internetalisation: the internet’s influence on ... · growth, an sme perspective, international...

I

Internetalisation: the Internet’s influence on international

market growth in the firm’s outward internationalisation

process

Shane Mathews

Doctorate of Philosophy (International Marketing)

School of Advertising, Marketing & Public Relations

Queensland University of Technology

Thesis

IF49 PhD (International Marketing)

Shane Mathews, n2408601


Faculty of Business

School of Advertising, Marketing & Public Relations

II

Internetalisation: the Internet’s influence on international market growth in the firm’s

outward internationalisation process

Supervisors:

Principal

Dr Marilyn Healy, Queensland University of Technology, School of Advertising, Marketing

and Public Relations

Associate

Dr Rumintha Wickramasekera, Queensland University of Technology, School of Advertising,

Marketing and Public Relations

Associate

Dr Steven Pike, Queensland University of Technology, School of Advertising, Marketing and

Public Relations

Associate

Professor Gordon Boyce, University of Newcastle, Faculty of Business and Law

III

Acknowledgements

I would like to sincerely thank my primary supervisor, Dr. Marilyn Healy, for all her

support and guidance throughout this journey. The high level of professionalism and rigour

set by Dr. Healy assisted my development as a researcher. Her integrity will last with me

for the rest of my life. I truly appreciate the enormous amount of time and effort Marilyn

spent helping me to achieve my personal goals. I would like to thank her from the bottom

of my heart. No words could capture the appreciation and gratitude that I feel for Dr. Healy.

Dr. Rumintha Wickramasekera was an invaluable support through the technical and

statistical sections of the research, which were very stressful. I would like to thank Dr.

Wickramasekera for his skill as a researcher in highlighting deficiencies and suggesting

amendments that allowed greater levels of rigour and validity.

Dr. Steven Pike was a great support through the research sections in the later stages of the

PhD. I would like to thank Dr. Pike for his time, experience and honesty in giving critical

feedback that assisted the research. I appreciated Dr. Pike‘s integrity and honest approach.

Thank you, Dr. Pike.

Thanks to Professor Gordon Boyce for his moral support, encouragement and leadership.

These were invaluable to me as an early researcher, as was Prof. Boyce‘s support to attend

conferences, research colloquiums and SEM training courses that were essential for the

research.

I would like to thank Dr. Stephen Cox for his patience and expertise in assisting with the

lengthy and arduous iterative process of survey development. Upon completion, he

encouraged me to ‗just do it‘. Thank you, Dr. Cox, for giving me that push, and for your

expertise and guidance.

Thanks to Dr. Len Coote for his insight and kindness. Even though I was not a student at

UQ, Dr. Coote kindly helped me develop a proposed model with a fantastic insight into

interrelationships within SEM.

IV

Dr. Meredith Lawley assisted with developing the survey and proposed SEM model. Even

though I was not a student at USC, Dr. Lawley was very kind and insightful. Thank you for

your experience and generosity.

Thanks to Dr. Richard Fletcher, Dr. Chris Styles, Dr. Nick Lee, Dr. Elizabeth Rose and

other academics at the multiple PhD colloquiums I attended. These colleagues provided

generous feedback, which helped form my thoughts and ideas, process and literature, which

underpins the research.

To the 250 international companies that assisted with data: these companies were fantastic.

They were generous in supplying information (sometimes very sensitive information),

generous with their time and compassionate. Thank you kindly to all the companies that

assisted with this research.

Further, I would like to sincerely thank my wife and son for their unwavering support and love

throughout this difficult journey. The endeavour of a PhD is for the most part a selfish one

where a spouse also feels the stress. I wholeheartedly thank my wife for her encouragement,

support and love.

V

Statement of original authorship

The work contained in this thesis has not been previously submitted for a degree or diploma

at any other higher education institute. To the best of my knowledge and beliefs the thesis

contains no material previously published or written by another person except where due

referencing is made.

Signed:……………………………..

Dated:………………………………

VI

ABSTRACT

It has been suggested that the Internet is the most significant driver of international trade in

recent years to the extent that the term ‗internetalisation‘ has been coined (Bell, Deans,

Ibbotson & Sinkovics, 2001; Buttriss & Wilkinson, 2003). This term is used to describe the

Internet‘s affect on the internationalisation process of the firm. Consequently, researchers

have argued that the internationalisation process of the firm has altered due to the Internet,

hence is in need of further investigation. However, as there is limited research and

understanding, ambiguity remains in how the Internet has influenced international market

growth. Thus, the purpose of this study was to explore how the Internet influences firms‘

internationalisation process, specifically, international market growth. To this end, Internet

marketing and international market growth theories are used to illuminate this ambiguity in

the body of knowledge. Thus, the research problem ‗How and why does the Internet

influence international market growth of the firm’ is justified for investigation. To

explore the research question a two-stage approach is used.

Firstly, twelve case studies were used to evaluate key concepts, generate hypotheses and to

develop a model of Internetalisation for testing. The participants held key positions within

their firm, so that rich data could be drawn from international market growth decision

makers. Secondly, a quantitative confirmation process analysed the identified themes or

constructs, using two hundred and twenty four valid responses. Constructs were evaluated

through an exploratory factor analysis, confirmatory factor analysis and structural equation

modelling process. Structural equation modelling was used to test the model of

‗internetalisation‘ to examine the interrelationships between the internationalisation process

components: information availability, information usage, interaction communication,

international mindset, business relationship usage, psychic distance, the Internet intensity of

the firm and international market growth.

This study found that the Internet intensity of the firm mediates information availability,

information usage, international mindset, and business relationships when firms grow in

international markets. Therefore, these results provide empirical evidence that the Internet

has a positive influence on international information, knowledge, entrepreneurship and

networks and these in turn influence international market growth.

VII

The theoretical contributions are three fold. Firstly, the study identifies a holistic model of

the impact the Internet has had on the outward internationalisation of the firm. This

contribution extends the body of knowledge pertaining to Internet international marketing

by mapping and confirming interrelationships between the Internet, internationalisation and

growth concepts. Secondly, the study highlights the broad scope and accelerated rate of

international market growth of firms. Evidence that the Internet influences the traditional

and virtual networks for the pursuit of international market growth extends the current

understanding. Thirdly, this study confirms that international information, knowledge,

entrepreneurship and network concepts are valid in a single model. Thus, these three

contributions identify constructs, measure constructs in a multi-item capacity, map

interrelationships and confirm single holistic model of ‗internetalisation‘.

The main practical contribution is that the findings identified information, knowledge and

entrepreneurial opportunities for firms wishing to maximise international market growth.

To capitalise on these opportunities suggestions are offered to assist firms to develop

greater Internet intensity and internationalisation capabilities. From a policy perspective,

educational institutions and government bodies need to promote more applied programs for

Internet international marketing.

The study provides future researchers with a platform of identified constructs and

interrelationships related to internetalisation, with which to investigate. However, a single

study has limitations of generalisability; thus, future research should replicate this study.

Such replication or cross validation will assist in the verification of scales used in this

research and enhance the validity of causal predications. Furthermore, this study was

undertaken in the Australian outward-bound context. Research in other nations, as well as

research into inbound internationalisation would be fruitful.

VIII

Publications and presentations

Journal articles:

Mathews, S. & Healy, M. 2008 ‗From garage to global‘ The Internet & international market

growth, an SME perspective, International Journal of Internet Marketing and Advertising

(IJIMA) Vol. 4. (2/3), pp.179-196: Special Issue on Breaking the Barriers: the Role of the

Internet in the International Marketing of SMEs

Mathews, S. & Healy, M. 2007 ‗The Internet and information capability reduces perceived risk

of internationalisation: an Australian SME perspective, International Journal of Organisational

Behaviour (IJOB), Vol.12 (1), pp. 71-87: Special Issue: Issues in Small and Medium Enterprises -

Enhancing Their Capabilities

Wickramasekera, R. & Mathews, S. 2007 ‗Wotif.com: An online success story‘, International

Journal of e-Business Management, Vol. 1 (1), pp. 50-52

Moore, S. & Mathews, S. 2006. ‗An exploration of Abandonment Cart Syndrome (ACS)‘,

Journal of Website Promotions, Vol. 1/2 pp. 77-88.

Book section:

Healy, M. & Mathews, S. 2005. Lustythreads.com, Case study in, Fletcher, R. & Brown, L.

International marketing, an Asian-Pacific perspective, 3rd edition, Pearson Education Australia

Conference papers:

Mathews, S. & Healy, M. 2006. ‗From garage to global. The Internet‘s influence on

international market growth. An Australian SME perspective‘, International Council for Small

Business world conference (ICSB), Melbourne. (Best Paper-World conference)

Mathews, S. & Moore, S. 2006. ‗The Internet‘s influence on internationalisation-reducing

perceived risks. An Australian SME perspective.‘ Internet Research 7.0, Brisbane.

Mathews, S. Healy, M. & Ali, Y. 2006. A comparative evaluation of the Internet‘s influence on

international market penetration and development growth strategies of Australian SME‘s,

Australia & New Zealand Marketing Academy Annual conference, Brisbane.

Manin, S. & Mathews, S. 2006. The global importance of values in brand choice, Australia &

New Zealand Marketing Academy Annual conference, Brisbane.

Mathews, S. Healy, M. & Wickramasekera, R. 2005. ‗From garage to global. An exploration of

the Internets influence on international market growth strategies; An Australian small firm

perspective‘, Asia Pacific Science Decisions Institute (APSDI) Taipei, Taiwan.

Mathews, S. & Healy, M. 2005. ‗A comparative evaluation of the Internet‘s influence on

international market penetration and development strategies of Australian SME‘s‘ Australia &

New Zealand International Business Academy, ANZIBA, Melbourne.

IX

Mathews, S. & Healy, M. 2004. ‗Internetalisation: International market growth strategies in a

digital environment‘, Australia & New Zealand Marketing Academy Conference, ANZMAC,

Wellington, New Zealand

Doctoral colloquiums:

Mathews, S. 2006. ‗A comparative evaluation of the Internet‘s influence on international

market penetration and development growth strategies of Australian SME‘s‘, Australia & New

Zealand Marketing Academy, Brisbane

Mathews, S. 2006, ‗A comparative evaluation of the Internet‘s influence on international

market penetration and development strategies for Australian SME‘s‘, Queensland University

of Technology, Faculty of Business research colloquium

Mathews, S. 2004. ‗Internetalisation: An Evaluation of International market growth strategies

in a digital environment; From an Australian perspective‘, PhD Paper at Australia & New

Zealand Marketing Academy, ANZMAC, Wellington, New Zealand

Mathews, S. 2004. ‗Internetalisation: International market growth strategies in a digital

environment‘, PhD Paper at Australia & New Zealand International Business Academy

Conference, ANZIBA, Canberra

Mathews, S. 2003. ‗The effectiveness of the Internet as a means of international market

penetration in Asian markets‘, PhD Paper at Australia & New Zealand International Business

Academy Conference, ANZIBA, Dunedin, New Zealand

Other presentations:

Mathews, S. 2005, ‗A comparative evaluation of the Internet‘s influence on international

market penetration and development strategies for Australian SME‘s‘, Queensland University

of Technology, School of International Business seminars

Mathews, S. 2005, ‗From garage to global: An evaluation of the Internets influence on

international market growth strategies; an Australian SME perspective‘, Queensland University

of Technology, School of International Business seminars

Mathews, S. 2004, ‗Internetalisation: International market growth strategies in a digital

environment‘, Queensland University of Technology, School of International Business seminars

Mathews, S. 2003, ‗The effectiveness of the Internet as a means of international market

penetration in Asian markets‘, Queensland University of Technology, Faculty of Business

Research symposium

X

CONTENTS

ABSTRACT ........................................................................................................................ VI

CONTENTS .......................................................................................................................... X

LIST OF FIGURES ........................................................................................................ XIV

LIST OF TABLES .......................................................................................................... XVI

1.0 CHAPTER 1: OVERVIEW ................................................................................. 1

1.1 Introduction ........................................................................................................... 1

1.2 Background to research ........................................................................................ 2

1.3 Research problem.................................................................................................. 3

1.4 Justification for research ...................................................................................... 4

1.5 Methodology .......................................................................................................... 9

1.6 Outline of the report ........................................................................................... 10

1.7 Definitions ............................................................................................................ 13

1.8 Delimitations ........................................................................................................ 16

1.9 Conclusion ............................................................................................................ 17

2.0 CHAPTER 2: LITERATURE REVIEW .......................................................... 18

2.1 Introduction ......................................................................................................... 18

2.2 Growth ................................................................................................................. 19

2.3 Internet Marketing.............................................................................................. 25

2.4 Internationalisation process theory ................................................................... 32

2.5 Internetalisation .................................................................................................. 38

2.6 Conclusion ............................................................................................................ 46

3.0 CHAPTER 3: CASE STUDY METHODOLOGY: STAGE I ........................ 48

3.1 Introduction ......................................................................................................... 48

3.2 Paradigm justification ........................................................................................ 51

3.3 Case study methodology justification: Stage I ................................................. 57

3.3.1 Validity and reliability of case study method ................................................... 59

3.3.2 Case selection ....................................................................................................... 63

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3.3.3 Data collection method ....................................................................................... 65

3.3.4 Pilot case study .................................................................................................... 68

3.3.5 Analysis procedure of data from case studies .................................................. 69

3.4 Limitations ........................................................................................................... 70

3.5 Ethical considerations ......................................................................................... 73

3.6 Conclusion ............................................................................................................ 74

4.0 CHAPTER 4: ANALYSIS OF CASE STUDY DATA .................................... 76

4.1 Introduction ......................................................................................................... 76

4.2 Within-case analysis ............................................................................................ 77

4.3 Cross-case analysis .............................................................................................. 85

4.4 Cross-case evaluation (hypotheses and model development) ........................ 109

5.0 CHAPTER 5: QUANTITATIVE METHOD: STAGE II ............................. 119

5.1 Introduction ....................................................................................................... 119

5.2 Quantitative research design ............................................................................ 120

5.2.1 Population and sample of study ....................................................................... 121

5.2.2 Unit of analysis .................................................................................................. 123

5.2.3 Selection of key informants .............................................................................. 123

5.2.4 Pre-testing instrument ...................................................................................... 123

5.2.5 Data collection procedure and response rate.................................................. 124

5.2.6 Addressing potential non-response bias .......................................................... 137

5.3 Exploratory factor analysis .............................................................................. 138

5.4 Structural equation modelling ......................................................................... 141

5.4.1 Analytical technique ......................................................................................... 142

5.5 Summary ............................................................................................................ 144

6.0 CHAPTER 6: QUANTITATIVE ANALYSIS AND EVALUATION.......... 145

6.1 Introduction ....................................................................................................... 145

6.2 Examining and preparation of data ................................................................ 146

6.2.1 Respondent profile ............................................................................................ 146

6.2.2 Missing data ....................................................................................................... 149

XII

6.2.3 Normality of data .............................................................................................. 150

6.2.4 Outliers ............................................................................................................... 150

6.3 Measurement model .......................................................................................... 151

6.3.1 Confirmatory factor analysis (CFA) ............................................................... 151

6.4 Full structural model evaluation...................................................................... 162

6.5 Model hypotheses interrelationship evaluation .............................................. 171

7.0 CHAPTER 7: DISCUSSION AND CONCLUSION ...................................... 179

7.1 Introduction ....................................................................................................... 179

7.2 Research Issue 1 discussion: ............................................................................. 181

7.2.1 Information availability, information usage and interaction ........................ 181

7.2.2 International mindset and business relationship use ..................................... 185

7.3 Research Issue 2 discussion: ............................................................................. 188

7.4 Research question discussion ........................................................................... 192

7.5 Implications for internationalisation theory ................................................... 193

7.5.1 Internationalisation process/ stages theory ..................................................... 194

7.5.2 Born global concept .......................................................................................... 195

7.5.3 Firm capabilities theory and perceived risk ................................................... 196

7.5.4 International entrepreneurship ....................................................................... 198

7.5.5 Network theory .................................................................................................. 199

