Internationalization and The Use of ICTs

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1 Internationalization and The Use of ICTs Gerard L. Danford, Haaga-Helia University of Applied Sciences, Finland As the geographical boundaries of the firm expand, complex organizations emerge which need greater information-processing capacity. Since internationalization proceeds step-by-step, its success depends on the ability of the firm to gather the necessary information during the process. Therefore, information-processing plays a crucial role in the internationalization process. In this research internationalization is investigated by examining the different stages in that process, defined as: products, operations and markets (POM). Informationprocessing capacity is investigated by examining the use of information and communications technologies (ICTs). The findings confirm a strong relationship between the incremental stages of internationalization and growing ICT intensity. Furthermore, taking an information-processing perspective on internationalization uncovered a significant challenge to mainstream internationalization theory. ICTs were found to speed up information intensive processes. The impact of that affect is to speed up the process of internationalization. Introduction This research is relevant because in the year 2000 alone, more than 2 trillion dollars was spent by industries worldwide on information and communications technologies. The rate of investments in such technologies has been growing at twice the rate of the global economy (de la Torre and Moxon, 2001). Furthermore, the study of ICT use during internationalization has received limited attention.the uncertainty and complexity faced in international business is considerable (Spender and Grevesen, 1999). Furthermore, accelerating technological developments are now forcing firms to internationalize more rapidly than some decades ago (Johanson and Vahlne, 2003, p. 83). Firms need to adopt information-processing mechanisms, which allow them to process vast amounts of information and simultaneously deal with information overload. Information systems are a key integrating mechanism. Considering the phenomenal development of information technologies these days, information based integration will be a more important and effective form of integrating various business functions and operations in the coming years. Despite its importance, previous research on global integration has given limited attention to this mode. The information-based mode should deserve far greater attention and should be a critical part of mechanisms for global integration (Kim, Park and Prescott, 2003, p. 340). Furthermore, viewing organizations as systems that need to balance organizational information-processing capacities against information-processing requirements originating from the firm s organization, strategy and environment can support the internationalization process (Axinn and Matthyssens, 2002). For the firm to internationalize, information has to be as broad as possible and relevant. This is because the international environment is highly uncertain, risky and containing excessive information. To determine alternative courses of action and identify opportunities and threats, information must be managed (Liesch and Knight 1999, Kim, et al., 2003). Furthermore, informationprocessing can help reduce lateral rigidity during internationalization and help decision-makers make the right decisions (Luostarinen, 1989). Therefore, increased information-processing can support uncertainty reduction, improve risk mitigation and help management identify opportunities during internationalization. During early stages of internationalization the information-processing capacity of firms is limited. This explains why firms tend to first expand into countries, which exhibit limited psychic distance (Evans, Treadgold and Mavondo, 2000). Psychic distance impacts the speed of internationalization, learning and knowledge accumulation. Slower internationalization is also due to undeveloped information-processing mechanisms. Rapid internationalization occurs when there is a close fit between psychic distance, knowledge, learning and information-processing capacity. However, there is limited research on the use of new information-processing mechanisms, such as ICTs, in international business. Clearly, there is much empirical and theoretical research to be done in order to get behind the hype and develop a clearer picture and understanding of how the Internet is changing the world of international business including that of firms foreign market expansion (Petersen, Welch and Liesch, 2002, pg. 219). ICTs

