (2000). Business models for internet-based e-commerce: An anatomy. California Management Review, 42(1), 55–69.CrossRefGoogle Scholar
  63. Mahajan, V., Muller, E., & Bass, F. M. (1990). New product diffusion models in marketing: A review and directions for research. Journal of Marketing, 54(1), 1–26.CrossRefGoogle Scholar
  64. Mahnke, V., & Venzin, M. (2003). The internationalization process of digital information good providers. Management International Review, 43(1), 115–142.Google Scholar
  65. Mathews, S., & Healy, M. (2007). The internet and information capability reduces perceived risk of internationalisation: An Australian SME perspective. International Journal of Organizational Behavior, 12(1), 71–87.Google Scholar
  66. McDougall, P. P., Shane, S., & Oviatt, B. M. (1994). Explaining the formation of international new ventures: The limits of theories from international business research. Journal of Business Venturing, 9(6), 469–487.CrossRefGoogle Scholar
  67. McIntyre, D. P., & Subramaniam, M. (2009). Strategy in network industries: A review and research agenda. Journal of Management, 35(6), 1494–1517.CrossRefGoogle Scholar
  68. McNaughton, R. B. (2003). The number of export markets that a firm serves: Process models versus the born-global phenomenon. Journal of International Entrepreneurship, 1(3), 297–311.CrossRefGoogle Scholar
  69. Milgram, S. (1967). The small world problem. Psychology Today, 1(1), 60–67.Google Scholar
  70. Müller, M. U. (2010). Facebook LOL as Germany’s StudiVZ loses ground. Spiegel Online, 20 May.Google Scholar
  71. O’Neill, H. M., Pouder, R. W., & Buchholtz, A. K. (1998). Patterns in the diffusion of strategies across organizations: Insights from the innovation diffusion literature. Academy of Management Review, 23(1), 98–114.CrossRefGoogle Scholar
  72. Oviatt, B., & McDougall, P. (1995). Global start-ups: Entrepreneurs on a worldwide stage. Academy of Management Executive, 2(1), 30–43.Google Scholar
  73. Petersen, B., Lawrence, S. W., & Liesch, P. W. (2002). The internet and foreign market expansion by firms. Management International Review, 42(2), 207–221.Google Scholar
  74. Prashantham, S. (2008). New venture internationalization as strategic renewal. European Management Journal, 26(6), 378–387.CrossRefGoogle Scholar
  75. Rafaeli, S. (1988). Interactivity: From new media to communication. In R. P. Hawkins, J. M. Wieman, & S. Pingree (Eds.), Advancing communication science: Merging mass and interpersonal processes (Vol. 16, pp. 110–134). London: Sage.Google Scholar
  76. Rogers, E. M. (2003). Diffusion of innovations (5th ed.). New York: Free Press.Google Scholar
  77. Rogers, E. M., & Shoemaker, F. F. (1971). Communication of innovations. New York: Free Press.Google Scholar
  78. Ryu, G., & Feick, L. (2007). A penny for your thoughts: Referral reward programs and referral likelihood. Journal of Marketing, 71(1), 84–94.CrossRefGoogle Scholar
  79. Schilling, M. A. (2002). Technology success and failure in winner-take-all markets: The impact of learning orientation, timing, and network externalities. Academy of Management Journal, 45(2), 387–398.Google Scholar
  80. Schilling, M. A. (2003). Technological leapfrogging: Lessons from the U.S. video game console industry. California Management Review, 45(3), 6–32.CrossRefGoogle Scholar
  81. Shane, S., & Cable, D. (2002). Network ties, reputation, and the financing of new ventures. Management Science, 48(3), 364–381.CrossRefGoogle Scholar
  82. Sharma, D. D., & Blomstermo, A. (2003). The internationalization process of born globals: A network view. International Business Review, 12(6), 739–753.CrossRefGoogle Scholar
  83. Sharma, D. D., & Johanson, J. (1987). Technical consultancy in internationalisation. International Marketing Review, 4(1), 20–29.CrossRefGoogle Scholar
  84. Shoham, A., & Ruvio, A. (2008). Opinion leaders and followers: A replication and extension. Psychology & Marketing, 25(3), 280–297.CrossRefGoogle Scholar
  85. Singh, N., & Kundu, S. (2002). Explaining the growth of e-commerce corporations (ECCs): An extension and application of the eclectic paradigm. Journal of International Business Studies, 33(4), 679–697.CrossRefGoogle Scholar
  86. Sullivan, D., & Bauernschmidt, A. (1990). Incremental internationalization: A test of Johanson and Vahlne’s thesis. Management International Review, 30(1), 19–30.Google Scholar
  87. Thong, J. Y. L. (1999). An integrated model of information systems adoption in small businesses. Journal of Management Information Systems, 15(1), 187–214.CrossRefGoogle Scholar
  88. Timmers, P. (1998). Business models for electronic markets. Journal on Electronic Markets, 8(1), 3–8.CrossRefGoogle Scholar
  89. Turnball, P. W., & Meenaghan, A. (1980). Diffusion of innovation and opinion leadership. European Journal of Marketing, 14(1), 3–33.CrossRefGoogle Scholar
  90. Uzzi, B. (1996). The sources and consequences of embeddedness for the economic performance of organizations: The network effect. American Sociological Review, 61(4), 674–698.CrossRefGoogle Scholar
  91. Vahlne, J. E., & Johanson, J. (2013). The Uppsala model on evolution of the multinational business enterprise – From internalization to coordination of networks. International Marketing Review, 30(3), 189–210.CrossRefGoogle Scholar
  92. Weitzel, T., Beimborn, D., & Koenig, W. (2006). A unified economic model of standard diffusion: The impact of standardization cost, network effects, and network typology. MIS Quarterly, 30(Special Issue), 489–514.CrossRefGoogle Scholar
  93. Williamson, O. E. (1985). The economic institutions of capitalism: Firms, markets, relational contracting. New York: Free Press.Google Scholar
  94. Wirtz, J., & Chew, P. (2002). The effects of incentives, deal proneness, satisfaction and tie strength on word-of-mouth behavior. International Journal of Service Industry Management, 13(1), 141–162.CrossRefGoogle Scholar
  95. Yadav, M. S., & Varadarajan, R. (2005). Interactivity in the electronic marketplace: An exposition of the concept and implications for research. Journal of the Academy of Marketing Science, 33(4), 585–603.CrossRefGoogle Scholar
  96. Yin, R. K. (2003). Case study research: Design and methods (3rd ed.). Thousand Oaks, CA: Sage.Google Scholar
  97. Zaheer, S. (1995). Overcoming the liability of foreignness. Academy of Management Journal, 38(2), 341–363.Google Scholar
  98. Zhou, L., Wu, W., & Luo, X. (2007). Internationalization and the performance of born global SMEs: The mediating role of social networks. Journal of International Business Studies, 38(4), 673–695.CrossRefGoogle Scholar
  99. Zhu, F., & Iansiti, M. (2012). Entry into platform-based markets. Strategic Management Journal, 33(1), 88–106.CrossRefGoogle Scholar

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Keith D. Brouthers
    • 1
  • Kim Dung Geisser
    • 2
  • Franz Rothlauf
    • 2
  1. 1.King’s College LondonLondonUK
  2. 2.Johannes Gutenberg Universität MainzMainzGermany

Personalised recommendations