7.6 Contributions ..................................................................................................... 201

7.6.1 Theoretical contributions ................................................................................. 202

7.6.2 Contributions to practice and policy ............................................................... 205

7.7 Limitations ......................................................................................................... 206

7.8 Future directions for research ......................................................................... 207

8.0 REFERENCES .................................................................................................. 210

APPENDICES ................................................................................................................... 233

Appendix A: Interview protocol ...................................................................................... 233

Appendix B Interview information package................................................................... 249

Appendix C survey questionnaire ................................................................................... 251

XIII

Appendix D Phone screening script ................................................................................ 259

Appendix E e-mail ............................................................................................................. 260

Appendix F: Education in SEM ....................................................................................... 261

Appendix G: SEM experts review ................................................................................... 261

Appendix H: Expert guidance in SEM ........................................................................... 263

Appendix I Descriptive Statistics ..................................................................................... 264

Appendix J Saturated models .......................................................................................... 266

Appendix K: Model 1 English market growth matrices................................................ 267

Appendix L: Model 2 non-English market growth matrices ........................................ 270

Appendix M Country markets summary ........................................................................ 273

Appendix N: 1st Country market ..................................................................................... 274

XIV

LIST OF FIGURES

Figure 1.1 Chapter 1 overview …..1

Figure 1.2 Research design and sequence …..10

Figure 1.3 Research project overview …..11

Figure 2.1 Chapter 2 literature review overview …..18

Figure 2.2 Ansoff’s product/market growth vector …..20

Figure 2.3 The product market matrix: Ansoff’s growth vector …..23

Figure 2.4 Unique influential variables of the Internet …..26

Figure 2.5 Internationalisation process online …..40

Figure 2.6 Theoretical framework …..45


Figure 3.2 Research design and method of investigation …..56

Figure 3.3 Types of design for case studies …..63

Figure 4.1 Overview for Chapter 4, data analysis …..76

Figure 4.2 Digitalisation of the product offering …..99

Figure 4.3 Internetalisation and networks …..99

Figure 4.4 Proposed model: information, knowledge and interaction …..113

Figure 4.5 Proposed model: international entrepreneurship …..116

Figure 4.6 Proposed model: Internetalisation …..117


Figure 5.2 Four-step processes in questionnaire development …..125

Figure 5.3 Internet intensity: mediation model that is moderated …..128


Figure 6.2 Proposed model (English speaking-Model 1) …..164

Figure 6.3 Proposed model (non English-Model 2) …..165

Figure 6.4 Competing model (English speaking markets-Model 1) …..167

Figure 6.5 Competing model (non-English speaking markets-Model 2) …..168

XV

Figure 6.6 Internetalisation model: significant and non-significant paths …..174

Figure 6.7 Final model: theoretical interrelationships …..178


Figure 7.2 RI 1: information availability, information usage & interaction …..182

Figure 7.3 RI 1: International mindset and business relationship use …..186

Figure 7.4 Internetalisation and networks …..200

Figure 7.5 Internetalisation framework …..201

Figure 7.6 Final Internetalisation model: theoretical interrelationships …..202

XVI

LIST OF TABLES

Table 1.1 International broadband consumers’ online activities …..5

Table 1.2 Main SME Internet and internationalisation themes …..8

Table 1.3 Element of research …..17

Table 2.1 Use of product market matrix …..21

Table 2.2 Literature evaluation summary …..47

Table 3.1 Internet international marketing research methods …..50

Table 3.2 Basic belief systems of alternative enquiry paradigms …..51

Table 3.3 Summary of mixed approach …..55

Table 3.4 Relevant situations for different research strategies …..59

Table 3.5 Validity and reliability of case study research …..60

Table 3.6 Case research design: replication logic …..64

Table 3.7 Literal and theoretical replication of case selection …..65

Table 3.8 Developed protocol question for research issues …..67

Table 3.9 Limitations and criticisms of case study methodology research …..71

Table 4.1 Within-case study analysis matrix …..78

Table 4.2 Cross-case analysis …..86

Table 4.3 Internet usage/importance identified …..87

Table 4.4 Internet - information components of internationalisation …..90

Table 4.5 Internet’s- international information/knowledge …..91

Table 4.6 Interactive levels online …..92

Table 4.7 Website marketing elements and trust issues …..95

Table 4.8 Website localisation integration …..96

Table 4.9 Digitalisation capacities of product offerings …..98

Table 4.10 Elements influencing internationalisation of the firm …..100

Table 4.11 Internationalisation path and pace …..102

Table 4.12 International market growth through penetration …..104

Table 4.13 International market growth and evaluation of potential …..107

Table 4.14 Research issues: variable identification and hypotheses …..110

XVII

Table 5.1 Sample selection pool: Austrade database …..121

Table 5.2 Questionnaire draft/scale …..125

Table 5.3 Measures …..133

Table 5.4 Postcode characteristics of the sample …..137

Table 5.5 Industry representative proportions …..138

Table 5.6 Significance two-tail test for non-response bias …..138

Table 5.7 Reliability and internal consistency tests …..139

Table 5.8 EFA measurement model …..141

Table 5.9 Research design …..142

Table 6.1 Respondent profile characteristic size, position and location …..146

Table 6.2 Respondents’ profile international market characteristic …..147

Table 6.3 Respondents profile age and experience characteristic …..148

Table 6.4 Respondent profiles Internet usage characteristic …..149

Table 6.5 Model fit indicators …..152

Table 6.6 Summary of initial findings (CFA): information availability …..155

Table 6.7 Summary of initial findings (CFA): information usage …..156

Table 6.8 Summary of initial findings (CFA): Interactive communication …..157

Table 6.9 Summary of initial findings (CFA): International mindset …..158

Table 6.10 Summary of initial findings (CFA): business relationship usage …..158

Table 6.11 Summary of initial findings (CFA): psychic distance …..159

Table 6.12 Summary of initial findings (CFA): Internet intensity …..160

Table 6.13 International market growth: English speaking markets …..161

Table 6.14 Summary of measurement model fit statistics …..162

Table 6.15 Summary of full-saturated model fit statistics …..163

Table 6.16 Summary of proposed structural model fit statistics …..164

Table 6.17 Summary of competing model structural model fit statistics …..167

Table 6.18 Final model measurement table summary …..169

Table 6.19 Evaluated hypotheses table …..171

Table 6.20 Model 1 and 2 correlation matrices estimates …..175

Table 6.21 Discriminant validity chi-squared test (final modified model) …..176

XVIII

Table 7.1 Information availability, information usage and interaction …..184

Table 7.2 International mindset and business relationships …..187

Table 7.3 The Internet and international market growth …..189

Table 7.4 Research Issue 1, 2 and research question conclusions …..191

Table 7.5 Contribution summary …..203

1

1.0 CHAPTER 1: OVERVIEW

1.1 Introduction

This thesis dissertation presents the theoretical underpinnings for the study pertinent to

the effects of the Internet on the internationalisation process and international market

growth of the firm. In the introduction a brief background to the research (Section 1.2),

research issues and the overarching research problem (Section 1.3), justification for the

research (Section 1.4), the methodologies used (Section 1.5), an outline of the thesis

(Section 1.6), definitions (Section 1.7) and delimitations of scope (Section 1.8) are

presented, as advocated by Perry (1998), and outlined in Figure 1.1. Consequently, in

Chapter 1 the key elements of the thesis are presented.

Figure 1.1 Chapter 1 overview

Source: adapted structure from Perry (1998)

Introduction (1.1)

Practical

Internet & the web

Localisation

Pure player

Glocal

Market space

Virtual network

Intermediaries

Virtual social networks

Research issues

Research question

Background (1.2)

Research problem (1.3)

Contributions (1.4)

Chapter 1-7

Elements of research

Theoretical

Research design & sequence Methodology (1.5)

Outline of report (1.6)

Definitions (1.7)

Conclusion (1.9)

Delimitations (1.8)

2

1.2 Background to research

Transcending traditional physical national borders, the Internet is an evolving technology

that has opened up new market opportunities (Rayport & Sviokla, 1994; Quelch & Klein,

1996; Bennett, 1997; Palumba & Herbig, 1998; Porter, 2001; Petersen, Welch & Liesch,

2002; Tian & Emery, 2002; Kotabe & Helsen, 2004; Loane, McNaughton & Bell, 2004).

Consequently, the Internet has altered the dynamics of international business

environments and the internationalisation process (Hamill, 1997; Petersen, et al., 2002).

Currently, internationalisation models that attempt to explain the effects of the Internet

on the internationalisation process are general in nature, relying predominantly on

traditional theories to explain a contemporary phenomenon (Quelch & Klein, 1996;

Bennett, 1997; Hamill, 1997; Petersen, et al., 2002). These few models form the

foundation for this research project and highlight the need for more exploratory

investigation into the Internet‘s impact on the internationalisation process. Current

Internet internationalisation models have a general focus on internationalisation theory

and neglect an explicit strategic approach to internationalisation. As, there are ‗many

research opportunities that exist with respect to international marketing online‘

(Harrison-Walker, 2002, p.19). To date, little attention has been paid to the Internet‘s

influence on international marketing strategy and its effect on international market

growth. Therefore, the body of knowledge in this field is considered relatively immature,

and previously referred to as in ‗an embryonic stage‘ (Hamill & Gregory, 1997 p. 23).

Recent research has attempted to identify the current and future effects of the Internet on

key internationalisation paths in the process of foreign market expansion (Petersen, et al.,

2002). There is a growing body of work focused on integrating the Internet in the

internationalisation process of the firm, also referred to as Internetalisation (Buttriss &

Wilkinson, 2003). However, with the exception of a few studies, the current research is

based on frameworks focusing on peripheral macro-environmental factors that affect

internationalisation, as opposed to specific internationalisation elements. Further, no

attempt has been made to reveal the precise impact of the Internet on directional

international market growth within the internationalisation of the firm. International

market growth is not a primary focus within an Internet internationalisation literature.

Using a model that identifies and explains the Internet‘s impact on international market

3

growth and the internationalisation process, this PhD study brings both a precise focus on

international market growth and a holistic framework of the Internet‘s impact on the

internationalisation process to the literature.

1.3 Research problem

An ever-increasing emphasis has been placed on the potential importance of the Internet

in international market expansion (Bennett, 1997; Hamill, 1997; Moen, 2002b; Petersen,

et al., 2002; Moen, Endresen & Gavlen, 2003; Aspelund & Moen, 2004). This is due to

the Internet becoming a standard medium used by international marketers (Okazaki,

2004) and potentially the most significant advancement in global strategy in recent years

(Melewar & Stead, 2002). However, the current literature pertaining to the Internet‘s

influence on international expansion is general in nature. For example, studies have

indicated that firms perceive the Internet to be a mechanism that can benefit the company

to grow in new business and grow in existing markets (Gibbs & Kraemer, 2004), but not

actual growth or international market growth. If international growth is advocated as a

major advantage, then there is a need for a more precise investigation of this

phenomenon.

It has been suggested that the Internet provides an arena for new research in

internationalisation and for testing extant internationalisation theories in a new context

(Kotha, Rindova & Rothaermel, 2001). Currently, no theoretical framework or model has

been developed that attempts to evaluate the Internet‘s influence on international market

growth in the context of the internationalisation process. More specifically, market

growth is relatively unexplored as a focus for research on internationalisation and the

Internet. Thus, the research problem ‗How and why does the Internet influence

international market growth of the firm,’ was justified for investigation. Moreover, two

research issues were developed to address the research question:

Research Issue 1: How and why has the Internet influenced the internationalisation

process of the firm?

Research Issue 2: How and why has the Internet influenced international market

penetration and development for the firm?

4

1.4 Justification for research

Significance of original contribution to body of knowledge

This research advances current internationalisation theory with respect to the Internet‘s

influence on international market growth. The Internet was found to be an important

mediator between the internationalisation process and international market growth. More

specifically, the Internet positively influences internationalisation components of

information, knowledge, international mindset and business relationships. This is an

important contribution, as growth is an integral element of the capitalisation of new

market opportunities (Peters, 1993; Aaker, 1998, 2001). Thus, the contributions found in

this study extend outward internationalisation theory.

Academic justification

The academic justification is twofold. Firstly, scant attention has been paid to research in

the area of the Internet and internationalisation within international marketing literature.

With the evolution of the Internet and its impact on international marketing, it is prudent

to investigate this growing body of work in greater depth. That is, ‗there remains

considerable opportunity for future exploration into international e-marketing‘(Harrison-

Walker, 2002, p.19).

Secondly, and more specifically, this research aims to diminish the current gap in the

literature by extending the theoretical understanding of the Internet‘s impact on

international market growth. This research provides a holistic model of the Internet‘s

influence on outward internationalisation. Beyond providing a holistic model, the

research identifies specific internationalisation components that have been affected by

the Internet intensity of the firm. Thus, the academic justification of this research project

identifies components of the internationalisation process and maps the complex

interrelationships between the Internet and international market growth within a holistic

model.

Practical justification

There are three practical justifications for this study. Firstly, the level of Internet

adoption by the firm and customers has an important role in the implementation of

5

Internet marketing. Thus, a broader evaluation of the adoption of the Internet by firms

and customers helps to highlight the importance of the technology. Secondly, the research

illustrates the impact of the Internet on SEM‘s internationalisation. That is, the Internet is

an evolving technology that has been proven to increase the internationalisation of

SME‘s. Thus, this research highlights the impact of the Internet on the international

market growth opportunities of SME‘s. Thirdly, the industries selected for the study have

a significant impact on the broader export impetus for the Australian economy. Thus,

these industries are assessed for their justification or importance for this study. The

Internet evolution will be assessed next.

Currently, there are nearly one and a half billion Internet users world wide (Internet

World Stats, 2008). The Asian region has been the largest and fastest growing region in

the world (Internet World Stats, 2008). Further, there is growing evidence that fast

Internet connections such as broadband Internet is having a positive impact on Internet

consumer activities (Forrester, 2006). These Internet activities include, e-mail, instant

messaging, stock market, purchasing, listening to the radio, playing games and

downloading music and movies, as illustrated in Table1.1. These consumer activities

online generate new Internet opportunities for firms to exploit when internationalising.

Table 1.1 International broadband consumers’ online activities

6

As a consequence of the rapid increase in global Internet consumers, firms are also

increasing their online activities. The percentage of Australian firms that used the

Internet in 2006 was:

77.6% for firms with 0-4 employees

86.3% with 5-19 employees


99.9 % for firms with 200+ employees (Australian Bureau of Statistics, 2007a)

Further, 72.6% of all firms use the Internet for their marketing (Australian Bureau of

Statistics, 2007a). The impetus for the increased Internet adoption was the recent

introduction of broadband Internet connections in Australia. For example, in 2006 the

adoption of broadband in Australia was:

79.2% for firms with 0-4 employees



97.7% with 200+ employees (Australian Bureau of Statistics, 2007a)

The proportion of businesses in Australia receiving sales orders via the Internet increased

from 12% in 2004-05 to 21% in 2005-06 (Australian Bureau of Statistics, 2007a). During

7

this period the value of Internet based income has grown by approximately 40% from

$40 billion to $57 billion. The Internet has become a significant mechanism for the

delivery of revenue for Australian firms.

Secondly, it has been suggested that the Internet has a more dramatic impact on SME‘s

internationalisation (Poon & Swatman, 1997; Arnott & Bridgewater, 2002; Koh &

Maguire, 2004). For example, advances in Internet technologies have been shown to alter

the international market growth path of the small and medium firms (SME), to be more

globally focused from inception (Loane, et al., 2004). SME‘s play a significant role in

the Australian economy, with an estimated 1.6 million small business operators

(Australian Bureau of Statistics, 2004). Small business in Australia accounts for more

than 97% of private business and employs more than 50% of the private sector

(Australian Bureau of Statistics, 2002).

