Digital Transformation in International Markets and International Omnichannel: History
Please note this is an old version of this entry, which may differ significantly from the current revision.
Subjects: Management

The growth of digital technologies, whose core is data management (e.g., big data, internet of things, artificial intelligence, virtual reality, augmented reality, blockchain, etc.), are transforming both societies and organizations. Digitalization assists in determining accurate agro-chemistry and weather conditions, automated quality control of agricultural products, and robotic devices with sensors and radio frequency identifiers in animal husbandry. Agriculture and food production is becoming more innovative with the implementation of new infrastructure, IT platforms, or biotechnologies, like gene editing or synthetic food production. The use of digital technologies allows for monitoring the growth of crops, a decision-making system for irrigation, and the choice of fertilizers. Digitalization has also enabled agricultural firms to gain access to markets abroad and overseas through online marketing platforms and international payments systems. Internationalization has indeed become a crucial condition for both the success and survival of most agri-food firms, that need to enter international markets, helped by the technological advances.

  • digitalization
  • omnichannel
  • internationalization

1. Digital Transformation in International Markets

Digital transformation has become a part of the life of all organizations in the past years, and for this reason, the literature has paid much attention to it (Warner and Wäger 2019). There are many definitions of what digital transformation means, however, there is not one common definition yet. In general, the literature agrees on defining Digital Transformation as the adoption of digital technologies to facilitate key business improvements (Morakanyane et al. 2017Westerman et al. 2014) and, in particular, as an organizational strategy through which to create differential value (Bharadwaj et al. 2013), and improve communication and information exchange worldwide (Coviello et al. 2017). This is possible through the adoption of new digital technologies such as big data, artificial intelligence, and 4.0 machines, which contribute to reaching a competitive advantage (Vial 2019), even with the customization of new products/services (Shahi and Sinha 2021) and the implementation of cost-effective processes (Chawla and Goyal 2021). This is gradually transforming the way companies do business (Rothberg and Scott 2017).
Since the internationalization process requires the collection of information, the analysis of new cultures, and heavy financial investments, it is very difficult to develop, especially for SMEs. In this regard, the introduction of digital transformation could represent the breaking point in facilitating the internationalization of SMEs. The internationalization process of SMEs should be intended as an opportunity for improving both organizational and business performance. As Wood and Mckinley (2020) stated, internationalization provides “the potential for introducing new goods, services, or organizing methods to a market”. From the economic point of view, while it is true that internationalization represents a way to increase sales by making the firm’s products/services available to customers in foreign markets and to obtain a competitive advantage, it is also true that it is often linked with a high level of investments (Ahsan and Musteen 2011), which may represent an important barrier to the internationalization of SMEs (Leonidou 2004).
In this sense, increased use and investments in digital technologies lead to higher degrees of internationalization and growth (Davis and Harveston 2000). As a consequence, digital transformation has brought a situation in which companies are more willing to start an internationalization process, because of decreased costs and risk of failure (Autio and Zander 2016). Digital transformation, with its tools, has made the barriers to the acquisition of market information and cross-border communications fewer (Lee et al. 2019). This means that new digital technologies have increased the ability to predict market demand and customize products and services so that the cultural distance between companies and the customer’s country could be reduced (Matarazzo et al. 2016). This ability is highly dependent on the entrepreneurial orientation and strategic posture of firms (Covin 1991). Companies that operate internationally are more likely to detect opportunities and have a greater propensity for innovative technologies (Gupta et al. 2016) Still, thanks to new technologies, such as e-commerce, companies are able to provide a unique customer experience (Ipsmiller et al. 2022Matarazzo et al. 2020). As a consequence, digital transformation has strongly impacted businesses, by introducing a third choice between the dyadic choices of internalization/hierarchy and outsourcing/market (Matarazzo et al. 2020). In particular, digital transformation introduces the possibility to create a market in which technology and human capital assets match each other and collaborate. Only in this case, digital transformation could reach the maximum of its usefulness. This means that companies should adopt an omnichannel strategy, merging the online and the offline environments (Ciasullo et al. 2019). The omnichannel strategy has been defined as “the synergetic management of the numerous available channels and customer touchpoints, in such a way that the customer experience across channels and the performance over channels are optimized” (Verhoef et al. 2015). Touchpoints could be a physical store, word of mouth, online magazine, or online research. The omnichannel strategy configures a situation in which the product is accessible from many channels, that are no more separated or independent among them but interact together allowing a unique and enhanced experience for consumers (Du et al. 2019). To this point, the literature has focused its studies on the concept of omnichannel in retailing and customer perspectives. On one hand, omnichannel retailing represents the subject on which the whole discipline of research has paid attention. From the retailer’s perspective, it affects logistics services, which has become a key factor in the transformation process of omnichannel retailing and retailing supply chains. On the other hand, from the perspective of consumers, scholars have focused on specific contact points that characterize the decision-making process, from search to purchase. Focus groups, expert interviews, economic decision-making models, machine learning, and other methods, are the elements that construct the omnichannel environment (Chen and Li 2021). As it has been shown, omnichannel studies have concentrated on different and specific perspectives, not considering omnichannel as a firm strategy of behavior in this environment. Consequently, there is the need to conduct a holistic consideration of the omnichannel strategy, which is crucial for the internationalization of SMEs.

