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Is there a CAGE around cyberspace? How digital innovations internationalize in a virtual world

This research paper shows that while most digital innovations are globally available from inception via online platforms, substantial user adoption barriers persist in cyberspace as users may find foreign digital innovations less relevant to their specific needs. These barriers can be partly overcome by engaging users in promoting digital innovations through word-of-mouth and in creating more diverse content to satisfy preferences across international markets.

WHAT YOU NEED TO KNOW

Authors Noman Shaheer and Sali Li draw attention to unique internationalization challenges in cyberspace and chart some novel strategies for overcoming them. Many start-ups develop digital innovations that are globally available since inception via online platforms. They analyze digital internationalization as a process of user adoption across countries. Digital internationalization can be subject to four types of user adoption barriers: cultural, administrative, geographic, and economic (CAGE) and these may lead to differences in user preferences across countries. Therefore, digital innovations developed in one country may appear less relevant to user needs in another. The authors analysis suggests that engaging users in value co-creation can help overcome these user adoption barriers. Specifically, they identify two demand-side strategies for engaging users: a social sharing strategy and (2) a virtual community strategy. A social sharing strategy encourages current users to post their usage of a digital innovation on their social media profiles, which can then reach prospective foreign users. A virtual community strategy enables users to interact with each other, encouraging current users to produce diverse content to meet the needs of users across different countries.

MORE DETAILS

What Did the Researchers Do?

Noman and Sali created several application programming interfaces (API) to set up data crawlers and web robots on a number of websites. These APIs gathered a large, longitudinal, cross country database tracking 127 newly launched mobile apps at Apple's app store across 50 countries on a daily basis for 18 months. This allowed them to analyze country-wise penetrations of apps since inception and to evaluate major factors that accelerate or impede digital app internationalization.

What Did the Researcher Find?

The results of their analysis show that the digitalization indeed enables rapid internationalization with apps in their sample penetrating16 countries on average, within only 12–15 months after their launch. They also find evidence of CAGE adoption barriers, including higher geographic distances between home and foreign markets, which adversely impact international adoption of the mobile apps. Their results also show that a social sharing strategy was effective in counteracting adoption barriers emanating from high cultural, administrate, and economic cross-country distances, whereas a virtual community strategy was only effective in presence of high economic distance. Lastly, neither strategy could overcome adoption barriers caused by cross-country geographic distance.

HOW CAN YOU USE THIS RESEARCH?

Given low foreign entry barriers in the virtual world, start-ups may be tempted to focus on developing globally appealing innovations (‘killer apps’ for example). However, international success is not only function of technical superiority and product quality. Indeed, digital advancements may deepen cross-national differences through greater customization so start-ups must account for cross-national CAGE adoption barriers. Creatively using current users to promote and improve digital innovations can be particularly critical for resource-constrained entrepreneurs.

WANT TO KNOW MORE?

Contact: Noman Shaheer, noman.shaheer@sydney.edu.au
Shaheer, N. A., & Li, S. The CAGE around cyberspace? How digital innovations internationalize in a virtual world. Journal of Business Venturing, 35, no. 1 (2020): 105892.

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