2 are highly effective information-processing mechanisms (Galbraith, 2002). Moreover, ICTs have the potential for reducing uncertainty, enhancing the learning process and facilitating the creation, transfer and retention of knowledge during internationalization (Egelhoff 1991, Petersen, et al., 2002, Galbraith, 2002, Petersen and Welch, 2002). Positioning Of Research This research builds on the work of Egelhoff (1991). Egelhoff explored in detail informationprocessing within the context of the multinational corporation (MNC). However, this research differs in that a deeper exploration is made of informationprocessing during the different stages of internationalization. This research also builds on the work of Petersen, Welch and Liesch (2002). These authors conceptualized the likely impact, which the Internet might have on firms foreign market expansion. This research augments their work by more explicitly testing the phenomenon through multiple empirical investigations. This research is also supported by previous observations made on the phenomenon in question. Because international environments are associated with uncertainty, it follows that internationalization leads to a significant increase in environment-related informationprocessing requirements. As the relative size of the foreign sector increases product interdependency should increase. Thus, internationalization would require more product-related information-processing capacity. Internationalization s influence on the volume of firm-related information-processing depends on the market entry mode used. Although pure export-oriented strategies will not greatly increase firm-related information-processing, internationalizing production often demands a higher level of firm-related information transfer (Wolf and Egelhoff, 2001, p. 124). ICTs have the potential to improve market transactions, reduce search costs and improve response time to new opportunities during internationalization (Petersen et al. 2002). Therefore, there is little doubt that the ICT revolution will indeed transform business processes, customer relationship management, supplier and procurement systems, the structure of industries, and, perhaps, the very nature of firms The field of international business is particularly vulnerable to this transformation. The act of crossing boarders-whether by products, services, ideas, people or money-is at the core of our field. Such crossing, imply a multitude of processes that are information intensive (de la Torre, et al., 2001, p ). However, this research is exploratory because investigations on the impact of ICTs during internationalization are rare (de la Torre, et al., 2001, Petersen et al., 2002). There has been international ICT research addressing macro structural issues (Leamer and Storper 2001, Zaheer and Manrakhan 2001). The impact of ICTs on transaction costs in international business has also been investigated (Bakos 1997). Furthermore, research employing a combination of theoretical approaches have been completed (Mata, Fuerst and Barney 1995, Wade and Hulland, 2004). Unfortunately, few research efforts have been carried out which explore the organizational impact of ICTs on international business. Therefore, work on more micro aspects of the impacts of ICTs on IB is certainly needed (de la Torre, et al., 2001, p. 631). Because of the exploratory nature of this research, a mixed empirical methodology was employed (quantitative and qualitative). This was done to enrich the researcher s understanding of the phenomenon (Onwuegbuzie and Leech, 2005). Mixed-method research is occurring increasingly across a range of disciplines (Mingers, 2001). Researcher results could be richer and more reliable if different research methods are routinely combined together (Robey, 1996). Conceptual Framework In this research internationalization is operationalized through the different stages of internationalization (Figure 1). As a firm progresses through each dimension the level of internationalization increases. Figure 1. Internationalization Dimensions Product Dimension (product type) Goods Services Know How Systems Operational Dimension (operation mode) Non-investment marketing activity Direct investment marketing activity Non-investment operations Direct investment operations Market Dimension (markets distance) very close Close Medium Distant Source: Adapted from Luostarinen, 1994 Information-processing is operationalized by investigating a wide range of ICTs. The original theoretical proposition of this research assumed a

3 relationship between growing ICT intensity and internationalization as: y = α + β x. The intensity (variety) of ICTs employed is the dependent variable (y) and the independent variable (x) is internationalization. The ICT mechanisms selected for this research included: , Internet, Intranet, Extranet and EDI (electronic data interchange). ICT intensity was operationalized by using ordinal intervals. Therefore, a combination of mechanisms is used as the indicator of ICT intensity, rather than the use of individual mechanisms. was found to be the alpha (α). The original theoretical proposition of the research is presented graphically in Figure 2. Figure 2. Proposed Relationship Between Internationalization Stages and Growing ICT Intensity ICT/INFORMATION PROCESSING INTENSITY strategic and environmental impact of internationalization. Egelhoff differentiated between logistical and cognitive information-processing. Logistical information-processing is concerned with information-processing capacities and requirements inherent in the firm strategy and environment. Organizational structures and processes to transfer and access information are the focus of the logistical approach. Furthermore, different organizational design features possess varying capacities to process information. Vertical information systems and lateral