Too big, too fast, too dangerous: dynamics of digital platform firm internationalization and government policy development

This chapter develops theory for how digital platform firms face and overcome heterogeneity and non-continuity in the contexts in which they operate. Digital platform firms are often characterized by unique market strategies, leading to large user networks and dominating market shares. These firms’ visibility prompts host governments to develop policies to protect their economies. The chapter discusses a theory that accommodates how digital platforms legitimize and sustain themselves, primarily through non-market strategies, in their international expansion. The theory is complemented with a sequencing logic of digital platform expansion, explaining how entering host countries with incomplete institutions can allow digital platforms to utilize home country knowledge and help quickly transforming host countries’ institutions to gain external legitimacy. Through experiential knowledge and legitimacy spillover drawn from internationalization, successful institutional transformations by digital platforms in countries with incomplete institutions can enable smoother implementation of institutional strategies during subsequent entries into highly institutionalized countries.