Therefore, not only do large firms with sizable capital capabilities have the ability to

internationalise through the Internet but also small and medium companies with only

moderate investment and infrastructure (Arnott & Bridgewater, 2002). It has been well

established that the Internet gives SME‘s the capabilities of internationalising where this

may not have been possible in the old economy (Bennett, 1997; Hamill, 1997; Aspelund

& Moen, 2004; Simpson & Docherty, 2004). In addition, the Internet is of strategic

significance for smaller sized firms as it increases internationalisation levels (Lituchy &

Rail, 2000). However, it has also been proposed that the capital capability of the firm

may perhaps be a barrier to the implementation of the Internet for SME‘s (Taylor &

Murphy, 2004), although, in recent research in the United Kingdom this argument has

been refuted (Simpson & Docherty, 2004).

Further, the Internet‘s influence on small and medium firms internationalising has

progressively become a focal point for researchers in the area of international marketing,

as seen in Table 1.2 (Quelch & Klein, 1996; Hamill & Gregory, 1997; Poon & Swatman,

1997; Kotha, et al., 2001; Arnott & Bridgewater, 2002; Moen, 2002b; Moen, et al., 2003;

Aspelund & Moen, 2004; Gabrielsson & Manek Kirpalani, 2004; Loane, et al., 2004).

Research over recent years has emphasised SME‘s with particular reference to the main

8

themes of; the barrier to Internet adoption, the Internet benefits for SME‘s, acceleration

of internationalisation, the niche focus online, the resource capacity, ICT (information

communication technology) firms, international experience, industry specificity, Internet

start-up firms, standardisation and the Internet‘s ability to give SME‘s a global strategy.

Research into SMEs and the Internet has increased, as illustrated in Table 1.2. SME‘s

make up the vast majority of firms in this study (99%) and the Australian economy.

Table1.2 Main SME Internet and internationalisation themes

Year Author/ construct

Barrie

rs

Ben

efi

ts

Accel

era

tio

n

Reso

urc

e c

ap

acit

y

Nic

he f

ocu

s

ICT

fir

ms

En

trep

ren

eu

ria

l

Inte

rn

ati

on

al

ori

en

tati

on

Ind

ust

ry

sp

ecif

ic

Sta

rt-

up

s

Sta

nd

ard

ise

pro

du

ct

Glo

bal

str

ate

gy

1996 Quelch & Klein X X X

1997 Hamill & Gregory X X X

1997 Poon & Swatman X X X

2001 Kotha, Rindova & Rothaermel X X X

2001 Tettah & Burn X

2002 Arnott & Bridgewater X X X

2002 Moen X X X X

2003 Moen, Endresen & Gavlen X X X

2004 Aspelund & Moen X X X X

2004 Gabrielsson & Kirpalani X X X X

2004 Loane, McNaughton & Bell X X X X

Total 4 4 5 2 2 4 4 2 2 3 1 2

Source: developed for this research

Lastly, this study has a cross sectional focus including sources from agribusiness,

business and financial services, consumer goods, and information communication

technology (ICT) industries, for Stage II of the research. These industries were selected

as they represent four out of the top nine industries of Australian exporters, accounting

for A$93.2 billion in export for 2006-2007 (ABS, 2008). Further, these industries

account for 20,393 of the possible 44,310 total Australian export firms in 2006-2007

(ABS, 2008). For example, the agriculture industry generates A$30 billion in value for

the Australian economy and employs 385,000 people. In 2005-2006 the industry

accounted for a quarter of the merchandise exports with A$26 billion, as 60% of what is

produced on Australian farms is exported (Austrade, 2008). The value the export of

services is estimated to be A$46 billion (ABS, 2008), with business services valued at

9

A$9 billion and financial/insurance accounting for A$3.8 billion in 2006-2007 (ABS,

2008). Exports of information communications technology in 2005 accounted for A$5.2

billion (Australian Bureau of Statistics, 2006). Finally, the manufacturing industry with

A$51 billion and retail trade A$2 billion (ABS, 2008) form the majority of what would

be considered consumer goods. Collectively, apart from the mining industry these four

industries represent the majority of outward internationalisation for Australia.

1.5 Methodology

This project used a mixed approach of qualitative and quantitative methodologies in

order to identify and verify theoretical constructs, as outlined in Figure 1.2 (Eisenhardt,

1989; Chetty, 1996; Poon & Swatman, 1997; Burgess-Limerick & Burgess-Limerick,

1998). Currently, little emphasis has been placed on empirical research within the

literature, as existing theoretical models are limited in an Internet internationalisation

context (Moen, 2002b; Moen, et al., 2003).

In Stage I, a qualitative methodology was used to ascertain specific theoretical constructs

(Yin, 1994; Chetty, 1996; Perry, Riege & Brown, 1999; Hastings & Perry, 2000;

Amaratunga & Baldry, 2001; Amaratunga, Baldry, Sarshar & Newton, 2002), as there

was a limited understanding of the influence of the Internet on international market

growth. Firstly, Stage I is a multiple-case study method for qualitative exploration, as

this yielded exploratory, empirical evidence concerning the Internet‘s influence on

international market growth in the internationalisation process. The findings have given

rich accounts of the interrelationships between events and factors in the research

(Gummesson, 2004).

Once an evaluation of the qualitative case studies data was conducted, a quantitative

analysis helped to verify the identified theoretical constructs (Eisenhardt, 1989; Chetty,

1996; Burgess-Limerick & Burgess-Limerick, 1998). By confirming or disconfirming the

initial qualitative study, a quantitative modelling process gave statistical verification and

generalisability to the findings that can be used by academics and practitioners

(Eisenhardt, 1989).

10

Figure 1.2 Research design and sequence

Source: developed for this research project

Stage II was a statistical evaluation using structural equation modelling (SEM). SEM was

used to test a model for the multiple interrelationships between the internationalisation

process, Internet intensity and international market growth. This multivariate structural

equation model (SEM) approach was a vehicle in which the researcher constructed

theory through direct and indirect relationships in a holistic manner (Bagozzi, 1994).

That is, SEM provided a higher level of complexity than more traditional means of

multiple variate analysis (Chin, 1998; Steenkamp & Baumgartner, 2000).

1.6 Outline of the report

This thesis was developed in accordance with Perry‘s (1998) overview, which outlined

the sequence for a research thesis, as shown in Figure 1.3. This outline includes:

an introductory chapter (Chapter 1)

a literature review (Chapter 2)

a case study methodology chapter (Chapter 3)

an case study analytical chapter (Chapter 4)

a data collection method (Chapter 5)

an analysis of the proposed model and competing models in a structural equation

model (SEM) evaluation (Chapter 6)

an implications and conclusion chapter (Chapter 7)

Theoretical

framework

Research issues

Adjusted theoretical

framework

Stage I- case studies Hypothesis formulation Structural equation

modelling analysis

Case study analysis Conceptual model

formulation

Revised theoretical

framework Stage II- Surveys

Discussion of findings

11

Figure 1.3 Research project overview

Source: developed for this PhD research

In the introductory chapter (Chapter 1), the background to the research, the evaluation of

the research problem and identified issues, a brief overview of the data collection

methods and a justification of the choice of case study methodology and structural

equation modeling are presented. Within this chapter relevant definitions and

delimitations are set as are the research boundaries for the investigation.

Within Chapter 2 an evaluation of the relevant existing literature pertinent to the research

problem is provided. This literature was drawn from the parent disciplines of growth,

Internet marketing and internationalisation. The effects of the Internet on

internationalisation components were investigated in order to identify the impact on

Chapter 2:

Literature review

Parent discipline 1

Growth strategy

Chapter 1

Introduction

Chapters 3 & 4:

Qualitative methodology

Immediate discipline

Internet internationalisation

Theoretical

framework

Research issues

Case selection Data collection

In-depth interviews

Case study analysis

Chapters 5 & 6:

Quantitative methodology, data

analysis (SEM)

Sample technique Statistical analysis

Structure equation

modelling

New theoretical

framework

Evaluation of

construct

Data collection method

Mixed-mode surveys

Chapter 7: Discussion &

conclusion

Discussion: research

issues & question

Implications for theory &

practice

Hypothesis formulation

& model development

Limitations &

future research

Stage I

Stage II

Parent discipline 2

Internet marketing

Parent discipline 3

Internationalisation

12

international market growth, as this focus is underrepresented in the literature. Although

some research has investigated the Internet‘s influence on internationalisation, no study

known to the researcher has explored:

a. the components of the internationalisation perspective in a holistic and statistical

manner; and

b. the internationalisation components with a primary focus on international market

growth.

Subsequently, a number of research issues and theoretical concepts were identified to

help explore the research problem, as seen in Section 1.3.

An evaluation and justification of the choice of methodology used for case study research

is given in Chapter 3. This research methodology adopted is thoroughly investigated to

ascertain the appropriateness of the methodology for this study project.

In the analytical chapter, Chapter 4, the data from the twelve data rich cases are managed

and the findings presented. Further, within this chapter a proposed model of

‗Internetalisation‘ is developed and highlighted. That is, the analysis of the case studies

helped to identify a series of hypotheses and proposed models for statistical testing.

The use of a quantitative collection method is evaluated and justified in Chapter 5. Both

reliability and validity issues are investigated. The ability to evaluate both manifest and

latent variables with multiple multi-item constructs in a simultaneous modelling process

highlights the strength of using SEM. Further, SEM enables the identification of complex

interrelationships, which were presented in the study.

In Chapter 6 analyses of the normality of data, missing data, reliability, and measurement

models, using exploratory factor analysis and confirmatory factor analysis are presented.

Structural models (fully saturated models, proposed models and competing models) are

presented and evaluated. Thus, in Chapter 6 an evaluation of the model fit relevant to the

interrelationships between the identified internationalisation components, Internet

intensity and international market growth is presented. The models are assessed for

validity, reliability and model fit using normed Chi-squared, p value, Goodness of Fit

13

Index (GFI), Tucker Lewis Index (TLI), Comparative Fit Index (CFI), Standardised Root

Mean-Square Residual (SRMR) and Root Mean Squared Error Approximate (RMSEA)

for rigour. Competing models and construct interrelationships are also assessed, using a

bootstrap test for robustness.

The potential theoretical and practical implications from the findings are evaluated in

Chapter 7. These findings concluded that the Internet intensity is an integral part of the

internationalisation process for the firm. More specifically, Internet intensity mediates

the information and knowledge components of internationalisation, as well as

international entrepreneurial elements. Thus, when firms develop internationalisation

capabilities, the Internet should be considered to be one of the key elements of their

international market growth endeavours. The holistic model extends current

understanding by providing empirical evidence of constructs and interrelationships.

Additionally, the primary focus on international market growth fills the current gap

pertaining to the Internet‘s impact on international market growth.

1.7 Definitions

Definitions adopted by researchers are not always uniform and often depend on the

project‘s purpose (Perry & Pyatt, 1995). Thus, key and/or controversial terms are defined

to establish the positions taken in this study. The key terms used in this thesis are defined

next.

Born global

Born globals are firms that have an accelerated path toward internationalisation. A

phenomenon of the 1990‘s, the born global perspective is where a firm creates a new

venture that undertakes market expansion in multiple markets within a short timeframe

(Knight & Cavusgil, 1996; Rasmussan, Madsen & Evangelista, 2001; Moen, 2002a;

Moen & Servais, 2002). The born global firm internationalises within a six-year time

frame from inception (Oviatt & McDougall, 1997; Wickramasekera & Bamberry, 2003).

The concept of a born global firm is contrary to the normal internationalisation path that

follows traditional internationalisation theories such as the stages or process theory

and/or network theory (Knight & Cavusgil, 1996).

14

Glocal

An Internet glocal strategy adapts international marketing activities online to suit the

specific needs of a particular target market in an international market destination

(Melewar & Stead, 2002; Siegel, 2004). That is, local content and cultural adaptation

give a customised perception for international consumers (Steinfield & Klien, 1999;

Melewar & Stead, 2002; Siegel, 2004). As distinct from a global strategy, the glocal

strategy goes beyond standardised universal offerings online by tailoring those offerings,

content and services to the specific target market.

Internet

The Internet is the global logical interconnection of unique addresses through a protocol

and a complex array of communication infrastructures (Dann & Dann, 2001). The

complex digital nature of the Internet lends itself to being known as a digital

environment (Hanson, 2000). Within this thesis the terms ‗Internet‘ or ‗digital

environment‘ are used interchangeably, as both terms define the medium as the

commercial and communicational tool of the World Wide Web. This usage is distinct

from the terms ‗intranets‘ and ‗extranets‘. Intranets are Internets specifically designed for

firms to use internally. Extranets although internal to the firm, are designed for the

interaction between suppliers and the firm. Although there is a minor overlap with

intranets there is no premeditated focus. However, where applicable and appropriate,

these terms will be used explicitly.

Internetalisation

The term Internetalization coined by Bell, Deans, Ibbotson, and Sinkovics, (2001, p. 69)

indicates internationalisation, due to the digital capabilities of the Internet. Buttriss and

Wilkinson (2003, p. 1) suggest that Internetalisation is ‗the process of a firm committing

resources to Internet commerce and Internet mediated transactions; including

communication and coordination of internal and external relations,‘ in the context of the

internationalisation process. Thus, Internetalisation is the process of integrating the

Internet into the internationalisation process of the firm.

15

Localisation

To localise a website is to tailor elements to the web presence of the firm. That is, a firm

uses local customs, information, services and offerings to the target market to localise a

website for a specific region (Siegel, 2004). By customising the offerings of a website,

specific needs, wants and preferences of the local market are satisfied (Siegel, 2004).

Localising a website is the implementation phase of a glocal strategy.

Pure player

A firm with a sole online focus is considered a pure online firm or pure player.

Sometimes also known as Internet start ups, the pure player differs from that of

traditional bricks and mortar companies that have dual online and offline focuses (Strauss

& Frost, 2001). The pure player exists for the sole purpose of Internet transactions, even

if the firm has some elements of a business in a physical form.

Marketspace

Information systems on the Internet lessen the importance of the physical location,

inventory and the actual site for buying and selling (Rayport & Sviokla, 1994). The

traditional marketplace interaction between physical seller and physical buyer is

minimised, and replaced in part with a virtual marketspace business environment online

(Rayport & Sviokla, 1994). The frictionless market space is purely online as opposed to

the physical market place with its physical barriers (Rayport & Sviokla, 1994).

Outward internationalisation

Internationalisation has been widely used to describe the outward movement in the firm‘s

international operations (Calof & Beamish, 1995). Outward internationalisation is the

seeking to exploit and/or selling in foreign markets (Welch & Luostrarinen, 1993). That

is, the outward internationalisation of the firm is focused on the outward growth of the

firm into international markets.

SME

Small and medium enterprises (SME) are those firms classified with between 1-200

employees (Australian Bureau of Statistics, 2002). Small firms are between 1-19

16

employees (Australian Bureau of Statistics, 2002), and medium firms between 20-200

(Australian Bureau of Statistics, 2002). A broader definition of SME within a global

context is 1-500 employees (OECD, 2002) or 1-250 within the marketing and

international marketing literature (Hamill & Gregory, 1997; Moen, 2002b; Koh &

Maguire, 2004; Simpson & Docherty, 2004). However, as this is an Australian study the

Australian Bureau of Statistics (2002) classification was adopted, unless specified.

Virtual network intermediaries (VNI)

Virtual network intermediaries are firms that act as conduits between the firms and

customers, such as, wotif.com, a firm that is an accommodation retailer. These virtual

intermediaries can be either directory informational-based networks such as

yellowpages.com.au, or virtual networks that act as a buyer-seller market space, for

example, eBay.com, tenders.com, wotif.com.

Virtual social networks (VSN)

These social networks are conduits between Internet citizens who have platforms that

enable virtual social engagement beyond what is provided by a standard corporate

website, for example, secondlife.com, youtube.com, myspace.com and facebook.com.

