Digital Transformation in International Markets and International Omnichannel

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.

Contributor:

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. 2017; Westerman 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. 2022; Matarazzo 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 2011; Akaka 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. 2016; Ciasullo 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

References

Warner, Karl S., and Maximilian Wäger. 2019. Building dynamic capabilities for digital transformation: An ongoing process of strategic renewal. Long Range Planning 52: 326–49.
Morakanyane, Resego, Audrey A. Grace, and Philip O’Reilly. 2017. Conceptualizing digital transformation in business organizations: A systematic review of literature. Paper presened at Bled eConference, Bled, Slovenia, June 18–21.
Westerman, George, Didier Bonnet, and Andrew McAfee. 2014. Leading Digital: Turning Technology into Business Transformation. Boston: Harvard Business Press.
Bharadwaj, Anandhi, Omar El Sawy, Paul Pavlou, and N. Venkatraman. 2013. Digital business strategy: Toward a next generation of insights. MIS Quarterly 37: 471–82.
Coviello, Nicole, Liena Kano, and Peter W. Liesch. 2017. Adapting the Uppsala model to a modern world: Macro-context and microfoundations. Journal of International Business Studies 48: 1151–64.
Vial, Gregory. 2019. Understanding digital transformation: A review and a research agenda. The Journal of Strategic Information Systems 28: 118–44.
Shahi, Chinmay, and Manish Sinha. 2021. Digital transformation: Challenges faced by organizations and their potential solutions. International Journal of Innovation Science 13: 17–33.
Chawla, Raghu, and Praveen Goyal. 2021. Emerging trends in digital transformation: A bibliometric analysis. Benchmarking: An International Journal 29: 1069–112.
Rothberg, Helen, and Erickson G. Scott. 2017. From Knowledge to Intelligence, 1st ed. London: Routledge.
Wood, Matthew S., and William Mckinley. 2020. The entrepreneurial opportunity construct: Dislodge or leverage? Academy of Management Perspectives 34: 352–36.
Ahsan, Mujtaba, and Martina Musteen. 2011. Multinational enterprises’ entry mode strategies and uncertainty: A review and extension. International Journal of Management Review 13: 376–92.
Leonidou, Leonidas C. 2004. An analysis of the barriers hindering small business export development. Journal of Small Business Management 42: 279–302.
Davis, Peter S., and Paula D. Harveston. 2000. Internationalization and Organizational Growth: The Impact of Internet Usage and Technology Involvement Among Entrepreneur-led Family Businesses. Family Business Review 13: 107–20.
Autio, Erkko, and Ivo Zander. 2016. Lean internationalization. Academy of Management Proceedings 1: 2–27.
Lee, Yan-Yin, Mohammad Falahat, and Bik-Kai Sia. 2019. Impact of Digitalization on the Speed of Internationalization. International Business Research 12: 4.
Matarazzo, Michela, Gabriele Barbaresco, and Riccardo Resciniti. 2016. Effects on cultural distance of foreign acquisitions: Evidence from Italian acquired firms. Mercati e Competitività 3: 159–81.
Covin, Jeffrey G. 1991. Entrepreneurial versus conservative firms: A comparison of strategies and performance. Journal of Management Studies 28: 439–62.
Gupta, Vishal K., Suman Niranjan, Banu A. Goktan, and John Eriskon. 2016. Individual entrepreneurial orientation role in shaping reactions to new technologies. International Entrepreneurship and Management Journal 12: 935–61.
Ipsmiller, Edith, Desislava Dikova, and Keith D. Brouthers. 2022. Digital Internationalization of Traditional Firms: Virtual Presence and Entrepreneurial Orientation. Journal of International Management 28: 100940.