relations are logistical mechanisms, which have the greatest capacity to process information. Vertical systems include computer-based systems and staff groups. Lateral mechanisms include: groups, E-coordination, integrators and matrix/line organizations. Based on the definition of ICTs applied in this research mechanisms would also include: information systems, information technology and virtual-human interfaces such as e-meetings etc. (Galbraith, 2002, 2006). α I 4 I 3 I 2 I 1 Information Processing INTERNATIONALIZATION STAGES Galbraith (1973) is credited with conceptualizing and unfolding the vision of the organization as essentially an information-processing entity. He considered organizational diversity to be a result of strategies that organizations employ to cope with environmental uncertainty. He defined uncertainty as the difference between the amount of information required to perform the task and the amount of information already possessed by the organization. Galbraith s work was based on the premise that the observed variations in organization forms represent variations in the strategies of organizations to adapt to information-processing requirements of the task and make decisions during the actual execution of the task. However, Egelhoff (1991) extended Galbraith s work by developing a multidimensional framework to define information-processing capacities and requirements in international business. He felt that increased organizational informationprocessing capacity requirements result from the Cognitive information-processing focuses on how information-processing is influenced by psychological and social-psychological characteristics of organizational members (Egelhoff, 1991, p. 346). However, the cognitive view is not explored in this research. Empirical studies verifying Galbraith s conceptualizations and Egelhoff s extension have been scarce in the international business domain (Petersen, et al., 2002, Premkumar, Ramamurthy, and Saunders, 2005). The importance of information acquisition, learning and knowledge during the internationalization process has been recognized. The role of information-processing and in particular the use of ICTs during internationalization, however, receives brief treatment (de la Torre, et al., 2001, Petersen, et al., 2002, Kim, et al., 2003). Therefore, conceptual and theoretical research on information-processing during internationalization has outpaced empirical research. It is ironic that there have been almost no studies that examine comprehensively the role of information and knowledge acquisition during the internationalization of the firm (Liesch et al., 1999, p. 384). However, the internationalization process of firms has been studied for decades (Luostarinen 1970 and 1994; Johanson and Vahlne 1977, Bilkey and Tesar, 1977). In those seminal studies internationalization was described as an incremental process during which learning plays an important role and psychic distance impacts the efficiency of information flows. Network theory (Anderson, Hakansson and Johanson, 1994), portfolio theory

4 (Rugman, 1979), knowledge internalization (Nonaka and Tekeuchi, 1995), resource based studies (Collis, 1991) and socio-competitiveness studies (Ohmae, 1991, Fouad, Mrad 2006) have also addressed information-processing during internationalization to a very limited extent. The presence of significant differences between global and domestic information technology requirements has also been researched (Tractinsky and Jarvenpaa, 1995). The alignment between technology and strategy has been the dominant stream in that research effort. However, ICTs have been the subject of analysis in few international business studies, especially from an internationalization perspective (Egelhoff 1991, de la Torre, et al., 2001, Kim, et al., 2003). By limiting this empirical investigation to ICTs the research neglects to consider other vertical and lateral mechanisms such as liaison roles, teams, and staff groups. However, teams and staff groups can also be supported by ICTs. Although this is an important limitation, the gap in current research prompted the author to investigate the internationalization-ict relationship (de la Torre, et al., 2001). Internationalization The internationalization stages model is a process and behavioral phenomena. Experiential knowledge is emphasized in that process during which knowledge is acquired by operating on foreign markets. Additionally, the accumulation of experience is vital to future internationalization. Furthermore, internationalization is firm specific and involves high risks. Therefore, uncertainty reduction during the process is necessary and significantly influenced by lateral rigidity. Internationalization is also a dynamic and multidimensional process involving buying, selling and different forms of cooperation. Furthermore, internationalization is incremental and involves a deepening commitment to different operating forms and a chain of activities. The internationalization process involves market selection and commitment based on; know how, human resources and technology. However, the process is unpredictable and market knowledge (both objective and experiential) plays a critical role. Therefore, information needs are affected by