1.8 Delimitations

It is important to state the parameters of the study. Although this is primarily an

exploratory study, the researcher has used parameters to limit the scope of the study, as

seen in Table 1.3. These delimitations include the use of only Australian firms, a

geographical limitation. Further, the focus of the study is international market growth, an

outward internationalisation pathway in the context of Australian firms. That is, although

inward internationalisation may overlap with the study subject, it is not the focus and

falls outside the scope of this study. Outward internationalisation is the seeking to exploit

and/or sell in foreign markets (Welch & Luostrarinen, 1993). The parent disciplines of

growth, Internet marketing, internationalisation and the immediate discipline of

internetalisation were the theoretical parameters set for this study. Further, the level of

informant was a top decision maker within firms. Any focus outside of these parameters

falls beyond the scope of this research.

17

Table 1.3 Element of research

Element of Research project Consequence Relevant Section

Growth strategy Parent discipline Chapter 2, Section 2.

Internet Marketing Parent discipline Chapter 2, Section 3

Internationalisation Parent discipline Chapter 2, Section 4

Internetalisation Immediate discipline Chapter 2, Section 4

Marketing/ International

Managers

Level of decision makers Chapter 1, Section 5

Chapter 3, Section 3

Australian Firms Geographical delimitations Chapter 1, Section 1.8

Restrictions Outward internationalisation Chapter 1, Section 1.8


1.9 Conclusion

In this first chapter the key components of the research were highlighted and outlined.

The research problem and issues were introduced to help ascertain the impact of the

Internet on the outward internationalisation process of the firm. Additionally, an

evaluation of the mixed methodology established a justification for an exploratory case

study methodology and a confirmatory structural equation modelling process. Further,

the research study was outlined with definitions and delimitations discussed. Thus, a

foundation has been established upon which an investigation can proceed into a more

detailed description of the research and findings. More specifically, this research

diminishes the current gap in the literature by extending the theoretical understanding of

the Internet‘s impact on international market growth. This study has confirmed the

elements, interrelationships and paths within the internationalisation process influenced

by the Internet. That is, information availability, information usage, interaction,

international mindset, business relationships and psychic distance are modelled with

respect to the Internet and international market growth. Thus, this research provides a

holistic model of the Internet‘s influence on outward internationalisation. Beyond

providing a holistic model, the research identifies specific internationalisation

components that have been affected by the Internet intensity of the firm, such as

information availability, information usage and international mindset and business

relationships. Thus, the academic contributions of this research project are the

identification of the components of the internationalisation process and the mapping of

the complex interrelationships between the Internet and international market growth

within a holistic model.

18

2.0 CHAPTER 2: LITERATURE REVIEW

2.1 Introduction

This chapter presents: a literature synthesis pertaining to the parent disciplines of growth

strategy (Section 2.2), Internet marketing (Section 2.3) and internationalisation (Section

2.4), which underpin the research with a theoretical framework that evaluates the

potential implications for the study. Further, theoretical frameworks are evaluated for

their implications in the immediate discipline of Internet international marketing

(discussed in detail in Section 2.5), as seen in Figure 2.1.

Figure 2.1 Chapter 2 literature review overview

Immediate discipline Parent discipline Parent discipline Concepts

Source: developed for the research from the literature

Finally, the immediate discipline evaluates the literature pertaining to the research focus

of Internet internationalisation in the pursuit of international market growth. Thus, these

parent and immediate disciplines of literature assist research by underpinning the study

with a framework of theory, as seen in Figure 2.1. Growth will be assessed first.

Internationalisation (2.4)

components

information/knowledge

stages, networks and

born global

Information

Internet international

marketing (2.5)

Internet

marketing (2.3)

Growth

strategy (2.2) Alternative

Product/market

Growth strategy

Control

Integration

Interactivity

Trust

Internal

19

2.2 Growth

The primary focus of this research is to evaluate the Internet‘s influence on the firm‘s

growth in international markets. Traditionally, strategic choice in international markets

and the features of internationalisation are determined in part by managers, especially in

relation to the development new of international markets (O'Farrell, Wood & Zheng,

1998). The strategic focus of the firm may take a purist economic standpoint, a

resources-based view, a knowledge-based view and/or a strategic leadership perspective

or a strategic decision-making viewpoint (Hoskisson, Hitt, Wan & Yiu, 1999). This

thesis does not aim to advocate one strategic perspective over another competing

perspective to justify a dominant viewpoint. However, all avenues are investigated to

identify possible constructs pertinent to the research problem in order to better

understand the phenomenon. Due to the use of multiple strategic perspectives, each

viewpoint is integrated where appropriate throughout the literature review.

The research incorporates multiple theoretical frameworks to evaluate a complex

international research problem within a strategic perspective (Hoskisson, et al., 1999).

Recently the incorporation of a multiple-theoretical framework in complex international

research projects has become a more prudent, sophisticated mechanism for investigation

(Hoskisson, et al., 1999). Evaluating the Internet‘s influence on growth strategy in

international markets falls into this complex category.

Market growth as a strategic option is considered to be the cornerstone of strategic

marketing theory (Ansoff, 1957, 1965; Ansoff & McDonnell, 1988; Kotler, 1998, 2001)

including, more recently, in the Internet marketing environment (Murphy & Bruce,

2003). This is because it has been suggested generic strategic marketing concepts can be

equally applied in an Internet context (Merrilees, 2001). Further, the Internet medium has

had a profound impact on corporate strategy (Booz-Allen & Hamilton, 1999). Ansoff‘s

market growth theory is used as an analytical framework for this research, in an Internet

and internationalisation context.

The strategic direction of the firm can follow two distinct paths: rationalism or expansion

(Peters, 1993; Murphy & Bruce, 2003). Rationalist strategies focus on internal firm

20

efficiencies such as retrenchments, restructuring, and cost cutting, whereas expansionary

strategies focus on opportunities outside the current vision that are formulated to grow

the firm (Ansoff, 1965, 1969; Ansoff & McDonnell, 1988; Aaker, 1998, 2001).

Expansionary strategies are also commonly known as growth strategies (Aaker, 1998,

2001). Market expansion or growth has been a topic of particular focus for authors in

contemporary literature concerning the Internet (Petersen, et al., 2002). The market

development and market penetration of a firm‘s product is considered to be a growth

strategy (Ansoff, 1965; Ansoff & McDonnell, 1988; Aaker, 1998, 2001), and has also

been used in an international market context by researchers (Gronhaug & Kvitastein,

1992; Lim, Sharkey & Kim, 1993). Therefore, these market growth choices of direction

and other alternative growth strategies will be explored further.

Market growth objectives

Most growth strategies have similar objectives, such as increased market share, sales,

profit and improved return on investment (ROI). An overriding strategy gives a

directional marketing path for the firm contemplating an optimistic strategic path (Quinn,

Mintzberg & James, 1988). The product market matrix is a way in which a firm can

choose a direction for growth. Although extensions to the product/market strategic theory

are evident in the literature (Miles & Snow, 1978), the growth vector or product/market

matrix with its fundamental four quadrants of growth strategy typology, remains the core

of contemporary marketing growth strategies (Evans & Berman, 1985; Harper, 1992;

Kotler & Armstrong, 1994; Pride & Ferrell, 1997; Aaker, 1998; Kotler, 1998; Watts,

Cope & Hulme, 1998; Aaker, 2001; Kotler, 2001). These fundamental directions of

growth strategy include market penetration, market development, product development,

and diversification, as seen in Figure 2.2.

Figure 2.2 Ansoff’s product/market growth vector

Product/

mission

Present New

Present Market

penetration

Product

development

New Market

development

Diversification

Source: Ansoff (1965, p.109)

21

This matrix still dominates strategic marketing texts, as seen in Table 2.1 (Ansoff, 1965,

1968, 1969; Evans & Berman, 1985; Perry, 1987; Ansoff & McDonnell, 1988; Aaker,

1998; Watts, et al., 1998; Aaker, 2001; Kotler, Brown, Adam & Armstrong, 2004;

Kotler, Keller, Ang, Leong & Tan, 2006). Thus, these four main strategic directions

pertaining to marketing growth will be discussed and evaluated in an international market

growth context.

Table 2.1 Use of product market matrix

1950s-1970 1970s-1990 1990s-2006

1957 Ansoff

1965 Ansoff

1968 Ansoff

1985 Brownlie & Bart

1985 Evans & Berman

1987 Perry

1988 Quinn, Minzberg & James

1988 Ansoff & McDonnell

1990 Brown

1993 Peters

1994 Kotler & Armstrong

1997 Pride & Ferrell

1998 Aaker

1998 Kotler

1998 Watts, Cope, & Hulme

2001 Aaker

2003 Murphy & Bruce (online)

2004 Kotler, Brown, Adam & Armstrong

2006 Kotler, Keller, Ang, Leong, & Tan


Firstly, market penetration is the exploitation of current established markets with the

same product (Ansoff, 1965; Aaker, 1998). That is, the firm attempts to increase market

share and/or increase product use in the firm‘s current international markets. The

increase in product usage can be achieved in several ways; increasing frequency of use of

the product, increasing the quantity being used, or finding new ways and applications for

existing consumer to use the product (Ansoff, 1965; Aaker, 1998, 2001). However,

market penetration, although significant in an international context, does not look to

exploit new markets.

The second quadrant of the product market growth matrix is market development. Market

development is particularly important in international marketing as it is embedded within

foreign market expansion of the firm. The firm is actively looking to capitalise on new

market opportunities outside existing markets. The market development growth strategy

22

not only identifies new segments within markets, but also identifies new markets to

develop and new channels to exploit (Evans & Berman, 1985).

The third quadrant, product development, is a growth strategy used to differentiate the

product from those of other competitors in the market (Ansoff, 1965; Aaker, 1998,

2001). Product development can be used to add to the current product or to redefine the

product, to develop a new contemporary product, or to simply create a new product for

the established market (Aaker, 1998). Although product development is a worthy

strategic choice it fails to give market direction for the firm. Consequently, this strategy

is not the focus of this research.

The fourth vector or quadrant of the theory is diversification. The diversification strategy

is the most difficult to implement. The strategic direction attempts to take advantage of

new products with related and unrelated product and market offerings, moving away

entirely from the firm‘s knowledge and experience curve (Kotler, 1998; Aaker, 2001;

Kotler, 2001). Thus, this vector is not the focus of this research.

Researchers have used the growth vector as a platform for extensions to corporate

strategy. For example, Aaker (1998, 2001) uses the fundamentals of Ansoff‘s (1965)

growth vector (the four quadrants) and adds a fifth quadrant, vertical integration, as seen

in Figure 2.3. This fifth quadrant views backward and forward integration as a growth

strategy that recognises benefits in acquiring intermediaries up or down the supply chain

(Aaker, 1998, 2001). This extension to the fundamental product/market matrix is more a

goal for firms than a core directional path. For example, a firm could use either a market

development or market penetration strategy to integrate vertically. The proposed

inclusion of the fifth vector is actually part of the market growth vector and should not be

incorporated as a new quadrant. Thus, its inclusion as a separate quadrant is not

warranted. Rather, vertical integration is the development of a new channel. Thus,

conceptually, vertical integration is consistent with market development, as illustrated in

Figure 2.3.

23

Figure 2.3 The product market matrix: an adaptation of Ansoff’s growth vector

Product/

markets

Established product New product

Established

markets

Market penetration

Increased market share

Increase frequency

Increase quantity

Create new applications

Product development

Product refinement

New generation product

New product, same market

New markets Market development

Expand geographically

Target new segments

Develop new channel

(Vertically integrate)

Forward integration

Backward integration

Diversification

Related

Unrelated

Source: adapted from Aaker (1998, 2001) & Kotler (1998, 2001)

Criticism of Ansoff’s product/market matrix

Ansoff‘s growth matrix is, however, not without its critics. The product/market matrix is

seen to be a strategic ideology more applicable to an environment of rapid global

economic growth, but its use in turbulent environments has been questioned (Harper,

1992). The strategic model in this project is in its directional capacity. In other words,

the model is used in this research for the simplicity, yet solid, theoretical basis for the

directional choices for firms in relation to market growth. Thus, the question of economic

stability when applying the product market matrix is moot as Ansoff‘s growth theory is

used in a market-directional capacity.

Market focus as opposed to product focus

To reduce the complexity further, this research project focuses on market growth for

existing products. This focus does not suggest product development and diversification

are not influenced by the Internet, as postulated by Murphy & Bruce (2003). However,

the focus of this study is the market aspect, as opposed to the product focus. Therefore,

the two strategic directions of product development and diversification are deemed to be

beyond the parameters of this study.

Alternative growth strategies

Product/market strategies are essentially a strategic direction for the firm‘s long term

profit endeavours (Quinn, et al., 1988). However, not all growth strategies follow the

24

parameters set out by Ansoff (1957, 1965). Two other major forms of growth include,

growth by acquisition and growth through a portfolio matrix (Aaker, 1998, 2001).

Firstly, acquisition strategies focus on acquiring a competitive company to strengthen the

firm‘s market position (Thompson & Strickland, 1996). An example of an acquisition

strategy is purchasing a weaker competitor in the market. Secondly, portfolio growth

strategies focus on market share and a portfolio of strategic business units (Schnaars,

1991; Kotler, 1998, 2001). The emphasis on growth-share strategies is an analytical tool

for the direction of the firm. However, it is assumed that the firm has multiple strategic

business units when in reality this is not the case. Therefore, the directional strategies of

market development and penetration growth are more appropriate, as a theoretical

framework tool for analysis in this research.

The Internet and marketing strategy

Murphy and Bruce (2003) evaluated all vectors of Ansoff‘s directional growth strategies

in a domestic e-retail context. However, Murphy and Bruce (2003) misinterpret Ansoff‘s

strategic directional product/market option in their comparison with value creation

strategies. That is, the product market matrix is an overall directional strategic option,

while a value creation strategy is how the firm will implement that direction, not the

actual directional path as stated by Murphy & Bruce (2003). That is, the interpretation by

Murphy & Bruce (2003) of Ansoff‘s product/market model findings may be misleading.

This critique does not argue that Murphy and Bruce‘s (2003) research is without merit.

On the contrary, this limitation illustrates the importance of the Internet and growth path

vectors, and the need for further investigation.

The limited focus on strategy with Internet implementation has lead to suggestions for a

strategic emphasis in the body of knowledge (Simeon, 1999; Porter, 2001; Simeon, 2001;

Murphy & Bruce, 2003). Research has indicated that the higher the level of Internet

intensity, the greater the propensity of a firm to have international ambitions (Moen,

2002b). That is, there is a relationship between a firm‘s rate of Internet implementation

and its level of international growth ambition. However, explanations for or

understanding of these interrelationships between international growth ambition and the

Internet remain limited.

25

New technological innovations online are creating opportunities beyond basic marketing

and communications (Simeon, 2001). To take advantage of these Internet innovations,

firms with a strategic perspective will capitalise on long-term value creation for current

and potential customers (Murphy & Bruce, 2003). Although some might argue that the

Internet is a source of advantage, the Internet has neutralised this advantage to some

extent, as a competing company can duplicate a competitive advantage online with

relative ease (Porter, 2001). Traditional firm-based competitive advantages can be

transferred online as core competencies and can form a platform for marketing strategy

(Porter, 2001; Murphy & Bruce, 2003). Current corporate trends however tend to ignore

the need for strategy, because short-term price-setting strategies are the predominant

focus. Thus, a long-term profit focus is being eroded (Porter, 2001). Subsequently, long-

term strategy online needs evaluating. Further, the Internet is a powerful tool in the

execution of marketing in international markets (Aspelund & Moen, 2004). Therefore,

Internet marketing elements affecting strategy will be evaluated accordingly.

2.3 Internet Marketing

Although it has been suggested the Internet is the ubiquitous solution for international

trade (Rayport & Sviokla, 1994), its capacity to enhance firms‘ abilities to facilitate

foreign market expansion is more moderate (Melewar & Stead, 2002) and certainly more

complex than has been suggested. It is now recognised that the Internet far exceeds initial

propositions of basic communication (Simeon, 2001). Because of the Internet‘s influence

many commentators, authors and researchers have argued for a new paradigm in both

marketing and international marketing (Hamill, 1997; Hamill & Gregory, 1997; Hoffman

& Novak, 1997; Samiee, 1998b, a; Prasad, Ramamurthy & Naidu, 2001; Darby, Jones &

Madani, 2003). Some have even gone as far as to name this new paradigm ‗Internet

international marketing‘ (IIM) (Eid & Trueman, 2002). As a consequence of these

alterations due to the Internet there have been changes to; information search for

consumers, information control for the firm, interactive capabilities, trust,

disintermediation and internal firm issues. These changes identified emphasise the

impact the Internet has had on marketing, as illustrated in Figure 2.4. Thus, these issues

will be assessed next.

