Utilization of digital technologies in internationalization
processes
A case study of high-tech SMEs in Sweden
Department of Business Administration
International Business
Bachelor Thesis
Spring 2023
Authors
Funck, Jakob 000512
Schöneman, Marcus 990414
Supervisor
Jakobsson, Johan
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Bachelor thesis - 2023
Acknowledgements
We would like to express our gratitude towards the participants of this study, for their
invaluable contributions of information and knowledge. The willingness to collaborate and
share their insights has been instrumental in addressing the research question at hand.
Without their involvement, the completion of this thesis would not have been feasible.
Furthermore, a special note of appreciation is extended to our supervisor Johan Jakobsson for
mentoring us throughout this whole process. The feedback and constructive comments have
helped us improve the quality of our work.
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Abstract
This thesis explores the role of digitalization in the internationalization process of Swedish
Small and Medium-sized Enterprises (SMEs). In today's global economy, digitalization has
become increasingly important for firms to remain competitive. Successfully navigating and
utilizing digital tools and platforms is arguably more important than ever for firms to achieve
success. In order to take full advantage of technological advancements a certain level of
expertise is necessary, and disparities between the technologies available and the
competencies of many firms are noticeable. This lack of knowledge limits the effectiveness
of these firms' decision-making processes and hinder their speed of internationalization.
Thus, this study aimed to explore the role of the digital economy as a facilitator in SME
growth while investigating the dynamic nature of digital technologies and understanding the
implications of these related to the internationalization process. To conduct this research,
qualitative research employing semi-structured interviews was conducted with five
representatives from high-tech SMEs across different industries operating internationally
from Sweden. The findings reveal three key areas within the internationalization process that
can be significantly facilitated by digitalization: networks, data management, and marketing.
In terms of networks, the study demonstrated that the long-term success of SMEs depends on
their proficiency in leveraging digital tools and platforms to establish and nurture
relationships with international partners. Data analytics emerges as a prominent method for
effectively acquiring market knowledge among the participating firms. By gaining a deeper
understanding of customer behaviors and preferences across various countries, SMEs can
tailor their marketing messages to better align with their target audiences. The study provides
practical insights for SMEs aiming to harness the benefits of digitalization for their global
expansion strategies.
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Glossary
Digitalization: The usage of digital technologies in order to change a business model
Internationalization: The process of enterprises increasing their involvement in
international markets
Internet of Things: A system of physical objects or "things" embedded with technology that
allows them to connect and exchange data with other devices and systems over the internet
List of Abbreviations
AI: Artificial Intelligence
CAD: Computer Aided Design
CEO: Chief Executive Officer
CMS: Content Management System
CRM: Customer Relationship Management
CTO: Chief Technology Officer
IBT: International Business Theory
IoT: Internet of Things
NLG: Natural Language Generation
SEO: Search Engine Optimization
SME: Small and Medium Enterprises
Key words
Digitalization, Internationalization, SME
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TABLE OF CONTENTS
Acknowledgements.................................................................................................................................2
Abstract...................................................................................................................................................3
TABLE OF CONTENTS.......................................................................................................................5
1. Introduction........................................................................................................................................ 7
1.1 Background..................................................................................................................................7
1.2 Problem discussion......................................................................................................................9
1.3 Purpose of the study.................................................................................................................. 10
1.4 Research question...................................................................................................................... 10
1.5 Delimitations of the study..........................................................................................................10
1.6 Disposition of thesis.................................................................................................................. 11
2. Theoretical framework.................................................................................................................... 12
2.1 Internationalization....................................................................................................................12
2.1.1 Traditional internationalization process theory................................................................12
2.1.2 Network theory................................................................................................................ 13
2.1.3 Born global theory........................................................................................................... 14
2.2 Digitalization............................................................................................................................. 15
2.2.1 Digitalization has made it easier for firms to integrate into targeted networks............... 15
2.2.2 The effects of digitalization on firms market knowledge................................................ 16
2.2.3 Digitalization has lead to reduced costs, resource allocations, time savings and improved
competencies.............................................................................................................................17
2.2.4 Borders and locations becomes less relevant...................................................................17
2.2.5 Data privacy and cyber threats in the digital age............................................................. 18
3. Methodology..................................................................................................................................... 20
3.1 Research approach.....................................................................................................................20
3.1.1 Abductive approach......................................................................................................... 20
3.2 Research method........................................................................................................................21
3.2.1 Qualitative method...........................................................................................................21
3.3 Development of theoretical framework.....................................................................................22
3.4 Method for empirical material collection.................................................................................. 23
3.4.1 Sampling.......................................................................................................................... 23
3.4.2 Case study design.............................................................................................25
3.5 Quality of the study................................................................................................................... 26
3.7 Research ethics.......................................................................................................................... 28
4. Empirical material........................................................................................................................... 29
4.1 Introduction of the firms............................................................................................................29
4.2 How digital technologies are utilized in the internationalization process................................. 31
4.2.1 Networks and communication......................................................................................... 31
4.2.2 Data management.............................................................................................................34
Data analytics..................................................................................................................... 34
Data collection....................................................................................................................36
Data storage........................................................................................................................ 37
4.2.3 Marketing......................................................................................................................... 38
4.3 Summary....................................................................................................................................41
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5. Analysis............................................................................................................................................. 42
5.1 Networks....................................................................................................................................42
5.2 Data management...................................................................................................................... 45
5.3 Marketing...................................................................................................................................48
5.4 Own interpretation and model................................................................................................... 50
6. Conclusions....................................................................................................................................... 53
6.1 Conclusions............................................................................................................................... 53
6.2 Theoretical contributions...........................................................................................................55
6.3 Managerial implications............................................................................................................ 56
6.4 Research outlook....................................................................................................................... 57
7. References......................................................................................................................................... 58
8. Appendices........................................................................................................................................64
Appendix 1 : Interview guides.........................................................................................................64
List of Tables and Figures
Figure 1: Our own interpretation of the relationship between the empirical material
Table 1: Overview of the theoretical framework
Table 2: Conducted interviews
Table 3: How digital tools and platforms have helped the respondents' internationalization
processes.
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1. Introduction
The introduction chapter first off presents the reader with a brief background on the topic,
involving the interplay of digitalization and internationalization. This is followed by a
problem discussion that brings up the existence of both practical- and theoretical
shortcomings on the subject, indicating that further research is needed to better understand
how digitalization affects internationalization. With the problem discussion in mind, the
purpose of this study is declared, along with the research question that will be examined and
the delimitations of this study. The chapter ends with a thesis structure, outlining the format
of this report.
1.1 Background
Traditionally, the process of internationalization has been described as a gradual expansion of
a firm's international presence and commitment such as the Uppsala model (Johanson &
Vahlne, 1977). This model has undergone revisions to account for changes in economic and
regulatory environments, emphasizing the importance of networks and knowledge in firms'
internationalization processes (Johanson & Vahlne, 2009). In recent years, research has
revealed new models of internationalization, in which firms are able to expand internationally
in a shorter period of time compared to the traditional models (Rennie, 1993; Knight &
Cavusgil, 1996; Oviatt & McDougall, 2005). These firms are commonly referred to as "Born
Globals", denoting small, and medium-sized enterprises (SMEs) that adopt a global approach
immediately upon establishment (Wictor, 2012). As it happens, there seems to be a
significant correlation between those born global firms and technological firms (Kudina et.
al., 2008). Technological change is an essential factor in ensuring organizational success
(Dicken, 2015), whereas digitalization is a vital element of technological change (McKinsey,
2018). From a firms’ point of view, digitalization is about how digital technologies are
utilized in order to change a business model and provide new revenue and value-producing
opportunities (Forbes, 2018). Consequently, digitalization has become more relevant in order
for firms to remain competitive in today's global economy (Bughin et al., 2018). Successfully
navigating and utilizing digital tools and platforms will therefore be of utmost importance for
firms to achieve success (Bughin et al., 2018).
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Digitalization poses both challenges and opportunities that firms must contend with when
internationalizing (Schmitt & Baldegger, 2020). First off, digital tools offer multiple
opportunities for international firms, particularly SMEs seeking to succeed in foreign markets
(Schmitt & Baldegger, 2020). With the increasing use of digital technologies, companies are
able to create new opportunities for growth, enhance their operational efficiencies, and
improve their customer experiences (Bughin et al., 2018). As a result, digitalization has led to
new opportunities for SMEs wishing to expand globally by enabling lower risk entry modes
such as direct exports and special offerings (Schmitt & Baldegger, 2020). Furthermore, by
leveraging machine learning and digital effects, SMEs can optimize their global value chain
and enhance the attractiveness of their entry mode by targeting niche markets with
innovative, high-quality products and services. Digital platforms provide crucial databases for
firms, offering new ways to reach potential customers. Additionally, digitalization encourages
skill sharing, open innovation, and partnership formation between companies, with a resultant
blurring of lines between internationalization and digitalization (Schmitt & Baldegger, 2020).
However digitalization also poses challenges that firms must contend with such as being
forced to undertake significant changes in strategy, structure, and corporate culture.
Companies are also required to develop a fresh international value proposition based on an
integrated digital strategy. To conclude, with the growing interconnectedness between
internationalization and digitalization it is safe to say that digitalization is shifting the borders
in a way that necessitates the development of new borderless internationalization concepts
(Schmitt & Baldegger, 2020).
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1.2 Problem discussion
As evident from the background, the revolution and continuous evolution of digital
technologies are transforming the way organizations operate in the present-day globalized
economy, providing firms with new opportunities to expand internationally at earlier stages
and at faster rates (Coviello et al., 2017). Digitalization is seen as a key enabler in
internationalization processes for SMEs in particular (Gawel et al., 2022), as these firms in
the past have been a lot more limited due to their lack of resources, limited knowledge about
foreign markets and limited access to international networks. However, in order to take full
advantage of technological advancements a certain level of expertise is necessary, and
disparities between the technologies available and the competencies of many firms are
noticeable. This issue arises due to both practical- and theoretical shortcomings (Hervé et al.,
2020). From a business point of view, most managers currently have a very limited
understanding of digitalization trends and the opportunities these can produce (Hervé et al.,
2020; Feliciano- Cestero et al., 2023). This lack of knowledge limits the effectiveness of
these firms' decision-making processes and reduces their speed of internationalization
(Neubert, 2018). On the theoretical front, the scientific community within the international
business field also acknowledges that existing theories have not adequately adapted to the
opportunities and challenges presented by digital environments (Hervé et al., 2020). Even
though there is growing anecdotal evidence of how digitalization has posed challenges to
international business theory and traditional internationalization methods, there is a scarcity
of literature that delves into how digitalization has affected and challenged International
Business Theory (IBT) more specifically (Autio et al., 2021).
To enhance our comprehension of the influence of digitalization on internationalization
processes, it is imperative to conduct further qualitative research. Further research should
therefore empirically examine the specific effects of different digital technologies on various
facets of internationalization (Hervé et al., 2020; Feliciano-Cestero et al., 2023). Case-based
studies and interviews with key stakeholders involved in digitalization processes can provide
valuable insights into their perspectives on the interplay between digitalization and
internationalization (Feliciano-Cestero et al., 2023). Exploring the role of the digital economy
as a facilitator in SME growth, investigating the dynamic nature of digital platforms, and
understanding the implications of advanced technologies such as artificial intelligence and
data analytics on internationalization processes are all important areas for empirical research
(Feliciano-Cestero et al., 2023).
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1.3 Purpose of the study
The purpose of this study is to extend the understanding of how SMEs utilize digitalization in
their internationalization process. To this purpose, empirical examples from the international
operations of high-tech SMEs in Sweden will be presented and analyzed. The ambition is to
provide examples of how different digital tools and technologies can be used to improve
international processes, as well as to provide avenues for future research.
1.4 Research question
● How do high-tech SMEs in Sweden utilize digitalization in internationalization
processes?
1.5 Delimitations of the study
This study will exclusively rely on cross-sectional data obtained from interviews conducted
with high-tech SMEs, aiming to capture their experiences and insights regarding the
interaction between digitalization and internationalization. However, this approach has
inherent limitations in studying potential long-term and dynamic effects that may arise during
different stages of firms' internationalization processes. A longitudinal study with an
extended time frame could better capture such effects. Furthermore, the study's scope is
constrained to case studies of five companies, which restricts the generalizability of the
findings to larger populations. Lastly, it is important to acknowledge that the study is centered
solely on companies originating from Sweden. Consequently, the work practices and routines
analyzed in this report may be influenced to some extent by underlying factors, such as
national laws and regulations (e.g., intellectual property) and macroeconomic conditions that
create diverse opportunities and support systems through institutional initiatives.
