Start Date
12-17-2013
Description
This study examines how IT influences the extent of internationalization of firms by using firm-level data on the IT investments and international operations of US multinationals for the 1999-2005 period. We identify managerial/operational complexity, geographic dispersion of subunits, and contextual differences between home and host countries as the main challenges involved in internationalization, and investigate whether IT plays a role in resolving these challenges. Our results suggest that firms’ IT capability plays an important role in their internationalization by resolving the aforementioned challenges. Moreover, a firm’s IT capability (as reflected in its IT investments) and production knowledge (as reflected in its R&D investments) are complementary in their influence on the internationalization of the firm. Given the lack of firm-level empirical evidence on the role of IT in the internationalization and global operations of firms, the current study provides a richer understanding of the impact of IT on firms’ international operations.
Recommended Citation
Yu, Jisun; Han, Kunsoo; and Mithas, Sunil, "THE ROLE OF INFORMATION TECHNOLOGY AS A FIRM-SPECIFIC ADVANTAGE IN INTERNATIONALIZATION OF FIRMS: THEORY AND EVIDENCE" (2013). ICIS 2013 Proceedings. 10.
https://aisel.aisnet.org/icis2013/proceedings/EconomicsOfIS/10
THE ROLE OF INFORMATION TECHNOLOGY AS A FIRM-SPECIFIC ADVANTAGE IN INTERNATIONALIZATION OF FIRMS: THEORY AND EVIDENCE
This study examines how IT influences the extent of internationalization of firms by using firm-level data on the IT investments and international operations of US multinationals for the 1999-2005 period. We identify managerial/operational complexity, geographic dispersion of subunits, and contextual differences between home and host countries as the main challenges involved in internationalization, and investigate whether IT plays a role in resolving these challenges. Our results suggest that firms’ IT capability plays an important role in their internationalization by resolving the aforementioned challenges. Moreover, a firm’s IT capability (as reflected in its IT investments) and production knowledge (as reflected in its R&D investments) are complementary in their influence on the internationalization of the firm. Given the lack of firm-level empirical evidence on the role of IT in the internationalization and global operations of firms, the current study provides a richer understanding of the impact of IT on firms’ international operations.