How ‘Flat’ is the Digital World, Really? Evidence on the Corporate Globalization of Digital Firms

Digital products and services can be delivered over the internet to any country in the world, at minimal cost and nearly instantaneously. Consequently, many scholars have argued that firms selling such digital products (‘digital firms’) operate in inherently global markets, making them international by default. However, empirical research on this topic remains very limited. Our mixed-methods study challenges the prevailing narrative on digital firms by showing that a large proportion of these firms are either purely domestic or exhibit a strong home-region orientation. We find that a key constraint on the internationalization of digital firms is the need to develop complementary capabilities (e.g., sales, customer service, local adaptation, coordination of external resources) that allow digital firms to monetize their products in foreign markets. We argue that internalization theory and the regional strategy perspective can–with some caveats–be usefully applied to digital firms. The empirical and theoretical insights developed in this study add to the emerging scholarly discussion on digitalization in international business.