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1.6 Disposition of thesis
The thesis is structured as follows:
1. Introduction - Provides background information along with a problematization of the
topic discussed in the report. Furthermore, the purpose of the study, the research
question and limitations are also presented.
2. Theoretical Framework - The theoretical framework provides insight into previous
research and theories that are relevant for the study. Three subchapters are contained
within the framework: Digitalization and Internationalization, Born global theory and
Network theory.
3. Methodology - This chapter explains our choice of methods, as in, how the data was
collected, how data were analyzed and the type of research approach utilized in the
study.
4. Empirical material - This section aims to present the empirical findings gathered from
the interviews held in order to manage answering the research question.
5. Analysis - A chapter that discusses and analyzes the empirical findings in relation to
the theoretical framework in order to detect similarities and disparities.
6. Conclusions - Finally, a chapter that summarizes the thesis with conclusions as well as
suggestions for future research is provided.
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2. Theoretical framework
This chapter first off presents a section related to Internationalization, including an
introduction to relevant traditional internationalization theories, the importance of networks
for internationalization processes followed by a description of Born global firms. Thereafter,
a section related to Digitalization is provided which explains how the use of digital
technologies has made it easier for firms to connect with customers, partners and suppliers
from different parts of the world. It also aims to explain how firms can manage their global
operations more efficiently facilitating a faster and smoother internationalization process.
2.1 Internationalization
2.1.1 Traditional internationalization process theory
One of the most influential and widely mentioned models in International Business and
Management research is The Uppsala Model, often called “the stage model” (Johanson &
Wiedersheim-Paul, 1975; Johanson & Vahlne, 1977; Johanson & Mattson, 1988). The
internationalization process is traditionally described as gradual and incremental, where firms
gradually acquire new knowledge and experience within foreign markets by interacting with
local actors (Johanson & Mattson, 1988). The stage model suggests that firms normally start
their expansion in close proximity to the home market where they have accumulated
knowledge of the market and obtained a higher control of resources, thereafter when the firm
has become more experienced and acquired better resources, they expand to the more distant
market (Johanson & Wiedersheim-Paul, 1975; Johanson & Vahlne, 1977; Johanson &
Mattson, 1988).
However, the changes in Business environment during the last 20 years has had a significant
impact on the theory’s development (Johanson & Vahlne, 1977; Johanson & Vahlne, 2009).
There have been enormous advancements in telecommunication, production technology and
transportation, but one of its largest critics has been its simplification of networks and the
neglect of institutions and contexts. The traditional models have only broached upon the topic
of networks. Johanson & Mattson (1988) explained that companies operating with similar
products and geographical markets have stronger linkages than those operating in different
markets, although networking across geographical borders is crucial to successful
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internationalization (Johanson & Mattsson, 1988). Further, a long relationship between a
company and a customer is beneficial as it allows for the continuous exchange of information
and knowledge, which could also be implicated between business relationships (Johanson &
Mattsson, 1988). However, the traditional models have been revised in order to keep up with
the changes in economic and regulatory environment, as well as the critique related to the
neglect of networks (Johanson & Vahlne, 1977; Johanson & Vahlne, 2009). Hence, the
importance of networks will be further explained in the next subchapter.
2.1.2 Network theory
Multiple scholars have discussed the importance of business networks in relation to
internationalization (Johanson & Vahlne, 2009; Juttner & Schlange, 1996; Hadley & Wilson,
2003). Johanson and Vahlne (2009) suggests that all companies should be considered to be
part of networks, whereas the issue for companies when internationalizing is no longer to
engage in the markets they can most easily understand but to integrate into existing business
networks where one or more members already are engaged and established internationally
(Johanson & Vahlne, 2009). Establishing a network is a crucial element for companies
seeking to collaborate with customers and suppliers in an international market (Johanson &
Vahlne, 2009; Hadley & Wilson, 2003; ). By participating in a network, firms can acquire
access to important information, knowledge, and resources from other companies within the
network, including insights into foreign markets (Johanson & Mattsson, 1988; Hadley &
Wilson, 2003). Internationalization through the network model is a natural progression where
relationships with foreign and domestic actors contribute to business opportunities across
borders (Johanson & Vahlne, 2009). In turn, networks could be seen as facilitators for
internationalization since they provide information that is difficult for firms to obtain unless
the network existed (Johanson & Vahlne, 2009).
There is a saying that, “being part of a network is more beneficial than to risk becoming an
outsider” (Johanson & Vahlne, 2009). In order to be included in a network, one must consider
how to join. Normally, interactions with only one company within the network is considered
enough and could be developed into a beneficial relationship (Johanson & Vahlne, 2009).
Thereafter, companies must remain attentive about their contacts within the network since
they can have a significant impact on their internationalization decisions (Juttner & Schlange,
1996). Even though the traditional models were revised to account for business networks, the
constantly evolving business landscape once again necessitated new perspectives and models
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in order to comprehend the current. Therefore, In recent years, research has revealed new
models of internationalization, in which firms are able to expand internationally in a shorter
period of time compared to the traditional models (Rennie, 1993; Knight & Cavusgil, 1996;
Oviatt & McDougall, 2005). This phenomenon, called Born Globals will be outlined in the
following subchapter.
2.1.3 Born global theory
According to Weerawardena et al. (2007), the distinguishing factors of born globals are their
accelerated internationalization processes and, as their name suggests, that the global
perspective is present from the start within these companies (Gabrielsson et al., 2005). Other
commonly cited characteristics include the founders' international experience (Oviatt &
McDougall, 2005), internationalization within two to three years of establishment (Rennie,
1993; Knight & Cavusgil, 2004), entry into at least two international markets during that
period (Oviatt & McDougall, 2005), and growth through alliances and partnerships (Freeman
et al., 2006). Furthermore, they are frequently situated in small, open economies with limited
domestic markets (Luostarinen & Gabrielsson, 2006), and the majority are knowledge-based
organizations (Bell et al., 2003). The born global firm and related theories are a modernized
approach to internationalization that suggests that firms can achieve rapid internationalization
from the outset by leveraging digital technologies and networks. The term “born global” was
first proposed by Rennie (1993) who upon conducting a study on exporting firms in Australia
observed that some of the firms were able to internationalize at a rapid pace without first
establishing a domestic market presence. Instead, these firms used digital technologies to
access and serve customers in different countries without the need for physical presence.
This “born global” phenomenon has attracted a lot of academic attention within the
international business field partly due to its contrast to traditional internationalization theories
(e.g., Johanson & Vahlne, 1977). According to certain authors, such as Oviatt & McDougall
(1994), the traditional internationalization models are not applicable to the rapid
internationalization processes of born globals. However, other studies have demonstrated that
born globals do follow traditional incremental models of internationalization but at a quicker
pace, in reverse order, or by omitting some steps, as argued by Coviello & Munro (1997) and
Luostarinen & Gabrielsson (2006). Studies have also revealed that high-tech companies are
more likely to be born globals (Kudina et al., 2008), and digitalization is viewed as a crucial
enabler of the born global phenomenon (Hagen & Zucchella, 2014). In conclusion, the
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distinguishing feature of Born Global firms is their ability to rapidly internationalize from the
outset of leveraging digitalization. In order to fully understand the unique characteristics of
such firms, it is necessary to understand the role of digitalization in firms internationalization
processes. Thus, the following subchapter will discuss the contributions of digitalization to
this matter.
2.2 Digitalization
2.2.1 Digitalization has made it easier for firms to integrate into targeted networks
The digital environment calls into question the fundamental principles of network theory,
forcing us to reconsider how we actually conceptualize cross-border relationships (Hervé et
al., 2020). The increasing number of players on both sides as buyers and sellers is the cause
of this change. As a result, SMEs are now able to incorporate consumers into their networks
and establish direct communication with them, allowing them to include customers as sources
of important data and product input. Because of the rising number of interactions between
businesses and customers brought about by digital technology, the relationship between the
two parties is redefined in many ways and undergoes drastic changes. These activities are
happening at a faster rate, which enables companies to simultaneously expand into multiple
overseas markets and adjust to the market more quickly. This trend increases market reach
and provides improved access to regional partners and market participants (Hervé et al.,
2020). An extensive virtual worldwide "market" for trade involving social and commercial
activities has begun to emerge as a result of the increased use of the Internet (Hervé et al.,
2020). As a result SMEs now have more opportunities for international trade since data flows
have shifted their focus from production to exchanges. Furthermore, SMEs have additional
opportunities for integrating targeted networks by exchanging knowledge and expertise with
partners. Decision-makers should establish procedures to organize interactions formed with a
diverse variety of actors, both internally and externally, in order to sustain these exchanges
(Ibid).
Small businesses should strive to expand their user bases across several countries while
consistently utilizing the social media and mass media platforms that are set up in those
nations. Working with opinion leaders in international marketplaces is advised to accomplish
this. These public figures can operate as integrators in global user communities and social
media, assisting companies in establishing their online identities and gaining recognition
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quickly, which accelerates the internationalization of SMEs. Additionally, businesses may
now save operating expenses and could thereby enhance communication and interaction with
all stakeholders - including partners, suppliers, distributors, and customers thanks to digital
technologies. According to Hervé et al. (2020), these options include co-creation, open
innovation, skill sharing, and company partnerships.
2.2.2 The effects of digitalization on firms market knowledge
As mentioned earlier, theories based on the stage model of internationalization suggest that a
firm's speed of internationalization is influenced by its capacity to learn new information and
gain knowledge about the market (Johanson & Mattson, 1988). But since internet exchanges
have grown in popularity recently, a lot of data can be collected to help business to better
understand their customers' wants and tailor their offerings and services (Hervé et al., 2020).
In addition, the utilization of digital technologies like 3D printers and the Internet of Things
(IoT) makes it easier for clients to customize items and gives them more control over the
product's design and manufacturing location. These technologies provide businesses with
experiential knowledge that can support them in meeting end-user requirements better (Ibid).
The acquisition of experiential knowledge can directly contribute to the international strategic
success of individual firms (Fletcher et al., 2013). By integrating the concepts of Lean
Entrepreneurship with digital tools like big data and analytics, businesses may launch market
experiments faster and across more nations. This enables them to immediately test and gain
feedback on products and services from potential clients wherever they may be in the world.
By utilizing the market knowledge acquired from these tests, businesses can adapt their offers
to better meet customer expectations (Hervé et al., 2020).
Furthermore, companies can often launch enhanced iterations of their goods and services by
utilizing the knowledge gathered from user reviews and comments posted on social media or
user community platforms. The increased use of digital technologies and online apps has
increased accessibility to content sharing, enabling businesses to better focus their marketing
campaigns and plan ahead (Ibid). As a result, it is believed that communication with these
user groups is essential to market adaptation campaigns because it makes SMEs more
adaptable and proficient at putting required policies into place (Hervé et al., 2020).
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2.2.3 Digitalization has lead to reduced costs, resource allocations, time savings and
improved competencies
The costs linked to insufficient knowledge about a market are related to the concept of
"liabilities of foreignness" (Zhou & Guillen, 2016). Businesses have the potential to leverage
digitalization to mitigate the risks associated with the costs related to these liabilities of
foreignness (Yuliia, 2023). Furthermore, technological advancements have facilitated the
dematerialization of manufacturing and distribution networks, enabling businesses to reduce
transaction costs in international marketplaces (Hervé et al., 2020). By altering the
management of globally distributed value chains, for instance, the usage of IoT can lower the
costs related to global production. By utilizing digital solutions, SMEs can also drastically
lower the assets required for operations and the expense of location specificity. Digitally
active SMEs operating in international markets can create new revenue streams without
substantial investments by executing commercial activities remotely (Hervé et al., 2020).
In addition digitalization results in reduced transaction times, better decision-making
procedures and resource allocation across a number of marketplaces. SMEs must continue to
have a competitive edge that distinguishes them from regional rivals on a global scale. They
can accomplish this by working with regional distributors who are already a part of a vast
network, or by focusing on specialized areas and providing unique, premium products (Hervé
et al., 2020).
