Overcoming user adoption barriers and accelerating the internationalization of digital innovations
Research Paper Title:
“The CAGE around cyberspace? How digital innovations internationalize in a virtual world”
Authors:
Noman Ahmed Shaheer (University of Sydney)
Sali Li (University of South Carolina)
Background:
A key feature of globalization has been digitalization. In past research, internationalization has been conceptualized as a gradual process of entering foreign markets. Startups trying to internationalize are challenged by entry barriers imposed by cross-national distance, such as cultural, administrative, geographic, and economic (CAGE) distances. Such barriers to entry may not be a problem for digital innovations, who can join globally accessible online platforms that internalize many barriers. This study moves beyond the traditional international entrepreneurship focus on foreign market entries to conceptualize digital internationalization as a process of user adoption through which digital innovations penetrate across foreign countries. This study examines how CAGE distances can affect user adoption in mobile app startups and discusses demand-side strategies to accelerate internationalization speed.
Methodology:
Sample: newly launched mobile apps available in the health & fitness category of Apple's app store
Sample Size: 127 apps and 5757 app-country observations
Analytical Approach: hazard model with an accelerated failure time (AFT) specification
Hypotheses:
1. An increase in the CAGE distances slows the penetration speed of a digital innovation in a focal country.
2. Pursuing a social sharing strategy will mitigate the effect of the CAGE distances on the penetration speed of a digital innovation.
3. Pursuing a virtual community strategy will mitigate the effect of the CAGE distances on the penetration speed of a digital innovation.
Results:
The coefficients for cultural, geographic, and economic distances are statistically significant and positive, showing that most CAGE distances increase the time to penetration.
The relationship between distance and the time to penetration is less positive for apps that pursue a social sharing strategy.
Virtual community strategy has a limited impact on the time to penetration when cross-national distance is high.
Conclusion:
As cross-national differences may still prevent users from adopting foreign innovations, start-ups must think beyond technical sophistication and account for cross-national distance to take advantage of the global opportunities in cyberspace. Creatively using current users through social sharing and virtual communities may enable resource-constrained entrepreneurs to accelerate the internationalization speed of their digital innovations.