imperfect access to information and knowledge. This imperfect aspect impacts market selection and operational mode choices. Psychic distance affects information needs. Hence, country, institutional, culture, competitor, market and customer aspects all impact the information needs of the firm during internationalization. Furthermore, information-processing during internationalization is a means of knowledge accumulation (Johanson & Vahlne, 2003). The result of knowledge accumulation is the reduction of uncertainty and perceived risk. Because experiential knowledge is costly, difficult to interpret and harder to transfer, utilizing appropriate informationprocessing mechanisms supports the firm during the internationalization process. Additionally, ICTs influence the firm s initiatives, information search processes, and information evaluation. Therefore, ignorance, unfamiliarity and uncertainty related to international business activities can be reduced through collecting, interpreting and evaluating information on these matters` (Luostarinen, 1970, Eriksson and Johansson and Majkgard and Sharna 2000). International environments are more geographically spread and culturally diverse, thus, even relatively routine tasks are geometrically intensified. Furthermore, problems in international business are unique to the international operating environment, as opposed to being merely distancerelated problems. Therefore, many issues are country specific and they represent constraints on the organization. As a firm s internationalization expands the firm must put in place a comparable amount of organizational support, if it wishes to advance further. Information systems maturity (formalization of planning, control, organization and integration) is a significant factor in predicting how firms react positively to new developments in the environment. The trend seems to be towards locally generated information and communications channels, rather than channeling information away from the field for headquarters consumption. Therefore, the distributed international organizations need suitable information processing mechanisms in order to flourish. Furthermore, as international organizations become less hierarchical, it can be more difficult to locate strategic and tactical decisions in different levels of the organization. This is because the location in an organization of specific kinds of knowledge and capabilities is strongly influenced by the organizations formal structure (Egelhoff, 1988). As more complex, less hierarchical and heterogeneous organizational processes are emerging; non-routine reciprocal information-processing (sensing, responding and defusing) is significantly expanding. Therefore, new design rules at all levels of the organization are required (flexible and emergent) which emphasize direct changes to informationprocessing first and foremost and place less emphasis on structural change (Egelhoff, 1988). Growing environmental uncertainty and equivocality require that firms balance information capacities with information-processing requirements. In unstable environmental situations (such as that faced during internationalization), uncertainty

5 increases. Because the organization can be viewed as an open system, the need for coordination emerges as the system grows in complexity. Environmental uncertainty can be due to internal and external factors. Furthermore, perceived environmental uncertainty is also related to organizational structure and firm strategy. Therefore, the need for processing of objective and experiential knowledge should grow as the firm progresses through the stages of internationalization (Luostarinen1970, Forsgren 2002, Johanson et al., 2003). Moreover, market knowledge reduces perceived market uncertainty. ICTs have been found to be an uncertainty-reducing information source. Search costs can also be positively impacted through ICTs (Luostarinen 1989, Liesch, et al., 1999, Peterson, et al., 2002). Propositions Based on the above discussion the following working propositions were postulated: WP 1. As firms develop their level of international business, the need for increased informationprocessing capacity grows and ICTs (logistical information-processing mechanisms) are increasingly employed WP 2. As firms increase their product offering (sales objects) during internationalization stages, the need for increased information-processing capacity grows and ICTs are increasingly employed. WP 3. As firms expand their use of operational modes (export etc.) during internationalization stages, the need for increased information-processing capacity grows and ICTs are increasingly employed. WP 4. As firms expand the number of markets served, during internationalization stages, the need for increased information-processing capacity grows and ICTs are increasingly employed. Empirical Description In order to more fully understand the phenomenon in question it was considered necessary to employ mixed-method research during the empirical phase. The advantages of the mixedmethod approach are numerous (Tashakkori and Teddlie 1998). Two empirical investigations were employed in order to better understand the mechanisms that cause the outcomes rather than only relying on the statistical significance of correlations