Abstract
This article explores the evolving impact of the behavioral, competitive, institutional, and technological forces and factors that have already influenced, and continue to influence, the architectural nature, speed and extent, and functional operations of international entrepreneurship. These evolutionary institutional and technological changes are intensifying competition, and accelerating the transformation of business models and their corresponding international operations, which are in turn stimulating the global consumers’ evolutionary behavioral change in favor of higher services and consumer-centered values (CCVs). It will be also exploring the ongoing evolutionary offline, and mainly online, developments that have already had and continue to impact internationalizing smaller enterprises (iSMEs). These developments have transformed the iSMEs’ international operations in favor of more service-oriented logic, adding value, offering higher services, speed, and extending their international reach substantially. As a result, iSMEs have been reaching much larger number of international customers and international markets at much faster than their slower predecessors (e.g., the born globals, the international new ventures, and the rapidly internationalizing enterprises) with lesser efforts and lower risks than ever before, mainly through collaborative arrangements with much larger institutions, such as the multi-sided online platforms (simply, Platforms). Consequently, iSMEs that are willing to collaborate with platforms need to evaluate the strategic cost/benefits of their transformation for reaching ever larger number of international markets through platforms to have larger and more satisfied international customers at highly accelerated internationalization through online platforms. The comparative, empirical, and theoretical analysis of this article contribute to advancing iSMEs’ accelerated internationalization benefiting from larger number of consumers and markets at lower risks, costs, and efforts through dominant platforms.
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Notes
Ironically, the interprovincial barriers in Canada and interstate restrictions in the USA and Mexico are still more strict than those across national country borders.
Currently, the European Union is an economic and political union of 27 countries. It operates as a single internal market, which allows for free movement of goods, capital, services, people, and enterprises amongst its member states. Entrepreneurs are nearly free to set-up shop at the preferred location(s) of their choice.
In 2005, Thomas Friedman, the author of World is Flat (2005), noticed that several services had shifted mainly because of the ability of the global Internet network and the decreasing barriers to movement of resources, which he called it as “the playing field is being leveled.” The book highlighted 10 influential “flatteners” (The fall of barriers -- e.g., the fall of Berlin Wall), Netscape, work-flow, outsourcing, offshoring, open-sourcing, insourcing, supply-chaining, in-forming and collaborations for faster learning), which would contribute to the further flattening of the global economies. He also outlined three shifts in level of globalization through the concept of “triple convergences” (i.e., the convergences of (i) workforces, (ii) business models, and (iii) corporate leadership) of other factors that would increase the impact of the 10 flatteners.
The concept of “algorithmic” process, discussed in a later section, is a manifestation of progressive transformations in favor of lower costs and higher efficiencies for faster operation to result in higher delivered values.
Interestingly, the introduction of fax machines, offering a more advanced technology at the time (and nearly obsolete and mostly discarded now), began to change our collective perception of timely value of information through communication, which would have previously taken days, if not weeks, to send or receive the same information from one part of the world to the other. Ironically, our expected typical timeliness has further shrunk substantially to momentarily, especially for receiving information.
Allen (1990) suggests that information is a highly valuable commodity, but it is time-sensitive as its value declines rapidly over time.
Prior to eBay, small “classified” advertisings were the means for possible P2P transaction, which involved the buyer(s) and seller(s) to meet, negotiate, and finalize their transaction.
“A chaebol would consist of multiple diversified affiliates, controlled by a person or group.” Chaebols also refers to several dozen large South Korean family-controlled corporate groups. Source: https://en.wikipedia.org/wiki/Chaebol
Zaibatsus were pre-Second World War Japanese large conglomerates, such as Mitsui, Mitsubishi, amongst many others, which were disbanded in the aftermath of the Second World War.
Such flows of information back and forth are shown in Fig. 4, in a later section, below.
It is noteworthy that collaborative arrangements may transform into unexpected competitive and co-opetitve situations (see Kock et al. 2010) possibly harming previous collaborators.