26

Figure 2.4 Unique influential variables of the Internet

Source: developed for the research from the literature

Information search

The Internet lowers the perceived cost of the information search in the purchasing

process of the consumer (Mathur, Mathur & Gleason, 1998; Kolesar & Galbraith, 2000;

Rowley, 2000). For example, the amount of time spent searching for product or firm

information is reduced. Conversely, when evaluating supplier information in a business-

to-business context, the Internet was found to be less relevant to consumers (Deeter-

Schmelz & Kennedy, 2004).

With the advent of new intermediaries such as comparison sites (for example

pricescan.com, a site that gives consumers comparison prices on desired products) comes

increased pricing transparency (de Chernatony, 2001). However, it has been suggested

that there are distinction between goods and services online, as services are less likely to

be looked upon as commodities than physical goods (Bergstrom, 2000). The Internet

benefits some product orientations as a conduit for transactions (Bergstrom, 2000;

Reynolds, 2000). Service (such as travel) firms have some advantages over firms with

physical goods as some service and digitally-orientated products have no physical

elements to impede the Internet transition (Mitra, Reiss & Capella, 1999). That is, brand

associations linked to experience, such as service-orientated and information-based

products, will have an advantage in the differentiation of their product online. Thus,

firms that do not want their products to be perceived as a commodity must find

something other than price or features alone to help differentiate their product

Information

search

Internet

marketing Control

Interactivity

Trust

Internal

Disintermediation

27

(Bergstrom, 2000). Firms that satisfy customer expectations through creating a level of

credibility alleviate customers‘ perceptions of transactional risk (Kolesar & Galbraith,

2000). The Internet has the capacity to provide information to establish this credibility.

Control

Traditional media assume that audience members are passive recipients of the marketing

message. Control of building a brand perception online involves not only the website

content but also the surrounding context (Aaker & Joachimsthaler, 2000). The Internet is

a recognised forum whose imbalance is in favour of the consumer (de Chernatony,

2001). That is, passive offline consumer involvement follows the classical media model

where the firm controls communication. Conversely, in a digital environment, blogs, chat

rooms, digital noticeboards and feedback facilities are all forums that enhance active

participation, and the process of interaction is a co-production of the firm‘s brand online

(de Chernatony, 2001). As consumers take a more active role in producing value online

through the website, they are initially more forgiving of the firm‘s mistakes, believing

they are partially responsible (de Chernatony, 2001). Offline there is a tighter level of

control compared to online. This variance in control is due to the interactive nature of the

Internet. Looser levels of control may produce a more desirable online perception,

because the website is a co-production element of the firm‘s product offerings (de

Chernatony, 2001). Hence, the issue of marketing communication online is a significant

shift from the traditional perception of tight interactive communication.

Interaction

Online perceptions are based on a new business model that creates an increased level of

interaction, giving an enhanced consumer experience (Davis & Buchanan-Oliver, 1999;

de Chernatony, 2001). A website‘s ability to generate interaction can yield emotional

arousal and longevity of the actual purchase beyond that of a site without interactivity

capabilities (Raney, Arpan, Pashupati & Brill, 2003). That is, an interactive website has a

positive influence on purchase behaviour as the perceived decision-making process may

become a more emotionally intense experience, and hence a more involved experience

for the consumer. It has been argued that the perception of interactivity of a firm‘s

website is the most important factor above that of actual interactive capability (Raney, et

28

al., 2003). Thus, the online purchase experience, with its perception of interactivity, has

the propensity to generate greater revenues. For example, firms with personalised and

speedy responses can generate a significantly improved value equation (de Chernatony,

2001). Further, the need for quick, quality interaction is essential for market growth

endeavours of the firm as the associations created from these interactive experiences are

more powerful than those of a traditionally controlled broadcast advertisement (Aaker &

Joachimsthaler, 2000).

In an online environment, consumer interaction with the firm and the website community

can generate a bond (de Chernatony, 2001). The unique property of the Internet needs to

be incorporated into the marketing program to help build these bonds. Interactive

properties such as e-mail, digital noticeboards, opportunities for suggestion and feedback

can lead to a richer, more personalised experience for the consumer (Aaker &

Joachimsthaler, 2000), especially if the customers are geographically isolated in

international markets. This level of interaction within the website can create strong

experiential associations that give the consumer a sense of community thereby

encouraging loyalty and a return visit (Aaker & Joachimsthaler, 2000; de Chernatony,

2001). These interactions and sense of community which generates trust will be assessed

next.

Trust

Trust is the belief that a person or thing may be relied upon (Ang & Lee, 2000). Trust is

an essential element in creating a business online, especially in international transactions,

as these are considered to be high risk. Trust is related to environmental uncertainty

(Jevons & Gabbott, 2000). With a lack of faith and trust online, perceived credibility is

vital for firms (Hoffman, Novak & Peralta, 1999). As Jevons and Gabbott (2000) argue,

brands are a surrogate for trust and therefore are a reliable indicator of a specific cluster

of values for the consumer. Furthermore, the trust of a firm can reduce the perceived risk

associated with transacting online (Davis & Buchanan-Oliver, 1999). It has become clear

that trust acts as an important element in building an online presence (Reynolds, 2000).

This perception has been reinforced by research in Switzerland, which found trust to be

pivotal in online transactions (Reynolds, 2000; Rudolph, Rosenbloom & Tillmann,

29

2004). Research has shown that 64% of online customers do not trust website operators

or online transactions (Ang & Lee, 2000). Additionally, consumers‘ confidence and the

perceived quality of the website can add to or detract from the level of consumer trust.

For example, having confirming transactions, feedback, answering e-mails, and security

in a website can assist in creating trust (Jevons & Gabbott, 2000). Moreover, Ang and

Lee (2000) found firms having a guarantee on the website and communicating that they

also had a physical office dramatically increased the level of trust, correlating with a

large increase in sales. Disintermediation will be assessed next.

Disintermediation

The nature of the Internet has already changed correctional fixed pricing of some firms as

new entrants take intermediary positions not seen previously. Evidence of significant

disintermediation is seen in industries such as banking, finance, travel and tourism and in

dissemination information intense industries such as media and entertainment.

Disintermediation is the reduction of intermediaries in the supply chain which creates a

shorter transactional link between the principle and the end-user (Quelch & Klein, 1996;

Hamill, 1997). An example of these changes in distribution is the airline industry, where

principals now transact directly with customers. In addition, consumers can circumvent

intermediary travel agents, wholesalers and consolidators, thus expanding the principal

firm‘s profit margins (de Chernatony, 2001).

Internet-based intermediaries have a unique role in distributing information to the target

markets (Reynolds, 2000). Pure players are able to enter the supply chain through a re-

intermediation process (as a new intermediary), as wotif.com has done in the travel

industry in Australia. That is, efficiencies can be gained by having a virtual presence as

opposed to a physical presence that incurs the higher cost burden (Quelch & Klein, 1996;

Petersen, et al., 2002; Murphy & Bruce, 2003). Real-time trading in the virtual

environment is creating an unprecedented level of convenience for trade. Examples of

this include Internet banking and Internet travel bookings, which are changing traditional

means of supply chain distribution (Bauer & Colgan, 2001; Overby & Min, 2001). As

previously discussed, service and information-based firms have seen more significant

30

disintermediation and re-intermediation in the supply chains of those industries (Bauer &

Colgan, 2001; Overby & Min, 2001).

Internal influences

Internal micro-environmental influences, such as human and capital resources,

international readiness of firms, company capabilities and other managerial

characteristics, are considered significant to marketing efforts when entering the

international online arena (Quelch & Klein, 1996; Freeman, 1998; Palumba & Herbig,

1998; Arnott & Bridgewater, 2002; Harrison-Walker, 2002). Internal influences are also

known and referred to as firm-based characteristics in the literature (Julian & Liesch,

2004; Morgan-Thomas & Bridgewater, 2004). Not only do large firms with sizeable

capital capabilities have the ability to internationalise through the Internet, but small and

medium companies may also do so with only moderate investment (Arnott &

Bridgewater, 2002). However, these internal issues may also depend upon industry-

specific elements, such as information-based products and services. For example, the

banking, music, publishing, computer software and travel industries have an advantage in

a digital environment, as opposed to a physical one (Arnott & Bridgewater, 2002).

It has been suggested that the Internet gives small and medium firms the capabilities of

internationalising, where this may not have been possible in the old economy (Bennett,

1997; Hamill, 1997; Aspelund & Moen, 2004; Simpson & Docherty, 2004). Further,

small, technology-intensive firms are able to create competitive advantages in

international markets only if they have a strong customer orientation (Aspelund & Moen,

2004). It has also been hypothesised that the firm‘s capital capability may be a barrier to

the implementation of the Internet to SMEs (Taylor & Murphy, 2004). However, recent

research in the United Kingdom has contested this viewpoint (Simpson & Docherty,

2004). Thus, some clarification is still needed in reference to barriers to e-commerce

adoption and internationalisation in small and medium firms.

Managerial orientation issues also affect the implementation of strategies in an Internet

international environment. This is because individuals‘ specific characteristics and

behaviours affect the firm‘s degree of internationalisation (Kotha, et al., 2001; Moen,

31

2002b; Aspelund & Moen, 2004). These marketing decisions include those involving

activities such as market intelligence gathering, marketing communications, brand

awareness, promotions, distribution and pricing elements of the marketing program

(Quelch & Klein, 1996; Hamill, 1997; Freeman, 1998; Palumba & Herbig, 1998; Samiee,

1998b; Davis, 1999; Arnott & Bridgewater, 2002; Harrison-Walker, 2002). However,

Moen (2002) highlights that the age of the firm and positive international orientation

significantly influences export firm‘s active integration of Internet technology in

international markets.

Marketing managers influence the implementation process of international market

growth strategy. Strategic orientation profile becomes a determinant in the

internationalisation of the firm online. Managers can take either a strategic proactive or

reactive internationalisation stance (Moen, 2002b; Aspelund & Moen, 2004). This

orientation toward internationalising is generally based on the experience and knowledge

of the manager, as seen in more traditional internationalisation theory (Aspelund &

Moen, 2004; Siegel, 2004). Further, the manager‘s experience level in international

situations and markets may have a bearing on the mindset of the manager, even in a

digital environment (Aspelund & Moen, 2004; Morgan-Thomas & Bridgewater, 2004).

Findings by Morgan-Thomas and Bridgewater in 2004 suggest that not only does

international experience but also Internet experience influence the acceptance of

integration of website and Internet use in international markets. It has been suggested that

if the decision-maker in an export firm has little international experience, the firm relies

more intensely on Internet technology (Morgan-Thomas & Bridgewater, 2004).

Integration

Internet marketing involves integrating online and offline tactics that will complement

and reinforce each other (Harvin, 2000). New models of strategic thinking are required to

integrate the unique elements of Internet marketing (de Chernatony, 2001). As the

Internet emerges, new types of enterprises are evolving and old economy enterprises are

forced to alter their strategy and organisational structure (Torre & Moxon, 2001).

Classical models recognise the dynamic role that consumers play in the strategic

decision-making process (de Chernatony, 2001). That is, more than ever customers have

32

power over what the firm delivers in respect to information in an online environment.

With interactive abilities, customers can instantaneously inform the company of their

feelings about the product. Furthermore, with information availability, customers are

given more power of choice. Committed firms will have a significant advantage in

developing long-term foundations that underpin the established firm (de Chernatony,

2001). However, the integration of the firms online and offline marketing may not mean

a consistent strategy. On the contrary, integrating strategy implies that the firm commits

to the Internet as part of its total strategic approach. That is, the Internet should not be

isolated as separate from the firm.

2.4 Internationalisation process theory

The first two parent disciplines of growth strategy and Internet marketing have been

evaluated. Now it is prudent to focus on the third parent discipline of this study.

Internationalisation process theory will be assessed next:

Internationalisation stages theory. Internationalisation process theories are well

established, with early work being drawn from a broad range of international business

perspectives (Rogers, 1962; Vernon, 1966; Johanson & Weidersheim-Paul, 1975;

Cavusgil, 1980). According to Welch and Luostarinen (1998b) internationalisation is the

process of increasing involvement in international operations. The underlying

assumptions of these conceptual models of internationalisation involves logical

incremental sequential processes by the firm toward international development (Bell &

Young, 1998). Predominantly, internationalisation of the firm has been influenced by

conceptualisations drawn from the Uppsala school in the 1970‘s (Bell & Young, 1998),

specifically, the ‗establishment chain‘ theory of internetalisation by Johanson and

Weidersheim-Paul (1975), commonly referred to as the Uppsala model or U model

(Andersen, 1993). For example, in the first stage, the firm has no exporting while

developing the domestic market; in the second stage exports are conducted via agents; in

the third stage overseas sales subsidiaries are used; and, finally in the4 last stage overseas

production manufacturing is employed (Johanson & Weidersheim-Paul, 1975). That is,

the pattern of internationalisation for the firm is a sequential, stepwise process (Welch &

Luostarinen, 1988b). The stages thesis of gradual internationalisation can be considered a

33

healthy step in the clarification of internationalisation theory (Welch & Luostarinen,

1988b). The Uppsala model of internationalisation is primarily a market seeking

international activity as opposed to natural resource seeking, efficiency seeking or

strategic asset seeking process (Bell & Young, 1998).

Subsequent studies by Johanson and Valhne (1977, 1990) and Luostarinen and Welch

(1988, 1990) build upon this platform to include increased commitment due to greater

knowledge and experience, as the internationalisation process proceeds. International

operations require both general and specific knowledge (Andersen, 1993). Market

specific knowledge is gained mainly through experience, whereas operational knowledge

can be transferred from one country to another. Johanson and Valhne (1990) argue

additional market commitment is made through small incremental steps and based on

knowledge. The need to acquire foreign market knowledge in the process of

organisational learning for expansion into international markets has been well

established, for example, (Andersen, 1993; Calof & Beamish, 1995; Inkpen & Beamish,

1997; Luo, 1997; Barkema & Vermeulen, 1998; Lord & Ranft, 2000; Zahra & Ireland,

2000). Thus, knowledge perspectives of internationalisation are based on ‗an orderly and

sequential process in which there is a shift from one stage to the next based on the

learning and accumulation of experience within the proceeding stage‘ (Kuada &

Sørensen, 2000 p. 13).

Innovation model. Others have argued that internationalisation happens as a

consequence of a learning curve, which is influenced by external stimuli such as

unsolicited orders and internal influences such as managerial ambition or excess capacity

(Bilkey & Tesar, 1977; Cavusgil, 1980; Czinkota, 1982). That is, internationalisation

processes are stimulated by managerial orientation and serendipitous international orders

(Bilkey & Tesar, 1977), pre-export activities, experience, psychic distance and the level

of involvement (Cavusgil, 1980). Further, internationalisation stages also involves the

interest in exporting by the firm, experience of exporting and size of the export

endeavours (Czinkota, 1982). These stages perspectives start to place an emphasise on

the management orientation on the learning sequence of the internationalisation process

and the subsequent adoption of export. That is, the adoption of export activities happens

34

due to the innovation adoption cycle (Lee & Brasch, 1978) based on the model proposed

by Rogers (1962). The innovation related internationalisation models focus on

internationalisation as an innovation of the firm, also referred to as the I model

(Andersen, 1993). Internationalisation studies that have followed the innovation adoption

models explicitly include stages of; export awareness, export intension, export trial,

export evaluation and finally export acceptance (Reid, 1981; Lim, et al., 1993). However,

as with the U-Model stages internationalisation theory, the I-models fail to account for

firms not following the sequential stages (Andersen, 1993).