between attributes and outcomes (Christensen, et al., 2003, p. 74). During the empirical phase, the researcher was conscious of the need to be able to make generalizations on the findings even though the work was exploratory. Study 1 used data from a large-scale domestic Finnish survey of ICT usage (Statistics Finland 2001) in a regression analysis. An Ordinary Least Squares (OLS) regression model was used to study the relationship between the dependent variables (Internet, Intranet etc.) and independent variables (imports and exports). Statistics Finland was able to gather import/export data for participating firms. The results of the regression analysis suggested that there was a strong probability of a link between involvement in imports, exports and ICT usage. However, the regression analysis was used only to make exploratory observations on ICT usage and involvement in international business (import and export). There were no assumptions made on the genralizability of the findings. Rather, the findings were felt to be indicative of the relationship. A deeper investigation of that relationship was explored in Study 2. Empirical Study 2 was a telephone survey made with 66 Finnish firms. ICTs were defined as: , Internet, Intranet, Extranet and EDI. These information-processing mechanisms have been investigated in other international studies (Petersen, et al., 2002, Kim, et al., 2003). The results confirmed a strong and positive relationship between the stages of internationalization and growing ICT intensity. Results: Study 1 The results from the exploratory regression analysis suggest that an important relationship might exist between early stages of internationalization (import-export) and the use of ICTs. Most of the variables had strong significance or significance in relation to ICT usage (Figure 3). Figure 3: Correlation of Imports/Exports and Information-processing Mechanisms Use ICTs Import/Export Pr>ItI Firm has www site (4119 observations) Firm has Intranet (3810 observations) Firm has Extranet (3810 observations) Firm has EDI (3681 observations) Import Export Import Export Import Export Import Export *** <.0001**** 0.002**** *** **** <.0001****

6 <0.01 = strong significance **** <0.05 = significance *** <0.10 = some significance ** The variables measured in this regression analysis represented only early stage activities (imports and exports). However, the regression analysis involved five ( was employed by majority) different ICTs. Descriptive analysis, such as the above, can make some probabilistic statements of association (Christensen, et al., 2003). Nevertheless, one can only assert on average the attributes associated with results. Testing inductive proposition through different sets of data is one way to proceed. However, based on these regression analysis findings one can assume that some relationship exists between early stages of internationalization and ICT usage. These findings imply that internationalization is informationintensive (de la Torre, et al., 2001). However, one should not draw too many conclusions or argue that the results are applicable to the entire population of internationalizing firms (Petersen et al. 2002). Figure 4 presents sample distribution by industry. Figure 5. Figure 5. Telephone Survey Respondent Industry Sector Breakdown The distribution of respondents by enterprise size and respondent position are presented in Figure 6 and Figure 7. Figure 6. Firm Size Distribution Based on Turnover Size Category Number of Respondents Micro 4 Small 8 Medium 23 Large 31 Total Number 66 Note: Size categories are based on OECD guidelines (OECD Small and Medium Enterprise Outlook, 2000) Figure 7. Telephone Survey Participant Profiles Figure 4. Distribution of Regression Sample by Industry Sector % Of Respondents Manufacturing 37 Business services 17 Retail trade 11.5 Transport/telecommunications 10 Construction 8 Wholesale trade 8 Hotels, restaurants and catering 6 Trade with motor vehicles and Fuels 2.5 Results: Study 2 Empirical Study 2 was analyzed using SPSS (Statistical Package for the Social Sciences). SPSS is a software package used for conducting statistical analyses, manipulating data, and generating tables and graphs that summarize data. The sample of respondents broken down by industry is presented in Sector % of Respondents Electronics/Software 30 Retail/Consumer goods 26 Engineering/Chemicals/ Metals 13 Food & Drink 13 Construction & Forest sector 10 Trading & Transport 8 Total 100% Number of Position Respondents CEO, Director, and Group Management 10 Marketing, Sales, Export, etc. Managers 32 Corporate Communications Department Personnel 24 Total 66 Empirical Study 2 revealed that a strong relationship (supporting WP1) exists between the stage of internationalization (products, operations and markets) and growing ICT intensity. However, all of the findings did not fully match the mainstream sales object pattern observed (Figure 8) in earlier internationalization research (Luostarinen 1979). One explanation for this could be that know-how firms do not need certain ICTs because they don t sell physical goods Therefore, the findings revealed that as an internationalizing firm progresses through different sales objects ICT intensity grows (WP2 partially supported).

