IDEAS home Printed from https://ideas.repec.org/p/zbw/umiodp/310321.html
   My bibliography  Save this paper

Going global, going digital: Firm internationalisation and digital resource use

Author

Listed:
  • Mayer, Pascal

Abstract

This research paper explores the relationship between firm internationalisation and digital resource use. On the one hand, the modularity of digital resources and their applicability in different international contexts provide significant benefits to multinational companies. On the other hand, the complexity of managing digital resources across different institutional systems escalates with rising levels of internationalisation. Because of these competing forces, I argue that the relationship is inversely U-shaped. Additionally, I investigate the moderating effect of firms' financial constraints and conjecture a steepening effect of the inverted Ushape. In my empirical identification strategy, I employ a text-based measure of internationalisation, based on companies' 10-K annual reports, and combine this measure with data on internet and e-commerce technology used by Standard & Poor's 1,500 firms. The results provide empirical support of an inverse U-shaped relationship and the moderating role of financial constraints. Various robustness tests corroborate the findings. This study contributes to the literature streams of firm internationalisation and information systems research by highlighting the trade-offs faced by MNEs when they "go digital".

Suggested Citation

  • Mayer, Pascal, 2025. "Going global, going digital: Firm internationalisation and digital resource use," Discussion Papers of the Institute for Organisational Economics 1/2025, University of Münster, Institute for Organisational Economics.
    • Handle: RePEc:zbw:umiodp:310321
    DOI: 10.17879/14918765971
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/310321/1/1916574289.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.17879/14918765971?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Cameron D. Miller & Richard D. Wang, 2024. "Product digitization and differentiation strategy change: Evidence from the book publishing industry," Strategic Management Journal, Wiley Blackwell, vol. 45(7), pages 1241-1272, July.
    2. Satish Nambisan, 2017. "Digital Entrepreneurship: Toward a Digital Technology Perspective of Entrepreneurship," Entrepreneurship Theory and Practice, , vol. 41(6), pages 1029-1055, November.
    3. Jeanne, Olivier & Korinek, Anton, 2019. "Managing credit booms and busts: A Pigouvian taxation approach," Journal of Monetary Economics, Elsevier, vol. 107(C), pages 2-17.
    4. Sumit Agarwal & Pulak Ghosh & Jing Li & Tianyue Ruan, 2024. "Digital Payments and Consumption: Evidence from the 2016 Demonetization in India," The Review of Financial Studies, Society for Financial Studies, vol. 37(8), pages 2550-2585.
    5. David J. Denis & Valeriy Sibilkov, 2010. "Financial Constraints, Investment, and the Value of Cash Holdings," The Review of Financial Studies, Society for Financial Studies, vol. 23(1), pages 247-269, January.
    6. Daniel S. Andrews & Phillip C. Nell & Andreas P. J. Schotter & Tomi Laamanen, 2023. "And the subsidiary lives on: Harnessing complex realities in the contemporary MNE," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(3), pages 538-549, April.
    7. Lamont, Owen & Polk, Christopher & Saa-Requejo, Jesus, 2001. "Financial Constraints and Stock Returns," The Review of Financial Studies, Society for Financial Studies, vol. 14(2), pages 529-554.
    8. Klaus E. Meyer & Jiatao Li & Keith D. Brouthers & Ruey-Jer ‘‘Bryan’’ Jean, 2023. "International business in the digital age: Global strategies in a world of national institutions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(4), pages 577-598, June.
    9. Inessa Love, 2003. "Financial Development and Financing Constraints: International Evidence from the Structural Investment Model," The Review of Financial Studies, Society for Financial Studies, vol. 16(3), pages 765-791, July.
    10. Richard F. J. Haans & Constant Pieters & Zi-Lin He, 2016. "Thinking about U: Theorizing and testing U- and inverted U-shaped relationships in strategy research," Strategic Management Journal, Wiley Blackwell, vol. 37(7), pages 1177-1195, July.
    11. Katherine Tatarinov & Tina C. Ambos & Feichin Ted Tschang, 2023. "Scaling digital solutions for wicked problems: Ecosystem versatility," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(4), pages 631-656, June.
