The Digital Economy and International Business, an Historical Perspective

The chapter critically analyzes the mainstream internationalization theories, starting from those developed in the West in the second part of the last century and continuing with those developed for emerging markets-based firms that appeared at the beginning of the 21st century. The focus of the discussion is the explanatory power of these theories in a highly digitalized environment. In this context, while some authors argue that the analytical approach of internationalization theories is still valid, it has been recognized that there are some elements that need to be revised to fully capture the impact of digitalization and new technologies. In particular, it seems that theories would need to be adapted so they can better explain how the following consequences of digitalization are influencing the international expansion of firms: (i) a reduction of transaction costs, (ii) an increase of network economies, speed, and scalability, (iii) the changing nature of firm-specific advantages and capabilities, (iv) the new definition of MNEs and the idea of digitally networked ecosystems, (v) the place/location moving from physical and territorial attributes, to digital and information flow-based attributes, and finally (vi) the different price settings.