2. The Service Ecosystems View of Digital-Enabled International Omnichannel

The need for a holistic view of the omnichannel strategy in an international setting under the wave of digitalization calls for the conceptualization of the omnichannel as a complex service system. In line with the service-ecosystems view (Chandler and Vargo 2011Akaka et al. 2013), in fact, omnichannel can be recognized as a self-regulating system of actors that integrate resources according to the alignment of purposes, shared institutional agreements, and the creation of mutual value through the service exchange (Storbacka et al. 2016Ciasullo et al. 2021). Thus, actors are willing to share resources, overcoming the myopic view of exclusively maximizing their own advantage (Barile et al. 2017). Technology is a key element of the service system ‘omnichannel’ if it is used to engage actors and continuously stimulate resource integration. Through innovative technologies, the channels through which a company can interact with its customers have changed, evolving towards omnichannel access. This phenomenon has generated a better customer experience by incorporating both direct and indirect channels. In this sense, digitalization helped diversify customers’ buying dynamics by sharply changing the interaction with retailers (Frishammar et al. 2018). Today, more than ever, retailers are aware of the fact that it is no longer possible to manage channels separately as customers increasingly use their mobile devices to compare offers on the digital marketplace (Sun et al. 2020). Additionally, in accordance with Verhoef et al. (2015) digitalization enables a better integration of multiple distribution channels and a more efficient resource allocation. The capacity to interpret the needs of customers has influenced their behavioral patterns, which are increasingly attracted to an omnichannel model.
It derives a framework where the concept of value assumes a contextual and experiential nature, which may be read through a service-ecosystem perspective considering both value-in-use, as “real value”, and value-in-exchange, as “nominal value” (Smith 1776). In this approach, the value co-creation process takes on value as a joint process of integration and exchange of resources between several actors, which bases its strength on the relationship between company and customer.
Being a complex service system, omnichannel can be framed through a three-tier architecture (Vargo and Lusch 2016), starting with the micro-level, passing through the meso-level, and reaching the macro-level (Ciasullo et al. 2019). The adoption of a multi-level perspective represents a valuable solution to the digital-enabled international omnichannel as a “wicked” problem (Zuiderwijk et al. 2016), that is, a complex problem, characterized by intricate interactions among a variety of actors, and insolvable by only considering part of the problem. More in-depth, the micro-level embraces the integration of resources and the exchange of value among stakeholders (Frow et al. 2016). The micro boundary is herein outlined by technology-enabled interactions among and between managers, teams, and departments in the various branches and manufacturing sites of the organizations, also considering perceptions and behaviors underpinning these interactions. The meso level comprises a network of actors that interact by exchanging resources and pursuing compatible objectives (Chandler and Vargo 2011). 
The three levels described above are nested (Mars et al. 2012), since every actor may have access to each of them (Frow et al. 2016), and interdependent because each level depends on the existence of the other two (Akaka and Vargo 2015).

This entry is adapted from the peer-reviewed paper 10.3390/admsci12020068

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