    12. Gorwa, Robert & Lechowski, Grzegorz & Schneiß, Daniel, 2024. "Platform lobbying: Policy influence strategies and the EU's Digital Services Act," Internet Policy Review: Journal on Internet Regulation, Alexander von Humboldt Institute for Internet and Society (HIIG), Berlin, vol. 13(2), pages 1-26.
    13. Changhyun Kim & Richard A. Bettis, 2014. "Cash is surprisingly valuable as a strategic asset," Strategic Management Journal, Wiley Blackwell, vol. 35(13), pages 2053-2063, December.
    14. Steven M. Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1988. "Financing Constraints and Corporate Investment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1), pages 141-206.
    15. Gerard Hoberg & Vojislav Maksimovic, 2015. "Redefining Financial Constraints: A Text-Based Analysis," The Review of Financial Studies, Society for Financial Studies, vol. 28(5), pages 1312-1352.
    16. Jean, Ruey-Jer “Bryan” & Kim, Daekwan & Cavusgil, Erin, 2020. "Antecedents and outcomes of digital platform risk for international new ventures’ internationalization," Journal of World Business, Elsevier, vol. 55(1).
    17. Bahaj, Saleem & Foulis, Angus & Pinter, Gabor & Surico, Paolo, 2022. "Employment and the residential collateral channel of monetary policy," Journal of Monetary Economics, Elsevier, vol. 131(C), pages 26-44.
    18. Bodnaruk, Andriy & Loughran, Tim & McDonald, Bill, 2015. "Using 10-K Text to Gauge Financial Constraints," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 50(4), pages 623-646, August.
    19. Yadong Luo, 2022. "A general framework of digitization risks in international business," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(2), pages 344-361, March.
    20. Lorraine Eden & Bo Bernhard Nielsen, 2020. "Research methods in international business: The challenge of complexity," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(9), pages 1609-1620, December.
    21. Tatiana Kostova & Sjoerd Beugelsdijk & W. Richard Scott & Vincent E. Kunst & Chei Hwee Chua & Marc Essen, 2020. "The construct of institutional distance through the lens of different institutional perspectives: Review, analysis, and recommendations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 467-497, June.
    22. Palash Deb & Parthiban David & Jonathan O'Brien, 2017. "When is cash good or bad for firm performance?," Strategic Management Journal, Wiley Blackwell, vol. 38(2), pages 436-454, February.
    23. repec:bla:jfinan:v:59:y:2004:i:4:p:1777-1804 is not listed on IDEAS
    24. Drechsel, Thomas & Kim, Seho, 2024. "Macroprudential policy with earnings-based borrowing constraints," Journal of Monetary Economics, Elsevier, vol. 147(C).
    25. Zachary R. Steelman & Taha Havakhor & Rajiv Sabherwal & Sanjiv Sabherwal, 2019. "Performance Consequences of Information Technology Investments: Implications of Emphasizing New or Current Information Technologies," Service Science, INFORMS, vol. 30(1), pages 204-218, March.
    26. Whited, Toni M, 1992. "Debt, Liquidity Constraints, and Corporate Investment: Evidence from Panel Data," Journal of Finance, American Finance Association, vol. 47(4), pages 1425-1460, September.
    27. Keith D. Brouthers & Liang Chen & Sali Li & Noman Shaheer, 2022. "Charting new courses to enter foreign markets: Conceptualization, theoretical framework, and research directions on non-traditional entry modes," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(9), pages 2088-2115, December.
    28. André O Laplume & Bent Petersen & Joshua M Pearce, 2016. "Global value chains from a 3D printing perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 47(5), pages 595-609, June.
    29. Schäper, Thomas & Jung, Christopher & Foege, Johann Nils & Bogers, Marcel L.A.M. & Fainshmidt, Stav & Nüesch, Stephan, 2023. "The S-shaped relationship between open innovation and financial performance: A longitudinal perspective using a novel text-based measure," Research Policy, Elsevier, vol. 52(6).
    30. Anthony P Cannizzaro, 2020. "Social influence and MNE strategic response to political risk: A global network approach," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(5), pages 829-850, July.
    31. Tim Loughran & Bill Mcdonald, 2011. "When Is a Liability Not a Liability? Textual Analysis, Dictionaries, and 10‐Ks," Journal of Finance, American Finance Association, vol. 66(1), pages 35-65, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Schauer, Catharina & Elsas, Ralf & Breitkopf, Nikolas, 2019. "A new measure of financial constraints applicable to private and public firms," Journal of Banking & Finance, Elsevier, vol. 101(C), pages 270-295.