2.2.4 Borders and locations becomes less relevant
The way businesses operate internationally has undergone substantial change as a result of
the digital revolution (Dicken, 2015). Nowadays, businesses can target numerous nations at
once and reduce psychological distances by managing their worldwide activities online
(Hervé et al., 2020). Moreover, user communities and corporate networks are taking the lead
in more and more global operations. The location and structure of industrial production have
also changed globally as a result of digital technology, pushing businesses to prioritize client
proximity over production costs. More transferability of firm-specific assets is also provided
by digitalization, which lessens SMEs reliance on location-bound assets in both their home
and host nations (Ibid). Therefore, it is recommended that SMEs benefit from the quick
access to global trade that digitization offers.
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Businesses can manage their operations remotely and reach a greater number of markets with
the same productive resources by externalizing location-specific assets and utilizing digital
technologies. But SMEs suffer new challenges when entering foreign markets because of the
"liabilities of outsidership". A lack of connections with other businesses in the new market
makes it difficult for them to integrate into the local business community (Ibid). SMEs can
use digital platforms to create and continually uphold user networks in order to overcome
these challenges. While the systems are easily replicable across borders, user bases are more
challenging to move. Therefore, in order for SMEs to become established in international
markets, they must swiftly achieve a significant number of users. If this is not done it could
limit future interactions and make it more difficult to enter the market (Hervé et al., 2020).
2.2.5 Data privacy and cyber threats in the digital age
In the era of digitalization, data privacy has emerged as a critical concern for businesses,
particularly for high-tech firms engaged in internationalization processes. As these companies
increasingly rely on digital tools and technologies, such as cloud computing and big data
analytics, they also face heightened risks related to data privacy and cyber threats (Kshetri,
2010; Wang et al., 2018). Data privacy refers to the right of individuals and organizations to
control how their personal or sensitive information is collected, used, and shared. In the
context of international business, data privacy is not only a matter of ethical business conduct
but also a legal requirement. Different countries have different regulations regarding data
privacy, and companies operating in multiple jurisdictions must comply with these varying
standards (Carter, 2019). Cyber threats, on the other hand, refer to potential attacks on a
company's digital infrastructure with the intent to steal, damage, or disrupt digital assets.
These threats can come in various forms, such as malware, phishing, and denial-of-service
attacks, and can have severe consequences for businesses, including financial loss,
reputational damage, and legal penalties.
International regulations play a significant role in shaping data security practices among
firms. Regulations such as the General Data Protection Regulation (GDPR) in the European
Union set stringent standards for data protection and impose heavy penalties for
non-compliance. These regulations not only increase the compliance burden for companies
but also create opportunities for businesses specializing in cybersecurity and data protection
services (Wachter, 2018).
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2.3 Summary
As previously stated, Born global firms stand out from other firms in the way they employ
digitalization in their internationalization processes. However, this in itself, is a very broad
subject. Thus, the impact of digitalization on firms’ internationalization processes has been
categorized into five aspects, namely market knowledge, networks, competencies, reduced
significance of locations and borders and data privacy. In order to get a comprehensive
understanding of how, precisely, digitalization can improve firms’ internationalization
success based on these five aspects, the theoretical discoveries will be summarized below in
Table 1.
The effects of Digitalization on Firms Internationalization processes.
Networks There has been a shift in the dynamic between companies and their customers. In
order to integrate into targeted networks, SMEs can now take advantage of data
flows and skill sharing via online apps and digital technologies. For businesses to
engage and communicate with partners inside a network, digital technologies offer
new opportunities including skill sharing, open innovation, and co-creation (Hervé
et al., 2020).
Market Companies can comprehend client wants and provide more individualized services.
knowledge For instance, Digital technologies such as the Internet of Things and 3D printing
offer basic experiential knowledge. It is easier to obtain customer feedback, which
helps businesses improve their products and services. Moreover, digital
technologies and online apps facilitate content sharing, which could improve their
targeted marketing (Hervé et al., 2020).
Competencies Digitalization has made it possible to allocate resources more efficiently across a
number of markets, save transaction times, and improve decision-making processes.
(Hervé et al., 2020). SMEs are able to lower their international operating expenses
and control the risks related to their "liabilities of foreignness" thanks to certain
digital tools and platforms (Yuliaa, 2023).
Locations and Digital technologies have greatly reduced the psychological distance to clients.
borders Firms could manage their activities remotely and reach a large number of markets
with the same resources as before. Digital platforms can also assist businesses in
overcoming the challenge of "liabilities of outsidership” (Hervé et al., 2020).
Data privacy The digital era has brought with it new challenges for firms. As firms rely more
and cyber heavily on digital solutions the occurrence of data privacy risks and cyber threats
threats increase (Kshetri, 2010; Wang et al.,, 2018). Regulations like the GDPR sets strict
data protection standards for companies, which increase the compliance burden
while also creating opportunities for new business models (Wachter, 2018).
Own table: Table 1 - Overview of the digitalization section.
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3. Methodology
This chapter focuses on describing the research methodology employed in this Bachelor
thesis. It outlines the process that has guided the development and design of the study, and
generated knowledge about the issue at hand. The methodology chapter aims to provide
clarity into the specific process that has resulted in the final conclusions presented in this
thesis.
3.1 Research approach
3.1.1 Abductive approach
The aim of this study was to explore how Swedish SMEs utilize digitalization in their
internationalization processes, drawing comparisons between existing literature and practical
examples. To achieve this, we adopted an abductive research approach, which allows for a
dynamic interplay between the deductive and inductive methods. This approach does not
strictly adhere to either empirical data or theoretical framework as the sole driver of the
research process. Instead, it permits a fluid transition between the two as needed, facilitating
a comprehensive analysis of both theory and empirical material to identify similarities and
disparities (Alvesson & Sköldberg, 2008). During the data collection phase, we encountered
several unexpected findings. To interpret these we turned to existing research for insights, a
process well-aligned with the abductive approach, which is particularly suited for explaining
unexpected phenomena (Bryman & Bell, 2015). This was apt for our study, given its focus on
understanding the influence of digital tools on various internationalization processes.
To further enrich our research, we incorporated multiple case studies, enhancing the depth of
interaction between the researcher, the field, and the interplay between data and theory. As
we progressed with the interviews, it became apparent that our theoretical framework needed
to be restructured to better align with the empirical material gathered. Upon completion of
data collection and analysis, we revisited the theoretical framework, interpreting it in light of
our findings. To aid comprehension, we presented the interpreted framework in a table,
providing a clear and concise overview of the topic under investigation. We employed a
similar strategy for the empirical material, summarizing the findings in a table for easier
understanding. These tables not only facilitated comprehension for the readers but also
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provided us with deeper insights into the phenomena under discussion. These insights were
subsequently utilized in the Analysis section, where we alternated between theory and
empirical material to further elucidate the issue under investigation. This iterative process of
revisiting and refining our understanding of the theory in light of empirical findings is a
testament to the flexibility and depth offered by the abductive research approach.
3.2 Research method
3.2.1 Qualitative method
The objective of this study is to “extend the understanding of how SMEs can leverage
digitalization in their internationalization process” which aligns well with the characteristics
and goals of qualitative research. Qualitative research is a methodology aimed at
comprehending human behavior, experiences, and beliefs by analyzing non-numerical data
gathered through open-ended interviews, observations, and other sources (Creswell, 2018).
One important factor of qualitative research is its ability to delve into complex social
phenomena that are challenging to quantify. This allowed us to gain a deeper understanding
of the participants' perspectives, experiences, and behaviors, providing unique insights that
quantitative methods would struggle to capture (Creswell, 2018). Thus, a qualitative research
method was deemed the most suitable as it facilitates a thorough and nuanced exploration of
the topic at hand.
Furthermore, qualitative research offers flexibility and adaptability, allowing adjustments to
the research question, method, and data collection techniques as the study progresses. This
flexibility is particularly valuable when addressing complex questions (Creswell, 2018). In
this study, qualitative research's flexibility was beneficial for two reasons. First, the intention
was to maintain open-ended interviews to emphasize participants' experiences and
perspectives rather than steering the direction and outcome of the interviews. Qualitative
research enables the report's direction to be adjusted more easily, aligning with the
philosophy and goals of the study. Secondly, the flexibility inherent in qualitative research
complements the abductive research approach employed in this study.
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Despite its advantages, qualitative research has faced criticism regarding potential
subjectivity and reliance on the researcher's unsystematic views regarding data significance
and relevance. Qualitative research relies on the researcher's interpretation, introducing the
possibility of bias (Bryman & Bell, 2015). To address this concern, deliberate measures have
been taken in this study to mitigate bias, which will be further explained in the Quality of the
Study section (3.7, Confirmability). In short, these measures include a case study design
involving semi-structured interviews with open-ended questions, repeated data interpretation,
peer reviews, and the involvement of two researchers. Thorough analysis and interpretation
of the data, along with the inclusion of multiple researchers in the analysis process, are
considered effective approaches for mitigating bias (Bryman & Bell, 2015). Another
limitation of qualitative research is its limited generalizability (Creswell, 2018). Typically,
qualitative research involves small sample sizes, which restricts the generalizability of
findings to larger populations. This study's sample includes five companies, and we are aware
of this potential limitation. However, this limitation can also be seen as a one of the factors
that enable more in-depth exploration of the issue at hand.
3.3 Development of theoretical framework
To construct a theoretical framework, researchers may draw upon various sources of
literature. These sources can be categorized into secondary, tertiary, and primary sources
(Adams et al., 2014). Secondary literature which is derived from pre-existing sources, such as
books and journals, can be a time-efficient option since it is readily available. Academic
journals are the most commonly used source, as they are peer-reviewed for quality and
relevance. Tertiary sources, such as search engines and databases, can also be used to gather
information by searching subject directories using keywords. Primary sources such as
original documents and theses can also be utilized, but are generally more difficult to locate
or time-consuming to establish.
In the development of our theoretical framework the initial goal was to get a general
understanding and a good overview of the topic at hand. To this end, the first objective was to
research the subject through literature reviews (eg., Knight & Liesch, 2016; Hervé et al.,
2020) and to create a list of relevant secondary sources that could create value for this report.
This was implemented through the use of various tertiary sources, such as the Gothenburg
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University Library and Google Scholar, in conjunction with a keyword researching process
with a variety of terms primarily related to digitalization and internationalization. The initial
research laid the foundation of this paper and allowed us to explore certain topics within this
framework at a deeper level, which we did by branching out from the literature reviews and
examining associated links and references. During the course of our research, we made
significant advancements that necessitated the incorporation of additional elements into the
theoretical framework. For instance, we recognized the importance of including a dedicated
section addressing data privacy and cyber threats. To delve into these specific aspects, we
relied on primary sources such as prior studies. This aligns with our abductive research
approach.
3.4 Method for empirical material collection
3.4.1 Sampling
In order to compile a list of potential participants for our case studies, we utilized a mix of
online searches, databases such as Gothenburg University's Retriever Business, and referrals
from industry associations like Business Sweden. Our selection strategy was guided by
purposive sampling, a non-probability sampling technique that allows for the selection of
participants based on specific criteria relevant to the research question (Bryman & Bell,
2015). Unlike probability sampling methods, where participants are selected randomly from a
larger population, purposive sampling involves a more targeted approach that selects
participants based on their knowledge, experiences, or characteristics. The aim of purposive
sampling is to ensure that the firms included in the study are the most relevant to the research
question. As such, this method is commonly used in qualitative research, where the objective
is to gain in-depth insights into a specific phenomenon (Bryman & Bell, 2015).
For this study specifically, the use of purposive sampling enabled us to intentionally target
Swedish SMEs that have both an international presence and substantial experience in
digitalization matters, thereby increasing the probability of acquiring information that is
richer and more relevant to the study. To this end, a list of sampling criteria were formulated
based on the research question (How do SMEs in Sweden utilize digitalization in their
internationalization process?). By examining this question four components can be
identified, namely SMEs, Sweden (Swedish firms), digitalization, and internationalization.
These four components evolved into our sampling criteria.
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Sampling criteria
● The company must be categorized within the limits of SMEs.
● The company (parent company) must originate from Sweden.
● The company should be considered digitally advanced.
○ i.e., having a business model that is heavily dependent on digital solutions and
advanced technologies, for example related to AI, IoT, or Cloud computing.