7 (Hassel, Hopner, Kurdelbusch, Rehder and Zugehor, 2003). Therefore, WP4 was partially supported. Figure 8. Internationalization Sales Object and ICT Intensity Figure 10. Internationalization Market Modes and 3,0 3,5 2,5 Average ICT Intensity 2,6 3,0 3,0 2,0 2,1 2,5 Average ICT Intensity 1,5 1,4 1,7 2,0 2,1 2,0 2,3 1,0 1,5 0,5 1,0 0,5 0,0 Product sales Service sales Know-how sales System sales Business sales object 0,0 ICT Intensity >50 Number of foreign countries the company sells in Regarding operational strategy, the findings also revealed (Figure 9) growing ICT intensity as firms progress from inward, outward and then to cooperative stages (WP3 supported). Figure 9. Internationalization Operational Mode and ICT Intensity Participants were also asked to indicate the major benefits gained (Figure 11) through the usage of ICTs during internationalization. Increased speed of business processes was considered to be the major benefit. Figure 11. Primary Benefits of Employing ICTs 3,0 Benefits of ICTs 2,5 Average ICT Intensity 2,0 1,9 2,1 2,3 2, ,5 40 1,0 1,1 Count 30 0,5 20 0,0 Importing Exporting Production abroad Licensing outward Technology transfer outward 10 0 Speed Costs Quality Increased sales Increased profits Finally, there appears to be a trend towards growing ICT intensity as the firm expands its market coverage (Figure 10) during internationalization Furthermore, participants were also asked to elaborate on those benefits. Table 1 summarizes the major benefits gained through the use of ICTs during internationalization. These benefits have been

8 categorized based on the product, operation and market framework (POM). Many of the benefits listed will have a positive impact on more than one POM variable. Table 1. Major benefits gained during internationalization by employing ICTs Product : Sales Object Products Services Systems know-how Operations In-ward Out-ward Co-operative ICTs: Major Benefits Gained During Internationalization on-line sales, on-line sales catalogues, electronic trading, more quickly solve problems Internet and Extranet based services, faster communication and data flows, easier exchange of files in original form, less paperwork precise information available, easy to use tools, following technical developments, quicker and more direct information sharing, easier to acquire information more effective networking, simplify and speed up communication, improved information quality, global availability of information, more diversified information available, quicker and less costly information availability ICTs: Major Benefits Gained During Internationalization easier to find and contact potential suppliers, electronic trading, better supplier information exchange, efficient order processing and invoicing more effective communication with distribution channels, customers get better information, lower costs, faster data and information transfers, better customer feedback, improved information sharing with subsidiaries all files in original form and easily exchanged, deeper interaction with core processes, speed of production increased, accounting systems improved, actions taken more quickly on problems, time saving Markets close distant very far ICTs: Major Benefits Gained During Internationalization finding new customer easier, sales and service on Internet, marketing and sales promotion easier, increase sales build awareness, after sales service, quickly respond to customers needs, easier to communicate, improved competitive scanning provide more information to own personnel in network, good Extranet for contacts with customers, e-commerce opportunities, improved competitive scanning, better customer feedback, better communication in markets where infrastructure is undeveloped Summary of Theoretical Contribution This research has demonstrated that ICT intensity gradually increases as the firm internationalizes because of environmental changes and resulting changes in firm strategy, organization and knowledge. These changes contribute to growing uncertainty and complexity. As firm s progresses through stage dimensions organizational learning occurs, experiential knowledge is accumulated, and procedural knowledge is gained (Johanson et al., 2003). Furthermore, the firm encounters psychic distance related barriers and lateral rigidity during internationalization. ICTs diminish the negative effects of growing complexity and psychic distance. Moreover, ICTs support increasingly cost effective and efficient transfers of knowledge from one product, operational and market context to another (Petersen, et al., 2002). ICTs can in fact accelerate the internationalization process. The Internet holds the potential of reducing the uncertainty associated with doing business in foreign markets. Since the uncertainty about foreign markets (as perceived by firms decision-makers) has been considered a major barrier to foreign market expansion, in the hands of international managers the Internet may be an instrument that accelerates foreign market expansion (Petersen et al. 2002, p. 208). However, information overload and the availability of credible information still represent a challenge when planning to increase informationprocessing capacity during internationalization. Information overload may also contribute to rash foreign market expansion and increased uncertainty.