    2. Klaus E. Meyer & Jiatao Li & Keith D. Brouthers & Ruey-Jer ‘‘Bryan’’ Jean, 2023. "International business in the digital age: Global strategies in a world of national institutions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(4), pages 577-598, June.
    3. Li, Xiafei & Luo, Di, 2019. "Financial constraints, stock liquidity, and stock returns," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 63(C).
    4. Banerjee, Pradip & Dutta, Shantanu & Zhu, Pengcheng, 2021. "Multidimensionality of text based financial constraints and working capital management," International Review of Financial Analysis, Elsevier, vol. 77(C).
    5. Schäper, Thomas & Jung, Christopher & Foege, Johann Nils & Bogers, Marcel L.A.M. & Fainshmidt, Stav & Nüesch, Stephan, 2023. "The S-shaped relationship between open innovation and financial performance: A longitudinal perspective using a novel text-based measure," Research Policy, Elsevier, vol. 52(6).
    6. Rong, Ke & Kang, Zhengyao & Williamson, Peter J., 2022. "Liability of ecosystem integration and internationalisation of digital firms," Journal of International Management, Elsevier, vol. 28(4).
    7. Dhole, Sandip & Mishra, Sagarika & Pal, Ananda Mohan, 2019. "Efficient working capital management, financial constraints and firm value: A text-based analysis," Pacific-Basin Finance Journal, Elsevier, vol. 58(C).
    8. Tori, Daniele & Onaran, Özlem, 2018. "Financialisation, financial development, and investment: evidence from European non-financial corporations," Greenwich Papers in Political Economy 22196, University of Greenwich, Greenwich Political Economy Research Centre.
    9. Monika Wieczorek-Kosmala & Joanna Błach & Joanna Trzęsiok, 2018. "Analysis of Bankruptcy Threat for Risk Management Purposes: A Model Approach," IJFS, MDPI, vol. 6(4), pages 1-17, December.
    10. Kim, Sehoon, 2020. "Disappearing Discounts: Hedge Fund Activism in Conglomerates," MPRA Paper 100876, University Library of Munich, Germany.
    11. Filipe Silva & Carlos Carreira, 2012. "Measuring Firms’ Financial Constraints: A Rough Guide," Notas Económicas, Faculty of Economics, University of Coimbra, issue 36, pages 23-46, December.
    12. Behr, Patrick & Norden, Lars & Noth, Felix, 2013. "Financial constraints of private firms and bank lending behavior," Journal of Banking & Finance, Elsevier, vol. 37(9), pages 3472-3485.
    13. Alhassan, Abdulrahman & Naka, Atsuyuki, 2020. "Corporate future investments and stock liquidity: Evidence from emerging markets," International Review of Economics & Finance, Elsevier, vol. 65(C), pages 69-83.
    14. Malik, Muhammad Farhan & Nowland, John & Buckby, Sherrena, 2021. "Voluntary adoption of board risk committees and financial constraints risk," International Review of Financial Analysis, Elsevier, vol. 73(C).
    15. Naeem, Kashif & Li, Matthew C., 2019. "Corporate investment efficiency: The role of financial development in firms with financing constraints and agency issues in OECD non-financial firms," International Review of Financial Analysis, Elsevier, vol. 62(C), pages 53-68.
    16. Yuting Fan & Ha Nguyen & Rong Qian, 2022. "Collateralized borrowing around the world: Insights from the World Bank Enterprise Surveys," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 2420-2437, April.
    17. Sanjeev Kumar & K. S. Ranjani, 2018. "Financial constraints and investment decisions of listed Indian manufacturing firms," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 4(1), pages 1-17, December.
    18. Dongyang Zhang, 2017. "Is working capital management value-enhancing through alleviating financial constraints? Evidence from Chinese non-listed firms," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 15(4), pages 373-406, October.
    19. Christopher F. Baum & Andreas Stephan & Oleksandr Talavera, 2009. "The Effects Of Uncertainty On The Leverage Of Nonfinancial Firms," Economic Inquiry, Western Economic Association International, vol. 47(2), pages 216-225, April.
    20. Samuel Jebaraj Benjamin, 2019. "The Effect of Financial Constraints on Audit Fees," Capital Markets Review, Malaysian Finance Association, vol. 27(2), pages 59-87.

    More about this item

    Keywords

    Digital Resources; Digital Strategic Initiatives; Financial Constraints; FirmInternationalisation; Multinationals;
    All these keywords.

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:umiodp:310321. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/ilmuede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.