Internationalization speed of online retailers: a resource-based perspective on the influence factors.
| Verfasser | Schu, Matthias |
| Posten | RESEARCH ARTICLE - Report - Abstract |
Abstract Numerous examples of online retailers that have internationalized shortly after their foundation indicate that they internationalize faster than and different from traditional brick-and-mortar retailers. This paper identifies and analyzes various influence factors on internationalization speed of online retailers and their impact on individual internationalization steps. Grounded in the resource-based view, the paper examines the effects of imitability of an online shop, the presence of venture capitalists, the scope of the country portfolio and distance and diversity within the country portfolio on the internationalization speed of online retailers. A Cox proportional hazards model is used to explore the effects on speed and their variations over time. Drawing on a sample of 150 online retailers (1110 market entries in 47 country markets over 19 years), this study shows significant curvilinear effects of the imitability of an online shop, as well as of the diversity and scope of the existing country portfolio and linear effects of the distance of new country markets on the length of time until the next internationalization step.
Keywords Internationalization speed * Resource-based view * E-commerce * Imitability * Distance * Diversity
1 Introduction
The globalization of markets and limited possibilities for growth in national markets have increasingly caused retailers to internationalize their operations; managing operations in diverse country markets has become a critical task (Assaf et al. 2012; Hoenen and Kostova 2014). This trend has been shown in the literature for store-based retailers, but it is even more relevant for online retailers that appear to internationalize more rapidly and different from brick-and-mortar retailers. There is widespread agreement that the internet is providing firms with new ways to conduct business (Loane et al. 2004). It significantly reduces psychic barriers and makes early internationalization a more viable and cost-effective option (Buckley 2011; Sinkovics and Penz 2005; Wen et al. 2001). In previous years, online retailers have shown remarkable efforts in opening new sales markets in foreign countries. Many online retailers pursued a 'get-big-fast' strategy to intensively develop their customer base as a significant source of increasing returns (Oliva et al. 2003) which highlights the importance of internationalization speed for online retailer's strategies. More than in most other industries, the quick rise of online shops has dramatically changed the retail industry over the last decade (Gartner Industry Research 2012) and is nowadays a serious competition for traditional retail channels. E-commerce has become an important influence on the European economy and accounts for 2.2 % (EUR 361bn) of European GDP and approximately 10 % of the total retail turnover in many Western European countries and the USA (E-Commerce Europe 2014, 2015).
Examining internationalization processes, researchers identified three basic dimensions: speed, extent (e.g., the percentage of foreign sales) and scope (e.g., the number of foreign markets) (Hagen and Zucchella 2014; Zahra and George 2002). Whereas extent and scope have been in focus of IB research for decades, speed was only introduced to the literature in the 1990s by the international entrepreneurship research. A rapid internationalization and a rapid exploration of foreign markets have been shown to have several advantages, e.g., performance and growth advantages (Oviatt and McDougall 2005; Powell 2014b), learning advantages (Autio et al. 2000; Zhou and Wu 2014), and first- or early-mover advantages (Oviatt and McDougall 1994, 2005). It has become an important topic for researchers (Jones and Coviello 2005; Oviatt and McDougall 1994; Sharma and Blomstermo 2003a; Trudgen and Freeman 2014; Zahra and George 2002). The majority of studies conceptualize internationalization speed as uniform throughout the entire internationalization process (i.e., in a single figure) or merely focus on the length of time from inception to the first internationalization step (Casillas and Acedo 2013; Madsen 2013; Zhou and Wu 2014). The development of the internationalization process over time and changes in speed have been scarcely researched, and "very little research has sought to explain the speed of the process once it is under way" (Casillas and Acedo 2013, p. 26). In addition, IB research mainly focuses on the internationalization processes of multinational enterprises (MNEs), but not on retailers in general (Eisner 2014) or online retailers in particular. The same holds true for international entrepreneurship research, in which online retailers as a kind of digital start-ups are also not in the center of research.
