Digitalization, internationalization and scaling of online SMEs

Abstract

While small- and medium-sized enterprises (SMEs) are increasingly required to look for growth beyond their national markets, the increasing digitalization of the global economy provides them with ample opportunities for internationalization. However, many SMEs are unable to internationalize digitally because they were not initially designed to scale that way, and managing business model scaling in the online environment is challenging. In response to this, the current study applies a quantitative descriptive analysis of survey data on business adoption of digital technologies by 535 Canadian online-based SMEs. The aim is to understand, 1) how internationally-oriented online SMEs differ in terms of their digitalization from those focused on domestic markets, and 2) how these differences are related to the companies’ business model for scaling internationally. The results show that internationally-oriented online SMEs differ from their domestically-oriented peers, in terms of a higher degree in the 1) use of information systems, 2) extent of value networks, 3) emphasis on key internal resources, and, 4) dealing with cybersecurity issues. The study contributes to the literature by suggesting that online SMEs willing to scale internationally through digitalization need to develop a set of capabilities in regard to partnering, customer relationship, and business process management, as well as investing in information and communication (ICT) resources and cyber resilience.