Criticisms of stages models. These stages theories have been criticised on the basis that

firms do not progress strictly through a sequence of stages (Turnbull & Valla, 1986;

Turnbull, 1987) and that all organisations do not take a similar approach to

internationalisation (Buckley, Newbould & Thurwell, 1979). Turnbull and Villa (1996)

contradict the concept of the Uppsala stages model as a different entry mode and pattern

is chosen by the firm for each specific country. Firms reversing the sequential movement

through the internationalisation process, also referred to as de-internationalisation, also

referred to as de-internationalisation (Luostarinen & Welch, 1990), highlight another

deficiency in the stages theory (Rosson, 1984). The stages models fail to delineate the

movement between stages adequately (Andersen, 1993), limiting the theory as an

explanation of the internationalisation process. These stages models do not account for

firms that do not follow the linear path or logical stepwise progression of

internationalisation (Bell & Young, 1998), which may result in the leapfrogging of

intermediary sequences of stages (Welch & Luostarinen, 1988b).

Further, these early internationalisation stages perspectives appear to segregate

international entrepreneurial elements such as global vision, foreign market experience

and the use of networks to facilitate internationalisation (Oviatt & McDougall, 1995;

McDougall & Oviatt, 1996) and fail to encompass these elements adequately in an

integrated framework of entrepreneurship (Young, Dimitratos & Dana, 2003). However,

as Andersen (1993, p.9) highlights ‗the difference between models reflects semantic

differences rather than real differences about the nature of the Internationalization

35

process‘. Thus, there is little difference between the sequential incremental stages models

of internationalisation.

Psychic distance. In addition to the stages models another pattern of internationalisation

is the movement or targeting of nearby countries and the subsequent entering of foreign

markets with greater psychic distance. That is, the firm enters international market based

on the similarity of the market in relation to their own, based on culture, economics,

political differences and geographical proximity, a concept also known as psychic

distance (Vahlne & Weidersheim-Paul, 1973; Andersen, 1993; O'Grady & Lane, 1996).

All of these models (U model and I model) propose an incremental stages approach to

internationalisation and generally support the proposition of psychic distance (Bell &

Young, 1998). Further, Bell (1995) argues that developing domestic markets first is not

always the case, as evidenced by Irish and Scandinavian software firms that were

established with exporting in mind. The size of the domestic market and the distinct

nature of the software industry may have a bearing on these findings (Bell & Young,

1998). That is, in the software industry rapid internationalisation is common (Young,

1987; Bell, 1995). Internationalisation may also include the inward movements (Welch

& Luostarinen, 1988b) or licensing agreements, joint ventures or green field investment,

which are not accounted for in the internationalisation stages models.

Networks. Developed from international industrial marketing, network theory focuses

upon interaction, relationships and networks (Bell & Young, 1998). That is, networks are

based on exchange relationships which evolve in less structured ways with mutual

knowledge and trust, which leads to greater international market action (Turnbull &

Valla, 1986; Johanson & Mattsson, 1988). Thus, the internationalisation process is not

based on the focal firm alone (Bell & Young, 1998). The network approach of

internationalisation is seen as the process in which relationships are continually

established, developed, maintained and resolved to achieve the objectives of the firm

(Johanson & Mattsson, 1988). Networks are also influenced by the firm‘s choice of

foreign markets and entry modes (Coviello & Munro, 1997). Personal contact networks

and social interaction play an important role in the development of international markets

(Welch & Luostarinen, 1988b). With experience, a deeper and longer lasting

36

relationships evolve, forming the basis for deeper commitment (Ford, 1980). Networks

between the buyer and seller form the basis of effective communication assisting where

there is an initial lack of knowledge of each other in the network, a situation which can

be exacerbated by physical and cultural distance barriers (Welch & Luostarinen, 1988b).

However, network theory on its own does not explain internationalisation, as firms have

been shown to internationalise without networks (Bell & Young, 1998). Johanson and

Valhne (1992) acknowledge network theory should be integrated into the stages model of

internationalisation for a more fruitful understanding.

Contingency theory. A contingency view of internationalisation is where the firm reacts

to international market opportunities and subsequent strategies, which reflects

circumstances and existing resource capabilities (Reid, 1983). This contingency

behavioural view highlights the process of internationalisation and is more complex than

what the stages models portray, as a firm‘s decisions depend on idiosyncratic firm factors

(Reid, 1981). Contingency models of internationalisation are dependent on the

environment, especially in relation to demand conditions, industry structure and

government policy (Kuada & Sørensen, 2000). No standardised pattern for

internationalisation of the firm is expected as the internationalisation process is

idiosyncratic for each industry and firm, as there is no one best process (Kuada &

Sørensen, 2000). Contingency models are based primarily on management adapting to

the environmental circumstances (Lawrence & Lorsch, 1967). One such contingency

model, Dunning‘s eclectic paradigm includes ownership, location specific factors and

internationalisation incentive advantages (Dunning, 1988; Hill, Hwang & Kim, 1990;

Dunning, 1993). This eclectic paradigm recognises the importance of both internal and

external environmental variables within internationalisation of the firm (Bell & Young,

1998). However, Dunning‘s view of environmental influences was predominantly

designed for multi national firms.

Integrated framework. Bell and Young (1998) argue for a more integrated framework

of internationalisation that incorporates differing perspectives of internationalisation

beyond the criticised stages theory of internationalisation. That is, an integrated model

for evaluating the internationalisation process would include entrepreneurship

37

characteristics, networks, knowledge marketing management decisions and performance

(Bell & Young, 1998). Kuada and Sørensen (2000) argued that companies strive to be

unique, therefore it is unlikely that there would be a common pattern to describe the

internationalisation of firms. A similar argument was espoused by (Yip, Biscarri &

Monti, 2000), that internationalising firms do not follow a strict single systematic

approach to internationalisation. Thus, an integrated model approach is adopted in this

study, not a narrow single model, so as to highlight the Internet‘s influence on pertinent

internationalisation theory,. Further, considering this PhD research is primarily

exploratory, it would be premature to exclude theoretical frameworks that are deemed

important within the investigation.

To summaries, there are a multitude of empirical and theoretical models that attempt to

explain the internationalisation process of the firm. The major contributions can be

classified as;

the stage models of internationalisation

network Theory

contingency theories

integrated model

These frameworks and other studies, such as the eclectic paradigm (Dunning, 1988), the

U-stages model (Johanson & Weidersheim-Paul, 1975) and I-model (Lee & Brasch,

1978) are for the most part considered largely outside the scope of this study as they

concentrate on well-established ―large‖ MNEs. As Bilkey and Tesar (1977) conclude the

stages models are meaningless in examining SME export behaviour. However, overall,

these theoretical frameworks have provided very useful insights into why firms consider

internationalisation. The aim of the current study is to understand the Internet‘s influence

on the international market expansion by Australian firms that are predominantly SMEs.

Thus, frameworks in this study are used where relevant. Internet and internationalisation

or internetalisation literature will be analysed next.

38

2.5 Internetalisation

Having addressed each of the parent disciplines, the focus is now on the immediate

discipline, that of Internet international marketing. The powerful global reach of the

Internet is altering the international trade landscape (Melewar & Stead, 2002). Because

of the Internet‘s influence, the theory of internationalisation needs re-examination

(Petersen, et al., 2002). It has been proposed that the Internet has the capability to

generate foreign market expansion (Petersen, et al., 2002; Kotabe & Helsen, 2004).

However, how much or at what level the Internet influences internationalisation is yet to

be determined (Petersen, et al., 2002).

The Internet has become a recognised means of internationalisation (Melewar & Stead,

2002). Consequently, the nature of internationalisation has enhanced the international

networks (Overby & Min, 2001; Petersen, et al., 2002) and subsequently the components

of internationalisation theory have altered (Petersen, et al., 2002; Buttriss & Wilkinson,

2003) due to the Internet. This has occurred to such an extent that some have referred to

post-Internet internationalisation as Internetalisation, rather than internationalisation

(Bell, et al., 2001; Buttriss & Wilkinson, 2003).

Aspelund and Moen (2004) confirm that the Internet intensity influences the firm‘s

international vision, niche strategy and technology advantage, in small Norwegian high

technology exporters. However, industry specific constructs relating to technology

advantage and niche focus although important may be limited to high technology

industries, as these industries tend to export from inception (Bell, 1995). These findings

from the only structural equation model in the Internetalisation literature identify the

impact of the Internet intensity on the international orientation of the firm through the

construct known as international vision, a behavioural element of the internationalisation

process. The construct of international vision is measured through items relating to a

global perspective of the firm, for example the firm views the world as a single market.

This study is a seminal work in the literature as findings move the body of knowledge

beyond conceptualisations and descriptive based statistics to a process of analysis

indicating the richness of multivariate perspectives. The work by these researchers

39

highlights the impact of the Internet on internationalisation process components, albeit a

single behavioural component of international vision (Aspelund & Moen, 2004).

Notwithstanding the above, conjecture is present in the literature as to which model of

internationalisation depicts the Internet‘s effects on internationalisation. For example,

research has focused predominantly on network theory when interpreting the Internet‘s

influence on internationalisation theory (Hamill, 1997; Buttriss & Wilkinson, 2003).

However, these assumptions have not been explored extensively, and not all researchers

subscribe to the parameters of network theory. Some advocate more conservative

internationalisation theories, such as stages theory commonly referred to as the Uppsala

model (Johanson & Weidersheim-Paul, 1975) or a transactional cost model (Bennett,

1997) (both theories are discussed in section 2.4) . In the new Internet economy,

alternative theories are being proposed for evaluation. These alternative theories of

internationalisation post-Internet stem from supply chain management and knowledge-

based theory (Overby & Min, 2001; Petersen, et al., 2002).

It has been suggested that international supply chain management (ISCM) is a framework

for explaining internationalisation in an Internet environment (Overby & Min, 2001).

The premise founding ISCM theory questions the traditional stages internationalisation

theory, as the stages theory advocates an ultimate goal of vertical integration (Overby &

Min, 2001). However, the ISCM explanation neglects to explain the significant

disintermediation caused by the Internet. That is, the Internet has altered industries

crucially, such as the airline industry. This change in the supply chain caused by the

Internet highlights the significant emphasis firms place on vertical integration,

contradicting the foundation of ISCM. This is not to suggest that ISCM is not without

merit. However, there are limitations within this proposed ISCM theory for explaining

internationalisation post-Internet.

Further, Petersen, Welch and Liesch (2002) propose rethinking internationalisation

theory in light of significant changes to information due to the Internet. Information and

knowledge internationalisation components have altered due to the Internet, enough to

warrant a new examination of internationalisation theory (Petersen, et al., 2002). Learned

40

knowledge of foreign market expansion is traditionally perceived as a slow and

cumbersome process (Petersen, et al., 2002). However, the Internet has enhanced the

normally difficulty to obtain international information and learned knowledge. These

components of internationalisation will be assessed next.

Internationalisation components

It has been suggested that the Internet has a positive effect of foreign market expansion,

including, transactional efficiencies, information availability, and knowledge learning

process of internationalisation (Petersen, et al., 2002) , as seen in Figure 2.5.

Figure 2.5 Internationalisation process online

Source: adapted from Petersen, B. Welch, L. and Liesch, P. (2002)

Transactional efficiencies

The Internet as a marketspace, as opposed to a traditional marketplace, facilitates the

creation of a borderless environment for international trade (Ryans, 1999; Kotha, et al.,

2001). The virtual environment created online contrasts with the traditional physical

environment of international trade. That is, a marketspace environment may bring

millions of buyers and sellers into a single space, beyond that which can be achieved in a

physical space. Therefore, efficiencies can be gained because of the lowering of

transactional costs related to the searching and purchasing of product for both buyer and

seller. The Internet reduces the need for physical elements and therefore has the benefit

of gaining transactional efficiencies in the process of internationalisation (Quelch &

Information

analysis

Knowledge

building


process (Internet as

an accelerator)

Transactional efficiencies

Foreign market expansion

41

Klein, 1996; Petersen, et al., 2002; Murphy & Bruce, 2003). One of the greatest benefits

for the international marketer is the transactional efficiencies due to the Internet for both

the customer and the firm (Petersen, et al., 2002; Murphy & Bruce, 2003). Thus, each

transaction between customer and company has a reduced transactional cost. However,

not only do the efficiencies require infrastructure but sunk costs are also incurred by all

parties (Petersen, et al., 2002; Murphy & Bruce, 2003). One such efficiency from a

marketing perspective is branding.

The Internet enables firms to create international and global awareness at relatively

minimal cost (Palumba & Herbig, 1998). This unprecedented global reach of a firm‘s

brand not only creates awareness, but also helps to create association towards the brand.

These associations of a brand—positive or negative—are reflections of a firm and its

capacity to meet customers‘ needs and wants (Aaker, 1998, 2001). Primarily, in a foreign

market the website may become the sole image used by a consumer to make a purchasing

decision. International online branding has been highlighted as a key research area of the

Internet international marketing literature, as seen in the work of Johar and Quint (1999),

Simeon (1999), Tan (1999), Carpenter (2000), Clark (2000), Dayal, Landesberg and

Zeisser (2000), DeChernatony (2000), Harvin (2000), O‘Keefe (2000) Reynolds (2000),

Ward and Lee (2000), Yan (2000), Ries and Ries (2001), Upshaw (2001), Melewar and

Stead (2002), and Tian and Emery (2002). Now, firm information will be assessed in the

context of Internet internationalisation.

Information

The term ‗information super highway‘ is an apt description when evaluating the ability of

the Internet to store and generate large amounts of information, but the Internet‘s

capabilities go well beyond simple information dissemination (Dann & Dann, 2001). The

Internet‘s powerful informational capability can be used not only for market evaluation

but also information can be shared easily within the firm (Warkentin, Bapna &

Sugumaran, 2001). Effective analysis of an international market requires as much

information as possible in order to get the best forecast possible for the firm.

International transactions are complex and filled with uncertainty (Welch & Luostarinen,

1988a). Information about a market can reduce this level of uncertainty (Petersen, et al.,

42

2002). The Internet has a positive effect on International market information (Aspelund

& Moen, 2004) reducing the perceived risk associated with international growth for the

firm.

Knowledge-based learning

The concept of knowledge within the internationalisation process is a well-developed

area of the literature (Welch & Luostarinen, 1988a). However, as the Internet evolves, it

remains to be seen whether knowledge can be learned in the same way as it is in the

traditional internationalisation process (Petersen, et al., 2002). Two types of knowledge

are important in market expansion and the internationalisation process: objective

knowledge and experiential knowledge (Petersen, et al., 2002). Objective knowledge is

information collected and stored in long-term memory through standard forms. As such,

the capabilities of the Internet to deliver objective knowledge within a firm are quite

significant (Petersen, et al., 2002). Recently, research has shown that firms can use the

Internet through knowledge management tools such as supply chain management (SCM)

or customer relationship management (CRM) systems to capture explicit objective

knowledge for use (Koh & Maguire, 2004). However, knowledge management tools are

highly dependent on experience, training and capital investment; thus, firm size is an

influential variable. As a consequence, there is a higher economic commitment needed

and a heightened risk associated with the implementation of such integrated knowledge

management technology (Koh & Maguire, 2004). Conversely, experiential knowledge,

knowledge learned through action, is more difficult to duplicate, as it is not easily

expressed: a challenge for the Internet. That is, experiential knowledge is predominantly

action-based learning. Thus, the Internet as a medium is limited in its capacity to transfer

experiential knowledge to others within the firm (Petersen, et al., 2002).