● The company must be active on an international level.
○ i.e., marketing activities scaling across countries, customers from multiple
countries, subsidiaries in foreign countries etc.
When we had a sample of firms the next step was to find individuals within these firms that
were involved in both digitalization and internationalization processes, and particularly with
an understanding of the synergy between these processes. To achieve this the potential
participants were, when first contacted, informed of the study’s purpose along with the topics
that would be discussed during the interview. In addition to being asked about their
willingness to participate in an interview, the potential interviewees were also asked if they
had any personal experience/knowledge about these processes and if they in that case were
interested in sharing these experiences, and in the opposite case if they could recommend
someone else from the firm with more involvement in digitalization and internationalization
processes. Further information about the interviews, including the firm industries and the
roles of their representatives, is presented in Table 2 below.
Interview Respondents, sector Interview platform Length of Interview
interview reference (date)
A CEO, logistics Teams 45 minutes 2023-04-04
B CEO, insurance Google Meet 40 minutes 2023-04-05
C Sales executive, Teams 35 minutes 2023-04-11
e-commerce
D CTO, 3D-printing Google Meet 45 minutes 2023-04-13
E CEO, ICT Teams 40 minutes 2023-04-14
Table 2: Conducted interviews
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3.4.2 Case study design
To gather the in-depth qualitative data we were after, the case studies were conducted through
interviews with the firm representatives. Interviews serve as a powerful method for collecting
rich and detailed data on the experiences and perspectives of key stakeholders on specific
topics (Cooper & Schindler, 2014), in this paper being the topic of interaction between
digitalization and internationalization. However there are several interview formats available,
including structured, unstructured, and semi-structured interviews, each with its own set of
advantages and disadvantages which were considered in an attempt to find the most suitable
approach.
Structured interviews involve a predetermined set of questions that are asked in a
standardized manner to all participants. This format is useful for collecting quantitative data
or when comparing responses across participants (Cooper et al., 2014). However, it can limit
the depth and richness of the data collected, as the responses are restricted to a predetermined
set of questions. A structured interview format was therefore ruled out, as the characteristics
of this format do not align well with the purpose of this study. The decision between an
unstructured or semi-structured interview format was considered more in depth.
Unstructured interviews are more flexible and open-ended in nature, with no predetermined
set of questions or order in which they are asked. Instead, the interviewer guides the
conversation based on the participant's responses, allowing for in-depth exploration of the
participant's thoughts and experiences (Cooper & Schindler, 2014). Unstructured interviews
provide rich and detailed data, but can be challenging to analyze due to the lack of structure
and standardization. Semi-structured interviews, on the other hand, provide a balance
between structure and flexibility. They involve a set of open-ended questions, but the
interviewer has the flexibility to follow-up and probe for more information as needed.
Semi-structured interviews allow for some standardization and comparability across
participants while also allowing for exploration of the participant's experiences (Cooper &
Schindler, 2014).
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For this thesis the most important aspect was the ability to explore the experiences and
perspectives of key stakeholders involved in both digitalization- and internationalization
matters, making both unstructured- and semi-structured formats appropriate. The matter of
structure and standardization became the deciding factor. On one end the flexible nature of an
unstructured format has the potential to allow a more in-depth exploration of the subject, but
on the other end the lack of structure may lead to information that is less relevant to the
research question. Since the objective of this study is rather specific (to learn how firms
utilize various digital tools in specific processes related to internationalization), the decision
was made that some form of structure was necessary to make the interviewees stay on topic.
Moreover, the ability of semi-structured formats to grant some standardization was seen as a
positive, as this would allow for more comparability in the analysis. The possibility to make
better comparisons of how the participating firms tackle similar scenarios in an international
setting, with the use of digital tools, could potentially lead to some insightful observations
and consequently some interesting conclusions.
The interviews were structured around the 10 open-ended questions presented in Appendix 1:
Interview guides. Although as exploration was an important factor these questions were
merely a guideline. The objective of the interviews was to let the interviewee steer the
direction of the discussions, as long as they stayed within the limits of the framework. This
was done to better capture the essence of what these individuals deemed as the most
important aspects in the interplay between digitalization and internationalization. Some
questions were therefore deemed less important in some interviews, and various follow-up
questions relevant to the topic were added in as seen fit. Furthermore, all the interviews were
conducted online through video conferencing platforms and the decision was mainly based on
convenience factors for all involved actors.
3.5 Quality of the study
This chapter includes an assessment of the quality of this thesis. For a qualitative study, it is
essential to evaluate its trustworthiness, which can be achieved by the following four
criterias: Credibility, Transferability, Dependability, Confirmability (Guba & Lincoln, 1994).
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The criteria Credibility is concerned with the truth-value of the study and ensures the readers
confidence in the accuracy of the findings (Guba & Lincoln, 1994). In the present thesis,
“triangulation” has been utilized in order to ensure the credibility of the study. This has
allowed for going back and forth and implementing various sources in order to strengthen the
credibility of critical empirical findings.
The criteria Transferability evaluates whether the findings in turn could be applied in other
contexts, thus it could be described as a criterion for applicability (Guba & Lincoln, 1994). In
order to enable the readers to evaluate whether the study’s findings can be considered
applicable to their own setting, we have provided a so-called “thick description” (Guba &
Lincoln, 1994). Further, the outline of our conceptual model helps the reader when making
projections about the likely transferability of the findings of this report, thus it could be seen
as analytically generalizable (Yin, 2009). Considering this report is of qualitative nature, it
should by no means however, be considered statistically generalizable. Finally, it is also made
sure that a transferability judgment can be easily made by the reader by, for example,
discussing the delimitations, theoretical contributions and outlook for future research.
The Dependability criterion represents a fundamental requirement for research results to be
considered trustworthy, as it ensures that the findings remain consistent and replicable in the
event of the study being repeated (Guba & Lincoln, 1994). In the present thesis, the research
process has been described and documented in detail. For instance, rough drafts of the thesis
at various stages of the development have been preserved. Further, all interview transcripts
and data analysis materials have been stored ensuring that the result of the study would be
equal if the research were to be repeated.
The final criterion, Confirmability, explains the degree of neutrality and the extent to which
the findings of a study are shaped by bias, motivation, or personal interest (Guba & Lincoln,
1994). While complete objectivity is typically not manageable in research (Bryman & Bell,
2015), confirmability aims to minimize the impact of subjective reflections and values on the
study's outcomes (Guba & Lincoln, 1994). In this thesis, we have strived to maintain an
objective perspective throughout the research process. To achieve this, semi-structured
interviews were conducted, meaning that the respondents steered the direction of the
interviews. This approach helped us to avoid influencing the interview responses on our own.
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Further, the transcription of the interviews allowed for repeated interpretation and thereby
reduced the risk of misunderstandings based on personal values.
3.7 Research ethics
As per Bryman and Bell (2015) viewpoint, it is crucial for researchers to recognize and
deliberate on the possible ethical concerns that may arise during the research process. A
generally accepted standpoint is to avoid compelling anyone to participate in research.
According to Collis and Hussey (2009), anonymity encourages honesty and greater
expression, as well as higher response rates. To offer anonymity to participants can ensure
that their identity and ideas cannot be identified without their consent. Another vital principle
is to clearly communicate the purpose and advantages of the research to the participants
which could increase the chances of cooperation. Lastly, it is considered good practice to
share the findings with the respondents after the study is completed (Collis & Hussey, 2009).
Before conducting the interviews, all participants were informed about the purpose of the
study, both in an initial email but also before all the held interviews. None of the participants
were forced to participate, they were all offered an option to decide whether or not they
wished to participate. Some of the respondents expressed reservations about disclosing some
of their more sensitive information. In order to address these concerns we chose to maintain
the anonymity of all respondents throughout the report. This option facilitated a more open
and candid exchange of information, enabling the respondents to express themselves freely
without fear of private data being exposed. A review of the thesis was sent to all participants
before its publication which allowed them to identify any areas they wished to exclude from
the thesis or any content they believed had been misinterpreted. Thereafter, the participants
provided their consent for the utilization of the empirical data as presented in the thesis.
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4. Empirical material
This chapter presents the empirical data collected from the case studies. It begins by
introducing the participating firms, offering a condensed description of their business models
and international initiatives. Afterwards, the section highlights the digital tools and
technologies employed by these firms in their internationalization process. This section is
further divided into three different areas; Networks and Communication, Data Management
and Marketing.
The study involved five companies identified as Company A-E, denoted by the greek letters
Alpha, Beta, Gamma, Delta and Epsilon. In order to provide the reader with a contextual
understanding, a brief introduction of each firm will be presented. This introduction aims to
increase comprehension when later discussing the specific digital technologies employed by
these firms in their respective internationalization processes. Subsequently, since the focus of
this study lies at the intersection between internationalization and digitalization, section 4.2
“How digital technologies are utilized in the internationalization process” will focus less on
the individual firms' value propositions and services in relation to digitalization. The goal of
this approach is to make observations that are more targeted at internationalization initiatives,
as well as to develop conclusions that are relevant to common internationalization processes
(i.e. networking) rather than industry specific (i.e. new business models).
4.1 Introduction of the firms
Alpha, logistics
Alpha, founded in 2017, is a logistics technology company driven by a mission to transform
the logistics industry. The inception of this organization was inspired by the founders'
discovery of the substantial financial losses resulting from ineffective logistics operations and
human errors. At the core of their solutions lies an innovative logtech platform that harnesses
the power of video analysis to make logistic processes more autonomous and accurate, this
type of technology is known as computer vision. By incorporating cutting-edge technologies
like Cloud Computing, AI, and IoT, Alpha's platform offers a comprehensive suite of
advanced tools that enables firms to streamline their logistics processes. Alpha has a
dedicated team of around 15 employees and since their foundation in 2017, they have
developed four foreign subsidiaries, three of them are located in Europe and one in the US.
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Beta, insurance
Established in 2015, Beta is a company dedicated to leveraging modern and cutting-edge
technology in the insurance industry. Their primary focus is on preventing and minimizing
property damage by utilizing advanced sensors with IoT technology. Complementing these
sensors is an intelligent alarm handling system integrated into their “Prevention-as-a-Service”
platform. Data from the connected devices (sensors) is by the use of IoT- and Cloud
technology transferred to the platform, where machine learning algorithms and data analytics
is used to identify potential risk and determine whether it is necessary to alert the user to
prevent potential property damage. Beta has a workforce of approximately 10 people and are
currently operating two subsidiaries in Europe and are in the process of developing a new
subsidiary in the US.
Gamma, e-commerce
Gamma is a company established in 2014 with a team of around five employees that
specializes in scalable content creation for E-commerce. Their primary goal is to automate
the process of copywriting and translation, allowing businesses to allocate more attention to
other critical aspects of their operations. Central to their offerings is a unified platform that
streamlines the collection, updating, classification, and enrichment of product information.
This approach enables companies to reduce costs and achieve faster time-to-market.
Gamma’s solution leverages Natural Language Generation (NLG) and an AI based grammar
algorithm that allows for the generation of accurate texts in 30+ languages, catering to
retailers with multilingual content needs. Additionally, their algorithms optimize the
generated content to enhance search rankings and conversion rates, making search-engine
optimization (SEO) easier. Due to their business model being completely digital Gamma has
not pursued any physical presence through subsidiaries in foreign markets. They do however
have an extensive reach online and cooperate with many large organizations, primarily from
Europe and the US.
Delta, 3D-printing
Delta, established in 2013, is a company specialized in 3D-printing, offering unique tailored
3D-modeling services in order to meet individual or business-specific requirements. Their
focus is on employing experienced 3D designers that deliver cost-effective 3D printing
models compared to traditional manufacturing methods, especially for small production runs
or one-off designs. By using 3D computer-aided design (3D CAD), the company works to
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design and develop various technological components. Delta currently has a committed team
of around 10 employees. Further, Delta leverages an online marketplace, meaning that the
company offers their services to customers worldwide and has expanded globally without the
need for any physical presence abroad.
Epsilon, information- and communication technology
Epsilon, founded in 2010 and with a team of around 15 dedicated members, is a company that
specializes in modern email technology. Their software is used to build the infrastructure
required for efficiently managing substantial volumes of email in motion. This includes
handling both operational and security functions, ensuring smooth and secure email
operations. Dedicated to prioritizing security, Epsilon strives to differentiate itself from
competitors by delivering advanced email protection against phishing, spam, and malware.