Following various authors (e.g., Casillas and Acedo 2013; Fuentelsaz et al. 2002; Powell 2014b), the objective of this paper is to investigate and empirically test the factors influencing internationalization speed in the online retail sector. Thereby, we acknowledge the fact that the internationalization speed of a company changes over time and that its antecedents may also not stay uniform over time. We examine the effects of imitability, country diversity and geographic scope that generally have a negative connotation, and we argue that their effects have a curvilinear shape, i.e., are positive within a certain range and negative in another range and that the effects change in the internationalization process. Moreover, linear effects of the variables age, distance to the home country as well as added distance are taken into account and effects of the categorical variable product category and home country and the binary variables multi-channel retailer or pure online retailer and presence of a venture capitalist.
This paper is organized as follows. First, the theoretical background of our study is presented, and the hypotheses are developed from a resource-based perspective, followed by details regarding the research design and method. The results section contains the hypothesis testing with a Cox regression model using time-varying data from the internationalization paths of 150 online retailers (1110 market entries over 19 years) from a geographically diversified country sample. Then, the results are presented. Finally, conclusions are drawn, limitations of the study are discussed, and implications and suggestions for further research are provided.
2 Theory and Hypotheses
We base our conceptual framework (see Fig. 1) on the resource-based view (RBV) in general and on dynamic capabilities. To ensure successful international expansion, firms must have appropriate resources (Hitt et al. 2006). The RBV grounds on resources regarded as bundles of tangible and intangible assets (Penrose 1959; Wemerfelt 1984). Firms develop resources and capabilities that are valuable, rare, heterogeneous, imperfectly mobile and inimitable; these can be applied in foreign markets, or firms can use foreign markets as a source for acquiring them to achieve resource-based advantages, resulting in superior performance (Barney 1991; Brouthers and Hennart 2007; Costa et al. 2013). Capabilities that include skill acquisition, knowledge and learning are intimately tied to firms' expansion paths (Teece 2007; Teece et al. 1997) and firms can benefit from the positive effects of capabilities that may emerge from diversity (Zahra et al. 2000). Our framework identifies and tests resource-based factors that may influence the internationalization speed of online retailers. Understood as a dynamic process, the internationalization speed of a firm is not considered uniform throughout the internationalization process; rather, this study investigates every individual internationalization step to emphasize the path-dependency of internationalization processes in which past actions may influence future operations in international markets.
[FIGURE 1 OMITTED]
2.1 Speed and Time in the Internationalization Process of Online Retailers
In traditional approaches, internationalization is regarded as a slow, gradual and path-dependent step-by-step process, as described in the Uppsala internationalization process model by Johanson and Vahlne (1977), based on uncertainty and limited rationality. Although time is an important determinant in the internationalization process and increasingly viewed as an important factor and scarce resource for internationalizing firms to manage, it has rarely been considered a primary conceptual dimension (Chetty et al. 2014; Jones and Coviello 2005; Sharma and Blomstermo 2003a). However, since Oviatt and McDougall (1994) placed time on the agenda in entrepreneurship theory, time is a central issue in the internationalization process of firms and frequently used as a predictor of knowledge accumulation (Acedo and Jones 2007; Morgan-Thomas and Jones 2009; Prashantham and Young 2011; Sharma and Blomstermo 2003a).
Speed is a time-based indicator of "how many foreign expansions a firm undertakes in a certain period of time" (Vermeulen and Barkema 2002, p. 643). Three different views of speed can be identified in the IB literature. First, an often used conceptualization is that of time elapsing between a company's foundation and the first international activity (Zahra and George 2002). This view focuses mainly on pre-internationalization. The second view is an overall observation (Mathews and Zander 2007) using, e.g., the average number of foreign markets per year (Vermeulen and Barkema 2002). The third view is the most thorough concept for gaining a deeper understanding of how internationalization processes develop: the time elapsing between two consecutive events in different stages within the internationalization process (Casillas and Acedo 2013).
Rapid internationalization and a rapid exploration of foreign markets typically provide performance and growth advantages for firms (Autio et al. 2000; Oviatt and McDougall 1994; Powell...
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