Born global-rapidly international

An important contemporary phenomenon in internationalisation theory is that of the born

global concept. Born globals are firms that have an accelerated path towards

internationalisation. A phenomenon of the 1990‘s, the born global perspective is where a

firm creates a new venture that undertakes market expansion in multiple markets rapidly

(Knight & Cavusgil, 1996; Rasmussan, et al., 2001; Moen, 2002a; Moen & Servais,

43

2002). The concept of a born global firm is contrary to the normal internationalisation

path that follows traditional internationalisation theories such as stages or process theory

(Bell, 1995; Knight & Cavusgil, 1996). These theories reflect a slow international path

that uses an incremental stages or networks to facilitate internationalisation. Born global

firms do not necessarily follow the traditional path associated with internationalisation as

they become rapidly international (Knight & Cavusgil, 1996; Rasmussan, et al., 2001). It

has been suggested that the Internet has a positive effect on the firm‘s ability to rapidly

internationalise (Torre & Moxon, 2001; Wickramasekera & Bamberry, 2003). Further,

Gabrielsson & Manek Kirpalani (2004) found that born global software firms are

influenced by the Internet in the collaboration and management of relationships for

international business networks.

The born global concept borrows elements from both stages and network

internationalisation theory; however, conjecture still remains as to the best explanation of

this phenomenon (Hashai 2004). There is still no clear theory explaining the born global

concept (Hashai 2004). This raises the question as to whether using a firm website

constitutes being international and hence born global (Kotha, et al., 2001). That is, are

online firms de facto born global firms? It has been suggested that if firms choose to

develop country-specific websites and incur costs by adapting the site for local content,

culture and demand trends, they then forfeit born global status as they localise product

offerings (Kotha, et al., 2001).

The distinction between a born global firm and a born global Internet start-up is crucial.

The body of knowledge thus far has mostly neglected to make this distinction. However,

Gabrielsson and Manek Kirpalani (2004) and Moen (2002), attempted to clarify this area.

For example, launching a website might give customers access to a firm‘s product, but

this does not necessarily constitute internationalisation (Kotha, et al., 2001). That is, the

firm must attempt to target customers of an international market outside of the firm‘s

domestic market or have international customers purchase from the firm, for their actions

to have constituted internationalisation. Thus, to argue that any firm can fall into the

category of born global just because of launching a website is misleading. Therefore, the

theoretical concept of born global in relationship to the Internet is currently in a state of

44

flux, as ambiguity exists. This argument does not consider the debate of whether the born

global concept is an apt evaluation of rapid internationalisation. However, considering

the possible impact of instantaneous opportunities for international market expansion

online, new emphasis has been given to this area of research.

Further, the concept of managerial entrepreneurship, although not evaluated in an

Internet context, may be an extrapolated research pathway from the more traditional

analysis of the born global concept of internationalisation (Gabrielsson & Manek

Kirpalani, 2004). That is, the born global concept indicates the possible influence of

managerial entrepreneurship affecting the strategic choices made by managers in

international marketing roles. Thus, further exploration is warranted in this important but

underdeveloped area.

Research question

From the evaluation of the literature surrounding Internet international marketing, growth

strategy has been identified as lacking depth, as illustrated in Table 2.2. That is, the

following table highlights that the bulk of the research is based on broad macro-

environmental factors, such as: political environments (Rose & Feldman, 1996; Samiee,

1998a; Zugelder, Flaherty & Johnson, 2000; Torre & Moxon, 2001; Gutmann, 2002;

Harrison-Walker, 2002; Hiebert, 2002), legal environments (Samiee, 1998a; Zugelder, et

al., 2000; Liu, 2001; Deibert, 2002; Einhorn, 2002; Harrison-Walker, 2002; Hiebert,

2002; Gibbs & Kraemer, 2004) culture environments (Quelch & Klein, 1996; Palumba &

Herbig, 1998; Samiee, 1998a; Davis, 1999; Lynch & Beck, 2001; Harrison-Walker,

2002; Blake & Neuendorf, 2004; Cullen & Parboteeah, 2004; Hill, 2004; Kotabe &

Helsen, 2004; Okazaki, 2004; Shiu & Dawson, 2004; Singh & Baack, 2004) and

technology infrastructure environments (Bennett, 1997; Palumba & Herbig, 1998;

Samiee, 1998b, a; Zongying, Haoming & Qiaoying, 1998; Davis, 1999; Tang, 2000;

Javalgi & Ramsey, 2001; Ling, 2001; Wilhelm, 2001; Abas, 2002; Harrison-Walker,

2002; Chao, Samiee & Yip, 2003; Ward, 2003; Siegel, 2004).

In contrast, there has been a limited emphasis on a strategic focus, as presented in Table

2.2 on the Internet‘s influence on international marketing. More specifically, there has

45

Growth Internet Internet

strategy marketing

been no focus in the research on growth strategies in international markets in an Internet

context. Thus, from this evaluation of the theoretical framework seen in Figure 2.6, an

overall research question developed to address this deficiency is: ‘How and why does

the Internet influence the international market growth of the firm?’

Figure 2.6 Theoretical framework


Internetalisation

International

foreign market Internet

growth internationalisation


components

Current limited:

research problem

Parent discipline:

literature drawn from

growth & Internet

marketing &

internationalisation

Surrounding

literature: foreign

market growth and

Internet


Parent discipline: literature drawn from internationalisation

theory and transaction cost perspectives:

internationalisation components: information, knowledge,

international orientation

Internet marketing elements: Information

search, information control, interaction,

trust, disintermediation, internal firm

Internet orientation. Product orientation:

Digital, services and goods

Growth paths: international market

penetration, market development, Internet

& strategy. Reactive versus proactive

46

Further, from the literature review two research issues are developed for exploration of

the research question:

RI.1 How and why has the Internet influenced the internationalisation process of the

firm?

RI.2 How and why has the Internet influenced international market penetration and

development of the firm?

2.6 Conclusion

Chapter two presents a synthesis of the literature, which assists in giving a theoretical

platform for this research. Additionally, research issues have been developed from the

limited literature. An evaluation of the literature has identified research opportunities for

further investigation pertaining to the impact of the Internet on the internationalisation

process and international market growth. The new digital environment is altering the

traditional perceptions of internationalisation. This review of Internet marketing and

internationalisation literature helps to bring a better understanding of the Internet‘s

impact on international market growth. Few authors have attempted similar research in

the area of Internet and internationalisation. Thus, an initial qualitative exploratory was

prudent. Accordingly, the qualitative methodology will be assessed next.

47

Table 2.2 Literature evaluation summary

Main Author/

construct O

ver

all

per

spec

tiv

e

Ch

alle

ng

es

Op

po

rtu

nit

ies

Mac

ro f

acto

r in

flu

ence

s

Po

liti

cal

issu

es

Leg

al i

ssu

es

Tec

hn

olo

gy

Infr

astr

uct

ure

Cu

ltu

re

Eco

no

mic

Inte

rnal

fac

tor

infl

uen

ces

Inte

rnal

Fac

tors

Ind

ust

ry/p

rod

uct

ty

pe

Ed

uca

tio

n

Ser

vic

es

Fir

m s

ize,

SM

E‘s

B-t

o-B

Web

sit

es t

yp

e

Mar

ket

ing

ele

men

ts

Mar

ket

ing

dec

isio

ns

Mar

ket

in

tell

igen

ce

Ad

ver

tisi

ng

Co

mm

un

icat

ion

s

Tra

nsa

ctio

ns

Ind

ust

ry i

nfl

uen

ce

Co

nsu

mer

beh

avio

ur

Mar

ket

ing

Mix

Inte

rnat

ion

alis

atio

n

Inte

rnat

ion

alis

atio

n t

heo

ry

Su

pp

ly c

hai

n,

log

isti

cs

Ex

po

rtin

g

Inte

rnat

ion

al m

ark

etin

g

Mar

ket

ing

str

ateg

y

Bra

nd

ing

Seg

men

tati

on

Glo

bal

str

ateg

y

1. Quelch & Klein, 1996 X X X X X X X X X X X X X X X X

2. Angelides, 1997 X X X X X X X

3. Bennett, 1997 X X X X X X X X X X X X

4. Hamill, 1997 X X X X X X X X X X

5. White 1997 X X X X X

6. Fish, Martinez, Santillan, &

Brazell, 1998

X X X

7. Freeman, 1998 X X X X X X X X

8. Palumba & Herbig, 1998 X X X X X X X X X

9. Samiee, 1998a, 1998b X X X X X X X X X X X X X X X

10. Berthon, Pitt, Katsikeas &

Berthon, 1999

X X X X X X

11. Davis, 1999 X X X X X X X X X

12. Steinfield & Klein, 1999 X X X

13. Javalgi & Ramsey, 2000 X X X X X X X X X X X X

14. Jevons, 2000 X X X X X X

15. Lazer & Shaw, 2000 X X X X X X X

16. Lituchy & Rail, 2000 X X X X X

17. Salcedo & Grackin, 2000 X X X

18. Stottinger, 2000 X X X X X

19. Zugelder, Flaherty & Johnson

2000

X X X X X

20. Bell, Deans, Ibbotson &

Sinkovics, 2001

X X X

21. Garau, Ranchhod & Hackney,

2001

X X X X X X

22. Lynch & Beck, 2001 X X X X X X X X X

23. Overby & Min, 2001 X X X X X X

24. Prasad, Ramamurthy &

Naidu, 2001

X X X X X X X X

25. Sparkes & Thomas, 2001 X X X X X

26. Arnott, & Bridgewater, 2002 X X X X X

27. Dou, Nielsen & Tan, 2002 X X X X X X X

28. Harrison-Walker, 2002 X X X X X X X X X X X X X X X

29. Melawar & Stead, 2002 X X X X X X X X X X X

30. Moen, 2002 X X X X

31. Petersen, Welch & Liesch,

2002

X X X X X X

32. Warden, Lai & Wu, 2002 X X X X X X

33. Aspelund & Moen, 2004 X X X X X X X

34. Javalgi, Martin & Todd 2004 X X X X X X X X X X

35. Julian & Liesch, 2004 X X X X X X X X

36. Morgan-Thomas &

Bridgewater, 2004

X X X X

37. Okazaki, 2004 X X X X

Aggregate concentration of

research

18 28 10 17 10 9 16 6 8 3 3 9 2 4 12 4 1 13 12 10 5 6 4 11 7 3 4 2 11


48

3.0 CHAPTER 3: CASE STUDY METHODOLOGY: STAGE I

3.1 Introduction

In Chapter 2, the literature surrounding the research question was evaluated. In Chapter 3

the epistemological ideology, ontological viewpoint of reality and methodology used to

collect data are explored. Figure 3.1 diagrammatically represents the structure of this

chapter showing the direction or path of the methodology. That is, the realism paradigm

(Section 3.2) and case study methodology will be justified (Section 3.3). Further,

limitations are presented (Section 3.4), ethics considerations outlined (Section 3.5) and a

conclusion drawn (Section 3.6), as illustrated in Figure 3.1.


Source: adapted from Perry (1998) for the purpose of this study

This project adopted a mixed approach of qualitative and quantitative methodologies to

identify a theoretical construct and then to achieve some verification in an area where

research is presently limited (Eisenhardt, 1989; Chetty, 1996; Poon & Swatman, 1997;

Burgess-Limerick & Burgess-Limerick, 1998). There is a lack of emphasis placed on

empirical research within academia as existing research models are limited in capturing

Justification of paradigm (3.2)

Justification of case study

methodology (3.3)

Validity and reliability of

case study research (3.3.1)

Case study design (3.3.2)

Data collection (3.3.3)

Pilot case study (3.3.4)

Analysis of case study

research (3.3.5)

Limitation of case study

research (3.4)

Ethical considerations (3.5)

Selection of cases

Number of cases

Construct validity

Internal validity

External validity

Reliability

Protocol

Design of protocol

Conclusion (3.6)

Introduction (3.1)

49

the theoretical impact the Internet has had on international marketing (Moen, 2002b).

Thus, empirical evidence contributes toward the Internet internationalisation literature

(Moen, 2002b; Moen, et al., 2003), with respect to the Internet and international market

growth.

Research in Internet international marketing is predominantly conceptual in nature

(54%), as seen in Table 3.1 (noted as A in the last row). Exploratory qualitative research

contributes 8% to the body of knowledge. Thus, these combined forms of research

account for 62% of research into Internet international marketing, compared with the

38% of quantitative research in the area. However, as this area of research evolves,

empirically based research is becoming more reliable and accepted. As many questions

remain unanswered in the area of Internet international marketing, an initial exploration

of the research question is justified prior to attempting quantitative approaches.

Therefore, the most prudent choice for this study is a mixed qualitative and quantitative

methodology, to best address the research problem and to contribute more reliable

findings to an area that currently lacks depth and verification. Further, in recent years a

growing number of authors have used case study techniques in evaluating phenomenon

concerning the Internet and theory (Klein & Quelch, 1997; Poon & Swatman, 1997;

Chan & Swatman, 2000; Raisinghani, Vinaja & Frank, 2001; Al-Mashari, 2002; Hughes,

2002; Moen, et al., 2003). Case study interviews represent the first stage of data

collection for this research. Prior to data collection it is important to set the paradigm

ideology of the researcher, which is presented next.

50

Table 3.1 Internet international marketing research methods

Main author/methodology

Co

nce

ptu

ali

sati

on

, op

inio

n

Co

nce

ptu

ali

sati

on

via

seco

nd

ary

co

nve

rgen

ce

Pro

po

siti

on

s vi

a s

eco

nd

ary

da

ta

con

verg

ence

Qu

ali

tati

ve

met

ho

ds

Qu

an

tita

tive

met

hod

s

1. Angelides, 1997

2. Arnott, & Bridgewater, 2002

3. Aspelund & Moen, 2004

4. Bell, Deans, Ibbotson & Sinkovics, 2001

5. Bennett, 1997

6. Berthon, Pitt, Katsikeas & Berthon, 1999

7. Davis, 1999

8. Dou, Nielsen & Tan, 2002

9. Fish, Martinez, Santillan, & Brazell, 1998

10. Freeman, 1998

11. Garau, Ranchhod & Hackney, 2001

12. Hamill, 1997

13. Harrison-Walker, 2002

14. Javalgi & Ramsey, 2000

15. Javalgi, Martin & Todd, 2004

16. Jevons, 2000

17. Julian & Liesch, 2004

18. Lazer & Shaw 2000

19. Lituchy & Rail, 2000

20. Lynch & Beck, 2001

21. Melawar & Stead, 2002

22. Moen, 2002

23. Morgan-Thomas & Bridgewater, 2004

24. Okazaki, 2004

25. Overby & Min, 2001

26. Palumba & Herbig, 1998

27. Petersen, Welch & Liesch 2002

28. Prasad, Ramamurthy & Naidu, 2001

29. Quelch & Klein, 1996

30. Salcedo & Grackin, 2000

31. Samiee, 1998a, 1998b

32. Steinfield & Klein, 1999

33. Stottinger, 2000

34. Sparkes & Thomas, 2001

35. Warden, Lai & Wu, 2002

36. White 1997

37. Zugelder, Flaherty & Johnson 2000

Aggregate choice of methodology 6/37

16.2%

11/37

29.7%

3/37

8.1%

3/37

8.1%

14/37

37.8%

Proportions: (A) CONCEPTUALISATION, (B) QUALITATIVE, (C)

QUANTITATIVE METHODOLOGIES (A)

54%

(B)

8.1%

(C)

37.8%


51

3.2 Paradigm justification

It is pertinent to give an ideological perspective or viewpoint for the research to make an

ideological stand or to comprehend the particular paradigm upon which the research is

founded. A paradigmatic ideology is a conceptual psychological framework within which

the research functions and is the belief system of the researcher that guides the

investigator‘s activities (Guba & Lincoln, 1989; Guba, 1990; Milliken, 2001). In this

context, a paradigm or viewpoint of reality is solely independent of any other paradigm

(Perry, 1998). The researcher‘s beliefs concerning the nature of reality (ontology) and

how knowledge about reality is gained from within the paradigm (epistemology) drive

the research techniques (methodology) (Perry, et al., 1999; Healy & Perry, 2000; Guba &

Lincoln, 2004; Thompson & Perry, 2004). That is, ‗ontology is reality, epistemology is

the relationship between that reality and the researcher, methodology is the technique

which is to be used in investigating the reality‘ (Thompson & Perry, 2004, p. 404). It has

been argued that questions of method are secondary and peripheral to the question of

paradigm perspective (Guba & Lincoln, 1994; Guba & Lincoln, 2004). Thus, the

paradigm tends to drive the research in this respect. The selection of the most appropriate

paradigm guided the researcher‘s opinion or view of reality, the relationship between the

researcher and reality, and the methodology used by the investigator, as seen in Table 3.2

(Gummesson, 2000; Healy & Perry, 2000). Therefore, the justification of the research

paradigm for this study is an essential stage, setting the scene prior to the investigation

itself.