They maintain a strong focus on safeguarding email communications and ensuring a secure
environment for their clients. While Epsilon serves the European market from its
headquarters in Sweden, the company has also established multiple subsidiaries in the US to
further expand its presence and better penetrate the American market.
4.2 How digital technologies are utilized in the internationalization process
4.2.1 Networks and communication
First off, all of the participants involved in this study concurred that effective communication
and networking were essential factors in the internationalization process. The emphasis of the
case studies was to examine the impact of digitalization on firms' internationalization
processes, resulting in limited attention given to conventional networking during the
interviews. Nevertheless, some references were made to conventional networking practices.
To begin with, three of the companies, (A, B and C) were partnered with the Swedish
non-profit organization, Business Sweden. Business Sweden has, in several aspects, helped
these firms in their internationalization processes. For instance, the CEO of Company A
stated that "Business Sweden has been a valuable collaborative partner, connecting us with
crucial partners. They acquire much knowledge on effective internationalization strategies
and have accumulated an extensive network through their international operations which they
generously shared with us”.
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The representatives of Company B, C and E agreed upon the importance of non-digital
networking methods. Various types of gatherings and events were identified as important
components of networking for these three companies. The CEO of Company B regarded
events as vital in the context of internationalization expressing that "Conventional networking
at networking events brings an aspect to the relationships we form that digital networking
cannot. For instance, you can tell a lot about a person by their body language and discussion
often tends to be smoother”. The CEO of Company A was of a similar opinion, saying that
“the physical act of meeting people and networking in person could sometimes lead to
stronger connections than what digital meetings could. Digital events have allowed us to
establish numerous beneficial relationships that helped during our internationalization efforts.
Therefore, it is crucial to manage time effectively during these events since the world can be
surprisingly small, and unexpected connections may arise which can prove advantageous in
the future”. However, in order to sustain these relationships, the contacts were stored using
diverse digital tools and platforms. Subsequently, to uphold these newly formed business
relationships, the focus shifted back to digital networking.
Various digital tools and platforms facilitating networking were used. To begin with, the
participants did not share opinions of the most suitable communication tool. Representatives
of Company A, C and E found Teams to be useful when managing communication amongst
colleagues, as well as with clients and partners, especially when faced with the challenge of
arranging meetings with individuals outside of their immediate location or a foreign market.
The CEO of Company A suggested that the deciding factor for what communication tool to
use was not the communication tool itself, but rather the collaborative suite which unlocks a
whole package of cloud based features and tools such as Teams. Collaborative suites provide
an integrated set of tools that span a range of collaboration needs. In addition to simple
services like business email, calendars and messaging, collaborative suites might also offer
modules for managing tasks, projects, contacts and more. The respondent expressed that
“when taking pricing into consideration, I prefer Teams considering Microsoft 365 which is a
collaborative tool, unlocks more cloud-based features compared to the corresponding
offerings by Google’s G suite” On the contrary, Company B and D expressed a preference for
Google Meetings, primarily because of its ease of use and the easy synchronization between
other Google applications, which, once again comes from the collaborative suite (G suite).
All of the participating companies agreed upon that using a collaborative suite such as G
Suite and Microsoft 365 facilitated integration and synchronization between programs,
leading to increased efficiency and time savings.
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Regarding the current digital business environment, representatives of Company A and B
both said that there is a significant challenge in capturing the attention of potential partners
and customers, owing to the huge amount of information that is received to them daily. The
CEO of Company A said that “the current information overload poses a challenge when it
comes to distinguishing between all the incoming information and which that should be taken
seriously”. Consequently, representatives of Company A, B and D found LinkedIn to be an
effective way to initiate contact with partners, collaborators, and customers and it has
supported them in finding links to networks within markets abroad. In contrast, they found
other communication channels, such as email and phone, to often be flooded by automatic
emails and newsletters, leading to difficulties in distinguishing between relevant and
irrelevant information. These difficulties were also confirmed by the CEO of Company E. As
a CEO of a company working with email security, he highlighted the importance for cloud
based email security by saying: “The importance for cloud based email security and spam
security is a very important issue in today's business landscape and the market is constantly
growing”.
Based on the input provided by the five participating companies it also appeared that the use
of a Customer Relationship Management (CRM) platform was crucial for establishing and
maintaining business networks. Typically, a CRM platform facilitates customer interactions,
however, a CRM platform could also help companies manage business contacts remotely,
store contact data and schedule business meetings, thereby facilitating networking processes.
Four out of the five companies (A, C, D, and E) confirmed using a CRM platform. The
representatives of companies A, B, and D reported using it ever since the launch of their
businesses. The CEO of Company A and E preferred the platform HubSpot, mainly because
of their utilization of the free version of Hubspot during the initial stages, whereas, B and C
favored Salesforce, as it was easily adaptable to the Swedish language. The four
representatives shared a common experience of growing together with the CRM platform.
The CTO of Company D explained that “It is, in my opinion, a highly essential digital
platform as it gives us the opportunity to share and obtain data and skills within the network”.
When it comes to sharing data and skills within a network, “network” refers to partners and
collaborators and not by any means competitors. According to the CEO of Company A, a
CRM platform provided the best foundation for saving business contacts and storing contact
data after different forms of events and gatherings.
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4.2.2 Data management
Digital tools to effectively collect, handle and analyze large amounts of data were another
recurring factor of importance in the internationalization process among these firms. The
terminology of this data management field is vast and consists of a wide array of different
subdivisions, and due to differences in definitions by both actors and platforms it can be
challenging to objectively differentiate between the purposes of some of these digital tools.
To make it more comprehensible, empirical material of the participating firms' various data
management solutions will here be presented through three distinct processes, data
collection, data storage and data analytics. The topics will be ordered in a manner of
relevance, based on observations from the case study.
Data analytics
Out of the three data management components, solutions related to data analytics were
discussed the most when the participants were asked about how digitalization has enhanced
their internationalization process. These solutions include various business intelligence- and
business analytic tools, with platforms such as Qlik Sense, Microsoft Power BI and Tableau.
Company B and E both used Qlik Sense for analytical purposes and found this to be an
effective and easy-to-use tool. By employing this data analytic tool, Company B and E could
conduct extensive analyses of their internal data, such as key performance indicators, sales
figures, customer demographics, and operational metrics. The ability to create graphs, charts,
and other visualizations was said to facilitate a more intuitive and accessible interpretation of
this data, allowing them to identify patterns, trends, and correlations within their international
operations. With this comprehensive understanding, the companies were empowered to make
informed decisions regarding their internationalization strategies, such as identifying new
market opportunities, optimizing resource allocation, and aligning their operations with
market demands. Moreover, the CEO of Company B further explained that the use of data
analytics tools extended beyond internal data, enabling them to explore macroeconomic
trends and external market conditions in international target markets. These tools facilitated
the integration and analysis of external data sources, including reports from the insurance
sector, market research data, and economic indicators. By leveraging analytics and
visualizations, the company gained valuable insights into market dynamics, competitive
landscapes, and consumer behavior. This information guided their market selection, entry
strategies, and adaptation of services to suit specific international markets.
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Company C used Microsoft Power BI for analytical purposes, although not pointing out the
ease-of-use aspect, but on the contrary mentioning that it was difficult to adapt to Power BI at
first. The decision to implement Microsoft Power BI was primarily driven by its efficient
integration with other Microsoft services already utilized by the company, as mentioned
above one example is Teams, along with cloud solutions and the more well-known functions
of Microsoft 365. Despite facing initial challenges and undergoing a time-consuming
implementation process, the sales executive of Company C said that “the investment was
worthwhile as we observed a notable improvement in the synergy between different
departments involved in the internationalization”. Furthermore it was stated that by
leveraging Microsoft Power BI, Company C was able to analyze and interpret data from
various sources, gaining valuable insights into their international operations and making
data-driven decisions to enhance their internationalization strategy. The CTO of Company D
explained how the analytics platform Tableau was a vital part of their data management and
had a positive impact on their internationalization, by providing straightforward and effective
tools to interpret and analyze their data through visualizations tools. One distinct factor of
importance for Company D was the platform's ability to support their data analytics process
in multiple stages, all the way from the initial unsorted raw data, to deep analysis functions
which ultimately would lead to insights that can easily be interpreted and shared to provide
value for different parts of the firm, on an international scale.
Overall, data analytics tools were seen as a vital component of digital infrastructures by the
participating companies and, as the CEO of Company E expressed it, “In today’s society
immense amounts of valuable data is created everyday, but this data won’t provide us any
value unless we have the right tools to analyze it, and capitalize from it”. Data analytic tools
were deemed fundamental for business in general but especially for internationalization
purposes. The increased need for data analytics tools in parallel to international expansion
was explained by the continually increasing need for knowledge (market knowledge), arising
both in the initial stages of international expansion but also for ongoing foreign operations.
First off, data analytic tools were seen as crucial for decision making processes related to
international expansion, as this allowed extensive research by analyzing and comparing
potential foreign markets. Secondly, as these companies expanded and entered new markets
an increased amount of data became relevant and valuable for analytical purposes. This
includes data from external sources as well as increasing amounts of data being produced
from internal operations, which further extends the value of data analytic tools.
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Data collection
In general, the subject of data collection was not discussed as actively or as detailed by the
participating firms when compared to data analytic processes. Although some specific data
collection methods and tools that were mentioned were Google Analytics (Tag Manager,
GA4), applying IoT-technology to capture data (specifically from internal operations) and the
use of open-source databases to collect relevant industry- and macroeconomic data. Social
media monitoring is also of relevance and could be attributed to this list, but matters related
to social media will instead be presented more thoroughly in section 4.1.3 (Marketing).
Three of the company representatives, B, C, and E, mentioned that they currently are using-
or at some point-in-time have used Google Analytics to collect and analyze data from their
websites. A distinctively valuable factor in the aspect of internationalization was said to be
the traffic data that Google Analytics captures, which among other things shows the amount
of visitors from different geographical areas. This function has the potential to work as an
indicator of where the demand is large and where it is growing, showcasing countries of
interest for future international expansion. The CEO of Company E said the following about
Google Tag Manager, “when we have done digital marketing campaigns in the past this
system has given us valuable data about the customers we have reached, in addition to the
standard data we receive directly from the advertising platforms, such as interactions, views
and so on, this system actually gives us more information about the consumers who seem
more heavily invested in our offer and follows through to the website”.
Continuing on with IoT solutions for data collection, it should be known that IoT technology
has a very broad definition, involving a wide array of various digital devices that are
integrated into other systems to automate processes. Hence, many of the platforms and digital
solutions presented in this empirical chapter provide the option to utilize IoT technology to
some extent. Nevertheless, on the subject of data collection a few participants specifically
mentioned the value of IoT solutions in light of their international operations, and the essence
of these discussions portrayed IoTs ability to automate processes that previously were
performed manually. On the matter of data collection for analytical purposes, both Company
B and E similarly explained how they, among other things, have created systems for their
sales orders to automatically register into their business-analytic-suites to provide data for
future insights. This data involves information about the geographical location of the
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consumer, along with other factors of interest - such as potential referral codes that can
display which platform the consumer found their offering through. Furthermore, utilizing
open-source databases and other third-party forums to collect relevant data was to some
degree mentioned by all companies, with the objective of gathering large amounts of external
data to use for internal analytical purposes. This process allowed these companies to create
important insights about external factors they cannot profitably measure themselves, such as
industry trends on a global- and country by country level as Company B pointed out, along
with other insights regarding the competitive- and macroeconomic environment in general.