The earlier infra-structural arrangements for nearly free movement of good, service, information and funds facilitated the platforms’ international operations. They, however, had to systematize the necessary logistics for the transfer of supplies from their supply chain enterprises to their ultimate buyers through their online and physical operations. At times, however, international supplies were stored in their various warehouses for better controls and saving delivery times.
Repeated purchasing visits to platforms have resulted in platforms’ rapid international growth in the past two decade. For example, more than 45% of Amazon’s Prime customers return frequently to Amazon platform for buying more.
Consequently, most platforms have abandoned the development of their own brands similar to those of the major traditional retailers (e.g., see different suppliers’ brand names on the product category pages of, for example, Amazon.com, Zolando.com, Wayfair.com, amongst many others).
Returned products can be only sold as “open box” or used products at lower prices if they can be sold at all.
Such consumer feedbacks can serve as ideas for improvements in the suppliers’ offerings as well.
An independent survey by Feedvisor found that of all consumers who belong to Amazon Prime, nearly half (48%) buy products online once a week or more frequently, and nearly three-quarters (74%) shop online at least every few weeks. It also found that more than two-thirds (67%) of consumers cited Prime eligibility as an important factor influencing their purchase decisions for the majority of situations. More importantly, when they were in need of purchasing a product, the majority of consumers favored buying it from Amazon rather than other platforms. Sources: https://www.forbes.com/sites/kirimasters/2019/03/20/study-89-of-consumers-are-more-likely-to-buy-products-from-amazon-than-other-e-commerce-sites/?sh=284442744af1).
Despite the above descriptions, some Amazon suppliers have voiced their dissatisfaction about Amazon’s demands for better products at lower costs.
In less than three decades, Amazon sales in the USA reached 11% of all US e-commerce transactions in 2022, and forecasted to exceed 14% in 2024. Furthermore, it nearly matched the total US sales of the largest global retailer, the Walmart, in 2022. (Source: https://www.forbes.com/sites/kirimasters/2019/03/20/study-89-of-consumers-are-more-likely-to-buy-products-from-amazon-than-other-e-commerce-sites/?sh=284442744af1).
Three examples are commonly known: (i) General Motors and Toyota Motors’s collaboration in building the “New United Motor Manufacturing, Inc. (NUMMI) in Fremont, California, for manufacturing, assembling and selling of similar cars. Toyota’s version was branded as Toyota Matrix, and the GM’s version was sold as Vibe by GM’s Pontiac Division, both of which were assembled side-by-side and their combined scale economies offered competitive advantages to both collaborators against other car companies; (ii) the US Ford and Japanese Mazda Motor companies initially collaborated and became partners later, and (iii) the US Chrysler and the German Daimler Benz Companies collaboration offered advantage to each partner difficult to attain by each firm alone. Such collaborations have not been limited to auto industry alone.
This is the strategy that well-established firms such as Walmart adopted to slow down loosing market share to Amazon. A competitor of Walmart, the Target, used to be a localized and mainly offline retailer when it started. Although they are not the only examples, they are included in the Table 1’s comparative analysis.
The influential long list may include the enterprise’s age, size, resources, and strengths, as well as the presence and the extent of experiential knowledge of the firm in different international markets at the time. Similarly, information on time and timing preferences of the top management team, the complementary nature of their offerings, capabilities and resources, potential liabilities and weaknesses, perception of risk-bearing capacity, expectations of returns, and growth rates in the short to medium terms could amongst factors influence enterprises’ strategic path forward.
Source of phone statistics: https://www.bankmycell.com/blog/how-many-phones-are-in-the-world (Accessed on Sept 10th, 2023).
In accelerated internationalizations, where smaller supplier(s) need to depend on the larger multi-sided platform, the likelihood of “opportunistic behavior” be of concern to smaller suppliers.
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Etemad, H. The emerging new architecture in international entrepreneurship: Dynamic impacts of business models transformation favoring accelerated internationalization of smaller enterprises. J Int Entrep 21, 271–300 (2023). https://doi.org/10.1007/s10843-023-00341-6
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DOI: https://doi.org/10.1007/s10843-023-00341-6