9 Furthermore, the impact of bounded rationality remains (Simon, 1959). Despite the presence of bounded rationality, ICTs are effective mechanisms for reducing uncertainty during internationalization. In addition, competitive advantage goes to those business managers and companies that deploy and use information, people, and IT more effectively to impact their growth and business performance in their industry and globally (Marchand, 2005, p. 24). Revised Theoretical Proposition The positive impact of ICTs on the process of internationalization represents a major contribution of this research. Therefore, in the revised framework (Figure 12) ICTs play a central role. Figure 12. ICT/Internationalization Relationship Framework Moreover, ICTs have a significant impact on internationalization and influence other elements portrayed in each loop of the framework. This research demonstrated that ICTs accelerate the process of internationalization. The internationalization process was described as firm specific and incremental. The central role of ICTs in the revised framework highlights the fact that ICTs support the growing need for information throughout the internationalization process, which is due to increasing environmental uncertainty. The cumulative effect of growing ICT intensity during the process of internationalization is the acceleration of that process (Arenius, Sasi and Gabrielsson 2006). This acceleration is a result of the positive role which increased information plays in knowledge accumulation and decision-making. Therefore, in this research ICTs were found to support the acceleration of foreign market expansion. The circular/reinforcing feedback loop of the framework illuminates the dynamic interplay, which exists between ICTs (along with other information-processing mechanisms) and internationalization. Logistical Cognitive Information Needs markets mode psychic distance ICTs Environmental Figure 12. ICT/Internationalization Uncertainty Relationship Framework internal external Decision Making distributed learning & knowledge business function Pace & Speed Informationprocessing Internationalization firm specific incremental POM Managerial Implications & Future Research There exists a need to reconsider the combined role of information and knowledge during internationalization. So far, the empirical data are scarce and anecdotal (Petersen et al. 2002). Because this research was exploratory, more research is needed in order to understand the enabling role of ICTs during foreign market entry and expansion. However, one should not view ICTs as the solution to all problems associated with internationalization. The empirical findings revealed that the primary benefit of using ICTs during internationalization was increased speed of processes. It was determined that speed had an impact on a number of processes such as: information flows, money flows, communication flows, information capacity, up-todate information and data transfer rates. Therefore, processes should be prioritized when considering the positive impact of ICTs. Individual business functions should also be accounted for when identifying the benefits that might be gained by increased ICT intensity. Furthermore, there is a need for more in-depth empirical research examining information-processing needs during the different internationalization stages. References Anderson, J. & Hakansson, H. & Johanson, J. (1994). Dyadic business relationships within a business network context. Journal of Marketing, Vol. 58, No. 4; p. 1 (15 pages). Arenius, P. & Sasi, V. & Gabrielsson, M. (2006).

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