Data storage
On the matter of data storage the participants mostly mentioned benefits and newfound
opportunities created by cloud services, while also bringing up the subject of data-privacy
risks. All five companies brought up the usage of cloud technology to some extent and some
of the general benefits that were mentioned were the cost-effectiveness, time savings, data
accessibility, data consistency and scalability. First off, as both Company A and E explicitly
mentioned, cloud storage offers an alternative to constructing and continually upholding an
in-house server room, which allows for easier scalability parallel to the firm growth, as well
as creating time- and cost efficiencies. The cost efficiency aspect was pointed out as a critical
factor by Company E as it allowed them to attain the large amount of data capacity which
they required at an early stage, particularly important for firms in the ICT-industry, and
consequently this also made their internationalization objectives more accessible at an earlier
stage. Moreover, some uses and benefits on the topic of cloud hosting were discussed. In
international settings the aspects of data accessibility and data consistency were deemed as
particularly important. Being that these companies operate in several countries - and that
some of them (A, B & D) already have multiple subsidiaries set-up around the world - it is
important that their databases along with all the accompanying functions of their digital
systems can be easily accessed at any time and from anywhere, while simultaneously
remaining consistent for all the actors involved. As pointed out by the CEO of Company B,
“Cloud technology is vital for our digitalization in general, it is necessary for the integration
of all our different systems and platforms… Assuring that new information is accessible and
consistent across all platforms and for all actors is especially important for international
matters, it makes communication easier”.
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However, several of the firms highlighted drawbacks regarding data privacy risks and cyber
threats. These concerns were discussed within the broader context of digitalization and
internationalization, although they were primarily related to Cloud technology. The CTO of
Company D highlighted the increased exposure to cyber threats that accompanied their
international growth and digitalization efforts. As their business expanded, the demands on
their data infrastructure grew, leading to the integration of additional platforms and the
storage of more Cloud data. Consequently, larger volumes of sensitive data were stored on
remote servers managed by Cloud service providers. This heightened their need for robust
data protection measures to safeguard sensitive information from unauthorized access and
potential breaches. Moreover, data security was also described as having implications for
international partnerships. The CEO of Company A explained that many of the large
international firms they were associated with required that their partners had strict security
procedures, with standards that met various data protection regulations and protocols. It was
mentioned by several participants that this could prove a challenge and make partnership with
certain international actors less attainable. Although, from another point of view, Company A
said that the relatively high data security standards that are present in Sweden through EU
law, the General Data Protection Regulation (GDPR), made this less of an issue for Swedish
SMEs wishing to internationalize.
4.2.3 Marketing
All five companies have implemented various solutions to manage their customer
relationships. In general, machine learning, AI, and IoT technologies have been utilized by all
companies to some extent. Among them, IoT has been broadly adopted. Representatives of
Company C and D have implemented IoT technology into their services to monitor usage and
enhance customer satisfaction. The CTO of Company D explained how they, with the
assistance of IoT technology, have gained insights into their customers behavior and
preferences, which can enable them to customize their products and services to better suit the
needs of their customers in new markets within their internationalization process. The
opinion of Company C is that “dissatisfied customers are unlikely to provide feedback, which
results in reduced product usage, but by implementing IoT technology, we can now monitor
customer issues and address them proactively to improve customer satisfaction, especially in
new markets”. Moreover, the companies that incorporate AI in their offerings, namely
Company A, B and C have provided a more comprehensive explanation of how they are able
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to ensure customer satisfaction. These companies have integrated a mechanism called
feedback loops into their AI systems. This allows for continuous loops of instructions that
can be given to their programs to detect potential problems or defects within the code. The
sales executive of Company C expressed that “by utilizing the output of our AI system in
conjunction with corresponding end-user actions, we are able to enhance our models over
time. By having positive feedback loops it indicates that no changes are required, whereas if
we have negative feedback loops it prompts changes of our service.
Additionally, two out of five companies (B and E) acknowledged the benefits of employing a
content management system (CMS), which has helped them to effectively create, manage,
and optimize their customers' digital experience. They both suggested that they found
Wordpress to be particularly advantageous for them as B2B companies along with their
internationalization purposes, utilizing it to both localize their websites and achieve greater
conversion rates. The CEO of Company E further elaborated on their experience saying, "We
used the WP plugin "Weglot" to seamlessly translate and display our website in diverse
languages, and this has resulted in significant benefits for our internationalization efforts”. As
for Company C, working with scalable content creation for E-commerce, they further
emphasized the significant advantages associated with content management. “Content
management holds immense value for firms, primarily due to its capacity to minimize costs
and expedite time-to-market. Nevertheless, it is important to acknowledge that the process of
search engine optimization (SEO) is not without its complexities, but obtaining favorable
search rankings and conversion rates is undeniably paramount for ensuring the success of
firms operating in this domain”.
All of the companies concur that digital advertising is an effective method to connect with
customers. Nevertheless, there are disparities in terms of their preferences and which
platform has yielded the most satisfactory response rates. Google Ads was identified by both
the CTO of Company D and the CEO of Company E as a significant digital platform for
advertising. Company E asserted that the platform enabled targeting of specific geographic
locations and groups in the internationalization process. They expressed that “The platform
provided us with the capability to analyze metrics such as click-through rates and conversion
rates, which makes optimization of our marketing campaigns smoother”.
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As for social media, Companies A and D explicitly use LinkedIn, and indicate that they have
not yet been able to focus on platforms such as Instagram, Facebook, and Twitter, as they are
still in the early phase within their development. Further, Company C reports that they have
used Instagram and Facebook to some extent, but also consider LinkedIn as their primary
source for important business connections, partners, and customer outreach. Additionally,
Company E utilizes all of the digital platforms mentioned above (Facebook, Instagram,
Twitter, and LinkedIn) to some degree. The CEO of Company B elaborates more into detail,
stating that “We have also utilized YouTube to address customer questions and promote our
workplace culture, with the aim of attracting high-quality employees”.
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4.3 Summary
The empirical material gathered in this section has been summarized and presented in Table
3, following a similar approach as used for summarizing the theoretical framework in Table
1. However, the headings in Table 3 are specifically tailored to reflect the empirical material.
The summary in Table 3 will provide an overview of the primary findings.
The effects of Digitalization on Firms Internationalization processes.
Networks and All respondents found collaborative suites to be an important tool within the
communication internationalization process. Collaborative suites can facilitate the integration
and synchronization between programs resulting in increased efficiency and
time savings in firms' internationalization processes. Besides, four out of the
five found CRM platforms necessary when establishing and maintaining
business networks. A CRM platform enables data and skill sharing within
networks. Moreover, two out of the five found community platforms and social
media to often be flooded with information, making it harder to filter out
irrelevant information when internationalizing. Lastly, conventional networking
such as events and gatherings was still seen as an important component by all
respondents, sometimes leading to stronger connections, benefiting the
internationalization process in the long run.
Data Data analytics tools were deemed a vital component of the data management
Management area. These tools are used to capitalize on the immense amounts of data
accessible to businesses, by creating insights for market knowledge and
improving decision-making processes. Furthermore, data analytics tools were
described as having an ever-growing value in relation to international
expansion, explained by the increasing need of knowledge and relevant data as
firms enter new markets. Regarding data collection, web trackers were seen as
efficient tools for international purposes because of their function to present
location data. This gives an ability to gauge the demand from different
countries, which can be useful for expansion initiatives. Additionally, Cloud
technology was seen as an important factor in the digitalization process. Cloud
solutions present an alternative to manually constructing and continually
upholding in-house server rooms, and was described as making
internationalization objectives more attainable at earlier stages. Lastly, the
Cloud’s ability to make data consistent and accessible from anywhere was seen
as important for international matters in general.
Marketing AI and IoT technology were by all respondents utilized to a certain degree.
Specifically, a mechanism called feedback loops enabled for increased insights
into customer behaviors and preferences. These insights were particularly
advantageous when addressing customer issues in foreign markets.
Furthermore, two out of five had used a CMS platform in order to translate and
display their websites into different languages, resulting in significant benefits
for their internationalization efforts. Lastly, all respondents concurred that
digital advertising was effective in order to connect with customers. Two found
Google Ads useful as it made targeted marketing easier and enabled for
analyzing metrics such as click-through rates and conversion rates. Further,
social media platforms were utilized to varying degrees in order to address
customer questions and promote workplace culture.
Table 3: How digital tools and platforms have helped the respondents' internationalization processes.
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5. Analysis
This chapter provides an analysis of the empirical findings in conjunction with the theoretical
framework. The structure of the analysis is based on the components of the empirical
chapter; Networks, Data Management and Marketing. To summarize, a model that illustrates
the interconnections between these areas is presented.
5.1 Networks
The internationalization process is influenced by various factors, among which networks
were identified as critical by all the participating companies. Theory states that networks can
provide valuable information that is difficult for firms to obtain independently, thus serving
as an enabler of internationalization (Johanson & Vahlne, 2009). Moreover, it is suggested
that it is particularly challenging to gain access to networks in foreign markets that are distant
from the domestic market (Johanson & Vahlne, 1977). However, in this study it is shown how
companies can leverage digital tools and platforms to overcome these challenges and reduce
the importance of geographical proximity during the internationalization process. In order to
provide additional insights into how digital tools and platforms have aided the participating
companies in establishing networks, the theoretical framework will be related to the empirical
findings below.
First off, the empirical findings partially referred to conventional networking, although with
less emphasis, given the main focus of this study was to examine the impact of digitalization
on the internationalization processes of the participating companies. Nevertheless, the
mention of conventional networking allows for an interesting comparison between
non-digital and digital networking. To begin, previous research by Johanson and Vahlne
(2009) suggests that the challenge for companies during internationalization is no longer
simply accessing markets they are familiar with, but rather integrating into established
business networks where one or more members are already engaged internationally. As
shown in the case studies, Companies A, B and C found assistance with this process from the
Swedish organization Business Sweden. The extensive foreign networks that Business
Sweden had acquired were shared to the firms, helping them to more easily integrate into
them.
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Furthermore, in order to integrate into a network, the theoretical framework suggested that
interactions with only one company within a network is often considered enough and could
be developed into a beneficial relationship (Johanson & Vahlne, 2009). This is in agreement
with the view of the respondents, who recognized the significance of gatherings and events as
crucial components for building business relationships. For the CEO of Company B, such
events were considered vital in the context of digitalization, as they provided an aspect to
relationships that digital networking could not replicate, referring to how meetings in person
often resulted in surprisingly stronger connections.
Moreover, the literature stated that participating in a network allows firms to acquire access
to important information, knowledge and resources from other companies within the network,
including insights into foreign markets (Johanson & Vahlne, 2009; Hadley & Wilson, 2003).
As for digital networking, the study showed that a communication tool was essential to
communicate internally and externally and in order to get a foothold into a targeted network.
The respondents agreed that a communication tool is necessary in the current business
environment in order to arrange meetings with people outside of their immediate location.
However, when taking the time savings and cost efficiency aspect into account there was said
to be less focus on the specific communication tool but rather to find the best collaborative
suite that offers a whole package of features and applications, including a communication
tool. In this manner, working with collaborative suites allows for their business operations to
be more cost efficient and time restrained. This is in agreement with previous research
suggesting that Digitalization can lead to time savings for SMEs that are utilizing digital tools
(Hervé et al., 2020).
The literature also highlighted the positive impact of digitalization on companies' ability to
gain insights from community platforms and social networks (Hervé et al., 2020). However
three of the five respondents (A, B and D) did not agree with this statement. On the contrary,
they suggested that community platforms and social networks often tend to be flooded which
makes it hard for companies to distinguish between irrelevant and relevant information.
Further, this overwhelming amount of information received daily makes it more challenging
for them in capturing the attention of potential partners and customers. Consequently, it
became imperative to filter out inefficient platforms, such as email and phone, and instead
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concentrate on platforms that yielded favorable outcomes, such as LinkedIn which were
found to be most effective by Company A and B. The CEO of company E brought up email
security and spam protection as an escalating concern in the current business environment. It
was said that effective management and safeguarding of email communications could greatly
enhance their efficacy. The benefits of community platforms and social networks are clearly
showcased by previous research (Hervé et al., 2020). However, this study reveals that the
effectiveness of these platforms is substantially diminished if they are inadequately protected
and mismanaged. Based on this, we would argue that, although community platforms and
social networks could assist companies in finding links to targeted networks, it has become
increasingly important to manage and minimize spam.
Furthermore, previous research highlighted the substantial influence networks have on
internationalization decisions, necessitating companies to be attentive of their contacts within
the network (Juttner & Schlange, 1996). This is in agreement with the findings of the study
that emphasized the importance of maintenance and nurturing within the network. Once
contact was established, it was deemed essential for these firms’ to save the newly formed
contacts within various digital tools and platforms to maintain and nurture these relationships.
