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Internalization theory for the digital economy

Journal of international business studies, 2019-10, Vol.50 (8), p.1372-1387 [Peer Reviewed Journal]

2019 The Author(s) ;The Author(s) 2019 ;The Author(s) 2019. This work is published under http://creativecommons.org/licenses/by/4.0/ (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;ISSN: 0047-2506 ;EISSN: 1478-6990 ;DOI: 10.1057/s41267-019-00243-7

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  • Title:
    Internalization theory for the digital economy
  • Author: Banalieva, Elitsa R ; Dhanaraj, Charles
  • Subjects: Assets ; Business and Management ; Business Strategy/Leadership ; Capital ; Globalization ; Governance ; Human capital ; Internalization ; International Business ; Management ; Modularity ; Multinational corporations ; Organization ; Technology ; Transactions ; Transferability
  • Is Part Of: Journal of international business studies, 2019-10, Vol.50 (8), p.1372-1387
  • Description: We study the internationalization of digital service multinational enterprises (SMNCs), focusing on how digitalization alters internalization theory’s assumptions about the nature of firm-specific assets (FSAs) and the theory’s predictions about governance choices in cross-border transactions. We invoke Simon’s (Proc Am Philos Soc 106(6):467–482, 1962) near-decomposability concept to explain how digitalization enables two distinct types of FSAs – technology and human capital. Applying the ideas of modularity and skill complexity, we further distinguish between core versus peripheral technology FSAs and between generic versus advanced human capital FSAs. Building on the transferability and appropriability of these strategic assets, we theorize on the FSAs’ internalization propensity in the digital age. We propose that with rising digitalization, the network plays a dual role–as a governance mode and as a strategic resource. Integrating insights from network economics, particularly increasing returns to scale, we propose that network advantages (On) emerge as a distinct strategic resource that merits separate investigation from the traditional asset-based (Oₐ) and transaction-based (Ot) advantages.
  • Publisher: London: Springer Science + Business Media
  • Language: English
  • Identifier: ISSN: 0047-2506
    EISSN: 1478-6990
    DOI: 10.1057/s41267-019-00243-7
  • Source: Springer OA刊
    ProQuest Central
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