Matarazzo, Michela, Lara Penco, and Giorgia Profumo. 2020. How is digital transformation changing business models and internationalisation in Made in Italy SMEs? Sinergie Italian Journal of Management 38: 89–107.
Ciasullo, Maria Vincenza, Paola Castellani, Silvia Cosimato, and Chiara Rossato. 2019. How smartness enables value co-creation: An explorative study of Italian fashion retail. In Predicting Trends and Building Strategies for Consumer Engagement in Retail Environments. Edited by Giuseppe Granata, Andrea Moretta and Theodosios Tsiakis. Hershey: IGI Global, pp. 226–48.
Verhoef, Peter C., P. K. Kannan, and Jeffrey J. Inman. 2015. From multi-channel retailing to omni-channel retailing introduction to the special issue on multi-channel retailing. Journal of Retailing 91: 174–81.
Du, Shaofu, Li Wang, and Li Hu. 2019. Omnichannel management with consumer disappointment aversion. International Journal of Production Economics 215: 84–101.
Chen, Xiaoxia, and Zhongbin Li. 2021. Scientific Measurement and Visualization Analysis of International Omni-channel Retailing Research (2011–2020) Research on Knowledge Graph-Based on Co-word Analysis. Journal of Physics: Conference Series 1861: 012078.
Chandler, Jennifer, and Stephen L. Vargo. 2011. Contextualization: Network intersections, value-incontext, and the co-creation of markets. Marketing Theory 11: 35–49.
Akaka, Melissa Archpru, Stephen L. Vargo, and Robert F. Lusch. 2013. The complexity of context: A service ecosystems approach for international marketing. Journal of International Marketing 21: 1–20.
Storbacka, Kaj, Roderick J. Brodie, Tilo Böhmann, Paul P. Maglio, and Suvi Nenonen. 2016. Actor engagement as a microfoundation for value co-creation. Journal of Business Research 69: 3008–17.
Ciasullo, Maria Vincenza, Francesco Polese, Raffaella Montera, and Luca Carrubbo. 2021. A digital servitization framework for viable manufacturing companies. Journal of Business & Industrial Marketing 36: 142–60.
Barile, Sergio, Maria Vincenza Ciasullo, Orlando Troisi, and Debora Sarno. 2017. The role of technology and institutions in tourism service ecosystems. The TQM Journal 29: 811–33.
Frishammar, Johan, Javier Cenamor, Harald Cavalli-Björkman, Emma Hernell, and Johan Carlsson. 2018. Digital strategies for two-sided markets: A case study of shopping malls. Decision Support Systems 108: 34–44.
Sun, Yongqiang, Chaofan Yang, Xiao-Liang Shen, and Nan Wang. 2020. When digitalized customers meet digitalized services: A digitalized social cognitive perspective of omnichannel service usage. International Journal of Information Management 54: 102200.
Smith, Adam. 1776. The Wealth of Nations. New York: The Modern Library.
Vargo, Stephen L., and Robert F. Lusch. 2016. Institutions and axioms: An extension and update of service-dominant logic. Journal of the Academy of Marketing Science 44: 5–23.
Zuiderwijk, Anneke, Marijn Janssen, Geerten van de Kaa, and Kostas Poulis. 2016. The wicked problem of commercial value creation in open data ecosystems: Policy guidelines for governments. Information Polity 21: 223–36.
Frow, Pennie, Janet R. McColl-Kennedy, and Adrian Payne. 2016. Co-creation practices: Their role in shaping a health care ecosystem. Industrial Marketing Management 56: 24–39.
Mars, Matthew M., Judith L. Bronstein, and Robert F. Lusch. 2012. The value of a metaphor: Organizations and ecosystems. Organizational Dynamics 41: 271–80.
Akaka, Melissa Archpru, and Stephen L. Vargo. 2015. Extending the context of service: From encounters to ecosystems. Journal of Services Marketing 29: 453–62.

© Text is available under the terms and conditions of the Creative Commons Attribution (CC BY) license; additional terms may apply. By using this site, you agree to the Terms and Conditions and Privacy Policy.