Contact data procured from different kinds of events was saved in a CRM platform. Further,
the respondents agreed that a CRM platform was useful to maintain and nurture relationships
with business networks. Previous research suggests that sharing data and skills with partners
offers SMEs new opportunities to integrate into targeted networks (Hervé et al., 2020). This
is supported by the empirical findings, indicating that a CRM platform was found to be
advantageous for facilitating the sharing of data and skills between firms within their
business network. The findings showed that more companies, A, C, D and E were engaged in
CRM platforms at an earlier stage compared to community platforms and social media.
Therefore, CRM platforms could be seen as more relevant for network building than other
types of digital platforms, but this claim requires further investigation in order to confirm.
Regarding the comparison between digital and non-digital networking, we contend that
conventional networking is a viable way to connect with potential partners, but the
importance of digital tools and platforms becomes evident in the long run. Nonetheless, one
does not exclude the other; rather, they complement each other. Conventional meetings
bringing together companies from different parts of the world occur less frequently than
digital meetings, but when such conventional meetings do occur, they can still be viewed as a
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more efficient way of establishing relationships and connecting with networks, as they offer a
more personal connection. However, to maintain contacts, proficiency in using digital tools
and platforms is essential.
5.2 Data management
Findings from the case studies indicate that a systematic and well-designed data management
infrastructure (4.1.2) had an essential role in these firms’ ability to internationalize at earlier
stages and at comparatively faster rates. This phenomenon can be attributed to various
efficiencies facilitated by data management, including automation of processes, better market
knowledge, improved decision-making, cost reductions, time savings, and making location a
less relevant factor. Even though the components, data collection, data analytics and data
storage, are fragments of a complete system and therefore interdependent, certain efficiencies
are more directly associated with different data processes. These relations, in conjunction to
the theoretical framework, will be presented below.
Data analytics
Dating back to the stage model of internationalization (Johanson & Vahlne, 1977) the firm’s
ability to acquire new knowledge about foreign markets has been seen as a crucial factor for
speeding up internationalization. In more recent times, the possibility of acquiring market
knowledge from the vast amounts of data available through the growing prevalence of online
exchanges has been recognized (Neubert, 2018). The notion of market knowledge being a
critical factor for rapid internationalization concurred with the beliefs of the participating
firms. Empirical material from the case studies further shows the procedures these firms used
to effectively attain market knowledge, and one of the most prominent methods used was
data analytics.
In addition to serving as an effective instrument for making large-scale and detailed
comparisons among potential host countries during the early stages of internationalization,
analytic tools were also noted as having a growing importance in parallel to the level of
internationalization. This effect was attributed to the increasing amount of valuable data,
which includes not only newly generated data from internal operations but also the ability to
convert third-party (external) data that was previously irrelevant into relevant data, thereby
further extending the firms’ market knowledge. The enhanced market knowledge
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subsequently contributes to the establishment of a stronger foundation for decision-making
processes within these firms, ultimately leading to more well-informed decisions based on
objective observations. This is consistent with previous literature stating that digitalization
leads to optimized decision-making processes (Hervé et al., 2020). In addition, digitalization
was recognized for its potential to create time efficiencies by reducing the need for manual
labor in various processes, one example of this is provided by these companies' usage of data
analytic tools to automate decision-making processes.
Data collection
To effectively utilize data analytics for enhanced market knowledge and improved
international decision-making, a substantial volume of data is essential to power the
analytical tools. The growing popularity of online exchanges has opened up opportunities to
capture large quantities of data that can significantly benefit internationalization processes
(Neubert, 2018). The empirical findings highlighted that the companies in the study leveraged
software solutions specifically designed to automatically collect extensive customer data
from website traffic. A key aspect of these data collection systems, particularly in the context
of international operations, was their ability to track website visitors locations. This feature
enabled the firms to easily assess demand from different countries, providing valuable
insights for their expansion initiatives. Furthermore, some participants mentioned their
adoption of IoT software to streamline data collection processes and seamlessly integrate it
into analytics suites. This approach facilitated efficient data gathering, allowing for in-depth
analysis and the acquisition of valuable market knowledge for international endeavors.
Based on anecdotal experience, data collection methods and tools may not receive as much
attention either in practice or in theory since the value-creating aspect is contained within the
boundaries of data analytics rather than data collection. Given that data collection is a
prerequisite to analytical processes, the value of an effective data collection system is
therefore likely to be attributed to analytics instead. Thus, the real values of advanced data
collection methods are likely to be misjudged or secluded. Based on our research we would
argue that systems constructed with the intent of finding and collecting large volumes of data
are an essential part of digitalization, both within the context of international business and for
business in general.
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Data storage
Furthermore, literature stated that digital tools have the potential to significantly reduce the
assets needed for operations (Hervé et al., 2020). A practical example of this was presented
on the matter of data storage, where findings from the study displayed that Cloud solutions
was seen as an important technology to enable early internationalization. Cloud storage was
described as an alternative to manually constructing and continually upholding in-house
server rooms, which allowed for easier scalability parallel to firm growth as well as creating
both time- and cost efficiencies. The cost efficiency aspect was pointed out as particularly
important, as this could enable newly started SMEs with limited resources to acquire large
volumes of data capacity at an early stage, reducing the need for storage assets and
consequently making internationalization initiatives more feasible at an earlier stage.
Additionally, the ability of Cloud technology to make information (data) accessible from
anywhere in the world while also making it consistent between different actors was seen as
an important characteristic. This has the potential to lead to improved communication
between stakeholders and could in alignment with literature provide a basis for better synergy
between geographically dispersed actors within the firm, while also improving co-creation
projects with external partners (Hervé et al., 2020).
Data privacy and cyber threats
The empirical study also raised important concerns about data privacy risks and cyber threats
in the context of digitalization and internationalization. It highlighted the increasing
challenges faced by companies as they expanded their operations and relied more heavily on
remote servers and Cloud technology (Kshetri, 2010; Wang et al., 2018). Firstly, the emphasis
on data protection and the need for robust security measures underscores the critical
importance of safeguarding sensitive information. As companies store larger volumes of data
on remote servers, the potential for unauthorized access and breaches becomes more
pronounced. This calls for heightened vigilance and investment in security infrastructure to
protect valuable data assets. Failure to adequately address these risks could potentially be
costly for firms, creating reputational damage and legal consequences. These implications are
thus likely to be particularly important for firms in industries that deal with highly sensitive
data, for instance finance and healthcare. Secondly, the mention of international partnerships
and the requirements for strict security procedures highlights the impact of data security on
global business collaborations. Companies seeking to expand internationally must not only
navigate the complexities of different markets and regulatory frameworks but also ensure that
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they meet the data protection standards of their potential partners (Wachter, 2018). Failure to
comply with these requirements can hinder partnership opportunities and limit market access.
Conversely, for companies operating in countries with robust data protection regulations,
such as Sweden with the GDPR, there may be a competitive advantage in attracting
international partners due to their higher data security standards. Furthermore, the
implications extend beyond individual companies to the broader business landscape. As the
importance of data security and privacy continues to grow, governments and regulatory
bodies are likely to strengthen regulations and impose stricter compliance requirements. This
can lead to increased compliance costs and regulatory burdens for companies, especially
those operating in multiple jurisdictions. However, it can also create opportunities for firms
specializing in digital business models such as cybersecurity and data protection services, as
there will be a growing demand for expertise in managing and mitigating data privacy risks.
5.3 Marketing
The study showed that one of the most essential components in the speed of which a firm was
able to internationalize were Marketing Processes. Marketing processes encompass a range of
factors that are considered when marketing a product including what consumers want, how
the product or service meets or fails to meet those wants, how the product or service is
perceived in the world and how the company that produces it interacts with its customers.
The results of this study reveal that all the interviewed companies have employed digital
technologies, including AI, machine learning and IoT, to some extent. Previous research
suggests that the use of digital technologies such as IoT and 3D-printers, can facilitate
product customization and provide customers with greater influence over the design of their
products and control over manufacturing origins (Hervé et al., 2020). These technologies, in
turn, provide firms with new fundamental experiential knowledge that translates directly to
the individual firms international strategic success (Fletcher et al., 2013). In conjunction with
the previous research, the companies that participated in this study similarly adopted IoT in
order to monitor usage and enhance customer satisfaction. It has enabled them to gain
insights into customer behaviors and preferences which in turn aided the customization of
products and services to better suit the needs of their customers during the
internationalization process.
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Additionally, three of the five companies under investigation incorporated artificial
intelligence (AI) into their business models. Specifically, feedback loops, a mechanism
commonly adopted in AI systems, were used to identify potential problems or defects within
their product or service codes. Consistent with the theoretical findings, these technologies
facilitate the acquisition of new fundamental experiential knowledge, which can enhance
firms' ability to fulfill end-user requirements (Hervé et al., 2020). Additionally, theoretical
insights indicated that information, along with knowledge plays an important role in
determining the pace of internationalization (Johanson & Mattson, 1988). This suggests that
feedback loops can serve as a beneficial mechanism in the context of companies'
internationalization processes. For example, this enables firms to directly test their products
and services on potential customers worldwide, regardless of their location. The market
knowledge and information gained from such experiments can help firms improve their
performance by adjusting and customizing their offerings to better meet customer needs. One
of the participating companies, Company C, concurs with this view and states that "positive
feedback loops indicate that no changes are required, whereas negative feedback loops
prompt changes to our service.".
Another interesting finding was that two out of the five companies (C and D) have employed
a content management system (CMS), which has supported them to create, manage and
optimize their customers' digital experience through their websites. As B2B companies this
came along as particularly advantageous for their internationalization purposes, helping them
localize their websites and achieve greater conversion rates. The theoretical findings
suggested that Digitalization has helped companies in managing their international activities
online, reducing psychological distances and targeting multiple countries at once. Besides, by
externalizing location-specific assets and leveraging digital technologies, firms can manage
their activities from a distance and reach a larger number of markets with the same productive
resources (Hervé et al., 2020). How companies leverage digital technologies in order to
manage their activities from a distance and reach a larger number of markets has been
explained by the firms that participated in this study. For instance, the CEO of Company E
explained how they utilized a CMS that could assist them in translating and displaying their
websites into different languages, which helped them a lot within the internationalization
process. Given company C has adopted a business model that offers a CMS-like service that
is tailored to the requirements of their clients, they explained further upon the value that
content management holds for firms in their internationalization processes. For instance, an
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advanced CMS could facilitate significant cost reductions and accelerate time-to-market for
companies. Given the complex nature of search engine optimization (SEO), the
representative acknowledged the challenges associated with achieving favorable search
rankings and conversion rates. Nevertheless, they affirm that attaining such outcomes
remains crucial for ensuring success in their internationalization efforts. We would therefore
argue that a CMS could accelerate the speed of internationalization, if utilized effectively.
Moreover, previous research suggests how the increase of online apps and digital
technologies has made content sharing more accessible, which has allowed companies to
anticipate their marketing efforts and apply better-targeted marketing (Hervé et al., 2020). On
the matter of targeted marketing, a practical example of this was seen by two out of the five
companies, (D and E), in the way they utilized Google Ads to allow for analyzing metrics
such as click-through rates and conversion rates in order to optimize their marketing
campaigns. Furthermore, theory also suggests that communicating with user communities is
seen as a fundamental factor for market adaptation initiatives, as it enables SMEs to become
more responsive and better at implementing necessary measures (Hervé et al., 2020). This is
in accordance with the empirical findings where all the companies saw digital advertising as
an effective method to connect with customers. User communities in the form of social media
platforms were used to varying degrees for marketing products, addressing customer issues
and promoting workplace culture to attract employees.
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5.4 Own interpretation and model
Figure 1: Our own interpretation of the relationship between the empirical material.
A model that conceptualizes the interrelationships between the areas presented in the
empirical material and analysis will now be presented. This model aims to contribute to a
broader understanding of how digitalization is utilized in internationalization processes. The
ensuing discussion aims to develop a comprehensive framework based on the empirical
findings in conjunction with the underlying theoretical framework. The model encompasses
the same constituent elements presented in the empirical section, namely networking, data
collection- and storage, data analysis, and marketing. However, a notable deviation involves
the inclusion of data collection- and storage as the initial step of the model, whereas data
analysis, marketing and networking are seen as intermediary steps. From our perspective, this
adjustment enhances the accuracy and provides a more realistic view of how digitalization is
utilized in internationalization processes. Subsequently, we will now explain more into detail
how these interrelationships work and simultaneously affect the internationalization process.
The model begins with data collection and storage processes, which can be seen as the
backbone of a firm’s digital infrastructure and the foundation of their digitalization efforts.
These processes empower firms to effectively gather and store large amounts of data
generated from internal operations. Examples of such data include customer feedback and
demand data derived from marketing activities, as well as contact data procured from
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networking events. Simultaneously, these processes facilitate firms in monitoring and storing
valuable external data, such as information regarding international market trends. Thus, as
firms expand their international presence, the significance of their digital infrastructure
experiences a corresponding surge.
The foundation of data gathering- and storage systems is what enables the subsequent stage in
the model, data analytics. Data analytics involves the systematic analysis of the collected data
to derive meaningful insights. These insights equip firms with a deeper understanding of their
operations and surroundings, thereby increasing their market knowledge and enabling them to
make more informed decisions about their internationalization strategies, both with regard to
international marketing and networking.
In the realm of international marketing, the insights derived from data analytics can be
utilized to create more targeted and effective marketing campaigns. By gaining a deeper
understanding of customer behaviors and preferences across various countries, firms can
customize their marketing messages to align more closely with their target audiences, thereby
enhancing customer engagement. Moreover, the insights derived from data analytics can
inform the development of new products or services, helping firms to stay competitive in the
rapidly evolving international market. When firms act on these insights and adapt their
international marketing, new data can be gathered from the consumers' reactions and
feedback to these changes. This data can then be stored and analyzed to create new insights,
thus creating the first loop of market knowledge that allows firms to better adapt to the
dynamic landscape of international markets.
The second loop in the model builds upon the insights and market knowledge derived from
data analytics and extends it through networks. As firms gain valuable insights from their
data analytics processes, they have the opportunity to share these new insights and skills with
their partners. This sharing of knowledge and expertise enables open innovation and forms
partnerships between companies that would not have been possible without the advancements
in digitalization. In this way, data analytics serves as a facilitator for networking. The shared
data, which contains the insights obtained through analytics, is collected and stored for
further analysis. This process not only enhances firms' market knowledge but also contributes
to the development of new competencies. For example, contact data obtained from different
networking events can be collected and stored for further analytics. By analyzing this data,
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firms can identify specific networks abroad that they can target for business opportunities.
This networking loop, driven by the continuous collection, storage, and analysis of data, aims
to develop competencies for firms. The insights gained through data analytics are not only
utilized internally but also shared externally, fostering collaborations and partnerships with
companies abroad. This iterative process of sharing, collecting, analyzing, and applying data
creates a virtuous cycle that enables firms to expand their competencies, increase their market
knowledge, and in turn strengthen their international presence.
The model provides a comprehensive and dynamic framework for understanding how SMEs
can leverage digitalization for internationalization purposes. By highlighting the
interconnectedness of data collection and storage, data analytics, networking and
international marketing, the model offers insights into how firms at different stages of their
internationalization can utilize synergies between the digitalization areas. However, it must
be noted that this model is projected on our subjective interpretations and perceptions.
Consequently, it is crucial to acknowledge that the model does not aspire to attain statistical
representativeness.
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6. Conclusions
This chapter begins by providing a short and concise answer to the research question,
followed by conclusions related to the specific digitalization areas. Subsequently, the
theoretical contributions are presented and contextualized within existing gaps in the
research field. The chapter concludes with a discussion on the managerial implications and
potential avenues for future research.
6.1 Conclusions
The analysis of how Swedish SMEs have applied digital technologies in their
internationalization processes has been utilized in order to draw conclusions on the following
research question:
How do high-tech SMEs in Sweden utilize digitalization in internationalization
processes?
The Swedish high-tech SMEs utilized digital tools and technologies in three key areas to
effectivize internationalization processes, networking, data management and marketing. By
utilizing digital tools and platforms, Swedish SMEs are able to collect, analyze and apply
data that enables them to expand their competencies and increase their market knowledge.
The newly made market knowledge can be used to tailor international marketing strategies
and better align them with customer audiences. The newly made competencies could also be
extended through foreign networks resulting in an enhanced international presence.
Our study identified three key areas in which the SMEs employed digital technologies
throughout their internationalization process; Networks, Data management and Marketing
processes. In relation to networks, the results showed that the long-term success of these
firms relied on the proficiency in utilizing digital tools and platforms to sustain and nurture
relationships abroad. Certain digital platforms might suffer from irrelevant content or spam
hindering their effectiveness. Hence, our results suggest that CRM platforms are most
efficient within this matter. However, it appears that conventional networking remains an
important component for establishing relationships with companies within foreign networks,
as they offer stronger connections that digital networking cannot replicate.
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Market knowledge is recognized as a critical factor for internationalization, and the
availability of vast amounts of data through online exchanges has expanded the possibilities
for acquiring market knowledge. This study demonstrated that data analytics is a prominent
method for effectively attaining market knowledge among the participating firms. Analytic
tools not only facilitated large-scale and detailed comparisons among potential host countries
during the early stages of internationalization but also gained increasing importance as
internationalization progressed. This growing importance was attributed to the abundance of
valuable data, including both internally generated data and the conversion of previously
irrelevant external data into relevant information. The enhanced market knowledge, resulting
from data analytics, contributed to more well-informed decision-making processes based on
objective observations.
The utilization of data analytics for enhanced market knowledge and improved
decision-making relies on the availability of substantial volumes of data. The case studies
highlighted the firms' utilization of software solutions designed to automatically collect
extensive customer data from website traffic. The ability to track website visitors' locations
was particularly valuable for assessing demand from different countries, providing valuable
insights for international expansion. Additionally, some firms adopted IoT software to
streamline data collection processes and integrate them seamlessly into analytics suites,
facilitating efficient data gathering and in-depth analysis. Furthermore, the use of Cloud
storage solutions significantly reduces the assets required for operations. Cloud storage
emerged as an important technology enabling early internationalization by providing
scalability, cost efficiency, and easier access to data from anywhere in the world, thereby
making locations and borders less relevant. This accessibility and consistency of information
enhance communication between stakeholders, improve synergy among geographically
dispersed actors within the firm, and facilitate co-creation projects with external partners.
The third factor explaining how Swedish SMEs utilized digitalization in the
internationalization process were marketing processes. This study revealed that the
integration of digital technologies such as AI and IoT empowers companies with fundamental
experiential knowledge that enables them to better fulfill end-user requirements. Notably,
mechanisms like feedback loops can be harnessed by companies to obtain valuable customer
insights into foreign markets. Moreover, the study implies that a content management system
(CMS) could help companies to translate and display their websites in diverse languages, as
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well as improve search rankings and conversion rates. Thus, we wish to suggest that a CMS
is particularly valuable for firms seeking to establish a presence in foreign markets.
Additionally, digital advertising platforms such as Google Ads can enable companies to
anticipate their marketing efforts through click-through rates and conversion rates, thereby
enabling more targeted marketing approaches. Furthermore, social media platforms emerged
as important platforms in order to be responsive to foreign customers and implement
necessary measures for foreign market adaptations. This enables companies to streamline the
process of adapting to the preferences and demands of foreign markets.
Finally, the research also highlights the growing cyber threats and data privacy risks that
come with digitalization, highlighting the escalating challenges faced by companies as they
expand their operations and increasingly rely on remote servers and cloud technology. As
firms store more data remotely, the potential for unauthorized access and breaches rises,
necessitating robust security measures and investments in security infrastructure. The study
also emphasizes the impact of data security on international partnerships and the need for
strict security procedures. Companies seeking international expansion must navigate complex
market- and regulatory frameworks while ensuring compliance with potential partners' data
protection standards. The study suggests that firms operating in countries with stringent data
protection regulations may have a competitive advantage in attracting large international
partners. As data security and privacy become increasingly important, stricter regulations and
compliance requirements are likely to emerge, potentially increasing costs for companies but
also creating opportunities for firms specializing in data protection services.
6.2 Theoretical contributions
The theoretical contributions of this study lie in its exploration of the interplay between
digitalization and internationalization in the context of SMEs. In reference to the problem
discussion outlined in Chapter 1.2, the existing literature is noted for its lack of in-depth
exploration into how digitalization has specifically influenced international business theories
(Autio et al., 2021), and the purposes for which various digital tools are utilized in the context
of internationalization (Hervé et al., 2020; Feliciano-Cestero et al., 2023). This research
enriches the current academic discourse by exemplifying how SMEs can employ a range of
digital tools and technologies in their internationalization, while also clarifying some of the
objectives that can be achieved through digitalization.
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In terms of networks, the study contributes to the theoretical understanding of how SMEs
leverage digital tools and platforms, particularly CRM platforms, to maintain and develop
relationships abroad. The findings further demonstrate the continued importance of
traditional networking in establishing strong connections, even in the digital age.
The study also enriches theoretical discourse on data management in internationalization. It
underscores the role of data analytics as a key method for acquiring market knowledge and
the increasing importance of analytic tools as internationalization progresses. The study
further highlights the role of software solutions, including IoT software and cloud storage
solutions, in streamlining data collection and analysis. These findings contribute to the
understanding of how SMEs can leverage data to inform their internationalization strategies.
Finally, the study's exploration of marketing processes offers valuable theoretical insights into
how Swedish SMEs utilize digitalization in their internationalization process. The integration
of digital technologies such as AI and IoT, the value of a content management system (CMS)
for firms seeking to establish a presence in foreign markets, and the role of digital advertising
platforms and social media in enabling more targeted marketing approaches and better
adaptation to foreign markets all contribute to a richer understanding of the role of
digitalization in SME internationalization.
6.3 Managerial implications
This study holds value for top-level managers or individuals assuming managerial roles.
From a business point of view, many managers currently possess a limited understanding of
digitalization trends and the opportunities these can produce (Hervé et al., 2020).
Consequently, this study aimed to address these practical shortcomings by providing targeted
observations on internationalization initiatives and developing relevant conclusions
applicable to common internationalization processes. Additionally, it provides suggestions of
various digital tools and platforms that can facilitate the internationalization process, serving
as a guideline in this regard. Collectively, these findings underscore the transformative
potential of digitalization across various dimensions for companies seeking to expand their
international reach.
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6.4 Research outlook
Further exploration is needed to adapt international business theories to adequately address
the opportunities and challenges presented by digital environments (Hervé et al., 2020). The
existing literature lacks a comprehensive understanding of how digitalization specifically
affects and challenges International Business Theory, highlighting the need for more research
in this area (Autio et al., 2021). This study addresses how digitalization can facilitate the
internationalization process of five companies from Sweden. This limits the generalizability
of the findings to larger populations. Future research could aim to include a more diverse
range of firms from various geographic locations to enhance the external validity of the
findings. Moreover, conducting longitudinal studies with extended time frames would allow
for a more comprehensive examination of the long-term dynamic effects that emerge at
different stages of firms’ internationalization processes. This could provide valuable insights
into the evolving nature of digitalization’s impact. Besides, considering the influence of
national laws, regulations and macroeconomic conditions on work practices and routines is
crucial. Exploring how different institutional initiatives and support systems impact the
internationalization process could provide a deeper understanding of the interplay between
these factors and digitalization. By addressing these areas of research, scholars can advance
the understanding of how digitalization impacts international business theory, uncover new
insights into the internationalization process, and provide practical recommendations for
firms navigating the challenges and opportunities of the digital era.
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8. Appendices
Appendix 1 : Interview guides
1. Firstly, tell us a little bit about yourself, as in, what type of company are you
representing? What kind of service/product is the company offering and what kind of
position within the company you have?
2. In what way has digitalization affected your company's internationalization process?
a. Do you have any concrete examples of how digitalization has helped you to
expand into new markets?
3. How does the use of digital tools and platforms help when it comes to international
marketing and sales?
4. Have you had any challenges with digitization in the internationalization process?
a. How have you dealt with these challenges?
5. In what way has digital technology improved communication and collaboration with
international partners or customers?
6. How has your data management processes affected your internationalization?
a. Can you provide any concrete example of how you have used data to make a
strategic decision related to international expansion?
7. How do you use social media to connect with customers and stakeholders in different
countries?
8. How do you ensure that your digital products/services are culturally appropriate for
international markets?
9. In what way has digitalization changed the competitive landscape for your industry in
international markets?
10. Finally, what opportunities and challenges do you see for your company in terms of
digitalization and internationalization?
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