Table 3.2 Basic belief systems of alternative enquiry paradigms

Item Positivism

paradigm

Critical theory

paradigm

Constructivism

paradigm

Realism paradigm

Ontology

(Reality)

Naïve realism:

Reality is real and

apprehensible

Historical realism:

Virtual reality shaped

by social, economical,

ethical, political,

cultural, and gender

values crystallised over

time

Critical relativism:

Multiple local and

specific ‗constructed‘

realities

Critical realism: Reality is

real but only imperfectly

and probabilistically

apprehensible and thus

triangulation from many

sources is required to try to

know it

Epistemology (Relationship between

researcher and that

reality)

Objective: Finding

the truth

Subjective:

Value- mediated

findings

Subjectivist:

Creating findings

Modified objectivist:

Findings probably true

Methodology

(Technique used to

discover that reality)

Experiments/

Surveys:

Verification of

hypothesis:

Dialogic/ dialectical:

Researcher is a

‗transformative

intellectual‘ who

Hermeneutical/

dialectical:

Researcher is a

‗passionate

Case studies/ convergent

interviewing:

Triangulation, interpretation

of research issues by

52

primarily

quantitative

methods

changes the social

world within which

participants live

participant‘ within

the world being

investigated

qualitative and quantitative methods such as structural

equation modelling

Source: Perry, Riege and Brown (1999, p.17); and Thomas and Perry (2004, p. 404),

based on Guba and Lincoln (1994, p.109)

Further, a mixed inductive and deductive approach to the research is used, as it is

impossible to separate the two approaches and as both prior theory and theory emerging

from the data are involved simultaneously (Perry, 1998). That is, it is very difficult for

the researcher to separate the two processes of inductive and deductive approaches for a

researcher as it is almost impossible to go into a study theory-free (Perry, 1998). In this

study, protocol questions are generated from the researcher‘s understanding of current

theories of Internet marketing, international marketing and internationalisation. Although

in the following analysis paradigms are labelled either inductive or deductive, this is a

categorisation for the most part. A paradigm should be considered inductive or deductive

in nature as opposed to being exclusively inductive or deductive (Perry, 1998).

The first paradigm to be investigated is the positivist paradigm. A positivist reaches for

causal explanations and inferred relationships through variables (Amaratunga & Baldry,

2001; Thompson & Perry, 2004). The whole is reduced to its simplest elements to

facilitate analysis (Perry, et al., 1999). Two major implications of the positivist approach

require the independence of the observer and the need to formulate a hypothesis for

verification (Perry, 1998; Perry, et al., 1999; Amaratunga & Baldry, 2001; Amaratunga,

et al., 2002). The positivist paradigm is quantitative with deductive objectives measuring

only a single reality (Tsoukas, 1989; Patton, 1990; Perry, et al., 1999).

For the researcher conducting this study, a positivist approach is an inappropriate

viewpoint. This study investigates the impact of the Internet on international market

growth. The investigator of this phenomenon must participate in the real world situation

so as to better understand the pertinent issues (Perry, 1998). In contrast to the

independence required by the positivist approach, it is imperative that the researcher in

this PhD research uses their unique understanding and is able to reflect on the knowledge

about the phenomenon (Perry, 1998; Perry, et al., 1999; Healy & Perry, 2000). This is

why the positivist paradigm is inappropriate for social science phenomena in marketing

53

with limited prior research (Healy & Perry, 2000). As no research has been undertaken

concerning the Internet‘s impact on market growth in international marketing, it is

prudent to explore the research gap before confirming variables. Thus, a positivist

deductive ideology attempts to verify identified established variables (Thompson &

Perry, 2004). However, these established variables are not evident in the current body of

knowledge. Thus, a positivist ideology does not fit the research approach, as it is

necessary to explore the research question initially.

The second of the paradigms is that of critical theory, a form of historical realism

whereby reality is shaped by social, economic, political, cultural, and gender values or

standards that have been crystallised over a period of time (Perry, et al., 1999).

Assumptions by researchers are subjective and therefore grounded‘ social historical

knowledge is routine and thus value-dependent (Guba & Lincoln, 1994; Perry, et al.,

1999). The critical theorist‘s aim is to transform values, as the researcher is an

intellectual who participates in a transformative capacity (Thompson & Perry, 2004).

This paradigm is assessed on individuals‘ perspectives, beliefs and variables, as reality

consists of multiple internal subjectively constructed realities (Thompson & Perry,

2004). Thus, this paradigm is inappropriate, as the research in this case does not try to

liberate respondents from their historical, mental, emotional or social structures (Perry, et

al., 1999).

The third paradigm is the constructivism paradigm. A constructivist would view the truth

as a construct of belief systems in each particular context (Perry, et al., 1999). That is,

reality is multiple realities that are distinct and intangible for individuals founded socially

and experientially (Perry, et al., 1999). The researcher in this paradigm constructs

realities through the passionate participation of the interviewer during the field work

(Healy & Perry, 2000; Thompson & Perry, 2004). Constructivism would be an

inappropriate paradigm for this study, as technological dimensions of business, as is the

case in this project, do not align with the parameters of this paradigm (Perry, et al.,

1999). Further, constructivism is rarely used in marketing management research, as this

approach excludes concerns of the economic and technological dimensions of business

(Healy & Perry, 2000).

54

The final paradigm to be discussed is the realism paradigm. This form of research

attempts to understand a common reality in which many individuals operate

independently and is also referred to as post-positivism (Perry, et al., 1999; Guba &

Lincoln, 2004). The realist believes that there exists a real world to discover, even if it is

an imperfect one (Tsoukas, 1989; Perry, et al., 1999; Guba & Lincoln, 2004; Thompson

& Perry, 2004). Perceptions for realists are viewpoints of reality. That is, perceptions

give a picture of reality that is then triangulated with other perceptions (Perry, et al.,

1999; Thompson & Perry, 2004). Discovery of structures and mechanisms of experiences

and events are a particular goal of this paradigm (Tsoukas, 1989; Perry, et al., 1999). In

contrast to constructivists and critical theorists who consider there are many realities, a

realist considers there to be only one reality (Perry, et al., 1999; Thompson & Perry,

2004). These many perceptions of reality are triangulated to paint a better picture of that

one reality (Perry, et al., 1999; Thompson & Perry, 2004).

The realism paradigm is the appropriate paradigm for this research, as it attempts to

explore and explain the phenomenon as opposed to strictly confirm (Healy & Perry,

2000). For example, in this case the research attempts to explore and explain the impact

of the Internet on the firm‘s growth in international markets. That is, this research

explores how, if at all, firms are using the Internet for international market growth. The

contemporary phenomenon of the Internet has no established principles or constructs

with reference to international marketing and therefore is not of a positivist deductive

paradigm (Perry, 1998; Perry, et al., 1999). Thus, in-depth interviews will draw internal

viewpoints (Guba & Lincoln, 2004) on the Internet‘s influence on international growth

through the evaluation of the Internet‘s influence on the internationalisation process.

Realism is predominantly inductive in nature and is the appropriate paradigm for new

areas of research (Tsoukas, 1989; Perry, et al., 1999) such as in this study. Therefore, the

realism inductive paradigm is the most appropriate of the four paradigms discussed in

this section, as it has the best fit. Furthermore, given that the realism paradigm is the

most suitable framework, both the case study and the structural equation model

methodology can be used for this research study. Initially, multiple-case study interviews

55

with expert data-rich sources will be conducted, as these individuals understand

international marketing. Thus, the data will provide a window into reality that can be

triangulated with other expert perceptions (Perry, et al., 1999). Further, these initial

multiple-case studies will help to define constructs that can then be modelled and tested

in a structural equation modelling evaluation.

Mixed methods approach

By employing qualitative and quantitative methods (seen in Section 3.3), each approach

gives different dimensions of the same phenomenon (Das, 1983; Amaratunga, et al.,

2002). Further, it has been argued that these methods are not mutually exclusive, as a

combination of approaches can be used to help give an improved holistic exploration of

organisational behaviours (Das, 1983). The emphasis of a mixed methodology is founded

on the concept of triangulation (Amaratunga, et al., 2002). That is, by combining

methods, the researcher can triangulate theoretical understandings about a phenomenon

(as illustrated in Figure 3.2) giving a better understanding of the research problem. By

confirming or corroborating theoretical constructs through a linking method,

triangulation helps to develop analysis and provide a deeper richer detail of the research

topic (Amaratunga, et al., 2002). In this research project, structural equation modelling is

combined with case study analysis, as this is consistent with the realism paradigm

ideology held by this researcher and this method can give confirmatory verification for

the research (Guba & Lincoln, 1994; Healy & Perry, 2000; Thompson & Perry, 2004).

Thus, using a mixed approach gives a more accurate understanding of the phenomenon.

Table 3.3 Summary of mixed approach


Stage I: Qualitative study

*Multiple in-depth case studies

*12 cases

Stage II: Quantitative study

*Survey

*Structural equation model

* 224 respondents

56

Although the aim of this project is to firstly identify constructs, some would argue that

the true purpose of case studies is to tell a story, rather than the development of

hypotheses (Dyer, Wilkins & Eisenhardt, 1991). That is, one criticism of the multiple-

case study method is that it does not give enough depth to generate constructs relating to

the research (Dyer, et al., 1991). However, the premise supporting this criticism assumes

that the researcher will not delve deeply enough into each case and that the researcher

will not take into account a priori research. This possible limitation of shallow analysis is

acknowledged and overcome by using in-depth interviews with experts in the area of

research, which are based on and analysed in the context of this a priori theory. Further,

the more conservative perception of the single in-depth case study method has evolved

into multiple-case analysis, specifically used to generate constructs as opposed to simply

describing a good story. As a consequence, the Stage I multiple-case study method will

now be explored, while Chapter 4 subsequently analyses these multiple-cases.

Figure 3.2 Research design and method of investigation funnelling process

Broader literature

The gap

Protocol questions

Better understanding

Model development

Analysis of SEM

Confirmation


Synthesis of literature

Identification research gap in literature

Development of research question & issues

Case studies (12)

In-depth interviews

Proposed-model development

Confirmation of the model

Good model fit (SEM)

Development of research protocol

Hypothesis formulation

57

3.3 Case study methodology justification: Stage I

Stage I of the study extracted pertinent theoretical constructs using multiple in-depth case

studies (Yin, 1994; Sylvie, 1996; Perry, et al., 1999; Hastings & Perry, 2000;

Amaratunga & Baldry, 2001; Amaratunga, et al., 2002). Case study methodology has

become an acceptable form of methodology within marketing for example, in the area of

Internet marketing and Internet international marketing (Klein & Quelch, 1997; Poon &

Swatman, 1997; Broussard, 2000; Raisinghani, et al., 2001; Raisinghani, 2001; Wynne,

Berthon, Pitt, Ewing & Napoli, 2001; Al-Mashari, 2002; Moen, et al., 2003). A case

study strategy can be qualitative and/or quantitative, a single or multiple-cases, which is

an empirical inquiry of a ‗contemporary phenomenon within a real life context,

especially when boundaries between phenomenon and context are not clearly evident‘

(Yin, 1994, p. 13). Further, the case inquiry moves beyond a single data point to rely on

multiple sources of evidence in a data convergence process, which benefits from the prior

development of theoretical propositions to guide the data collection and analysis (Yin,

1994).

The justification of case study methodology for the investigation of the Internet and

international market growth is founded on a myriad of analytical arguments. The major

arguments are: firstly, that no significant focus has been given to growth strategy in

Internet international marketing. Thus, this study will help to construct, extend and build

theoretical concepts (Perry, 1998; Perry, et al., 1999).

Secondly, due to the inadequacy of the literature concerning Internet international

marketing with a specific focus on growth strategy, no set standards or procedures are set

in the body of knowledge (Perry, 1998). Thirdly, the topic area is contemporary in

nature, it is a phenomenon, and not an historical phenomenon, but a contemporary

phenomenon about which little is currently known (Perry, 1998; Perry, et al., 1999;

Amaratunga & Baldry, 2001; Amaratunga, et al., 2002). This third argument could be

considered to be an extension of the above-mentioned second justification. Fourthly, case

study methodology can give the study a holistic view of the pertinent issues concerning

the research problem (Miles & Huberman, 1994; Gummesson, 2000, 2004). Finally,

58

using case study methodology is appropriate for a complex situation in the social

sciences, as is the case in this study.

In some quarters of marketing research, case study methodology has been considered an

inappropriate form of methodology for postgraduate students where there is already

substantive theory, as highlighted by Chad Perry (1998). However, case study

methodology has become more prevalent in academic research in management and

marketing disciplines in recent years (Perry, 1998; Gummesson, 2000). A major reason

for the increased acceptance of case study methodology in marketing research allows a

holistic view of a contemporary topic to be gained (Amaratunga & Baldry, 2001;

Amaratunga, et al., 2002). This holistic view is in contrast to a reductionist path where

the components of the study are broken down into a small number of fragmented parts

(Gummesson, 2000). That is, a holistic view of the study does not consider the whole as

the sum of the parts (Gummesson, 2000).

Primarily, a case study method of collecting data attempts to understand a particular

situation as opposed to one isolated component of the situation (Bouma, 1996). In this

project, using multiple-cases gives the research a better view of the total environment in

relation to the Internet and international marketing growth. This research used in-depth

interviews though multiple-case studies to draw an understanding of the issues (Patton,

1990; Gummesson, 2000). The individual respondents bring informed, knowledgeable

and experienced information to the project that gives a holistic view of a complex issue

(Patton, 1990; Gummesson, 2000). Decisions concerning international market growth are

complex, as they revolve around strategic decisions in both a highly technical

environment and an international environment.

When formulating a methodological strategy, several characteristics and philosophies

underpin each chosen method (Yin, 1994). These characteristics and philosophy,

including the form of research question, the lack of control over that event and the focus

on a contemporary issue, all support the chosen methodology of case studies, as seen in

Table 3.4 (Yin, 1989; Amaratunga & Baldry, 2001; de Weerd-Nederhof, 2001;

Amaratunga, et al., 2002).

59

Table 3.4 Relevant situations for different research strategies

Strategy Form of research

question

Requires control over

behavioural events

Focuses on contemporary

events

Experiment How, why Yes Yes

Survey Who, what, where

How many

How much

No Yes

Archival analysis (e.g.

economic study

Who, what, where

How many

How much

No

Yes/no

History How, why No No

Case study How, why No Yes

Sources: Yin (1989 p. 17)

These characteristics and philosophies can be directly linked to the research to help

justify the chosen methodological strategy (Yin, 1989; Amaratunga & Baldry, 2001; de

Weerd-Nederhof, 2001; Amaratunga, et al., 2002). That is, the contemporary event is the

Internet‘s impact on international market growth, there is a lack of control over

individuals in the study, and the how and why question needed to address the research

problem. These characteristics of the research problem also lend themselves to the

justification for the initial qualitative methodology needed for this investigation. That is,

the research problem is specifically a ‗how‘ and ‗why‘ exploratory question.

Although the use of case study methodology has been justified, a significant level of

credibility is needed for qualitative research. The internal validity, external validity and

reliability of the case study project are analysed in Section 3.3.1.

3.3.1 Validity and reliability of case study method

A set of criteria is employed in order to gain the desired level of acceptable research

validity and to achieve credibility (Parkhe, 1993; Yin, 1994; Amaratunga & Baldry,

2001). The study‘s validity and reliability are evaluated on the ability of the researcher to

abide by a number of key design checks and to adhere to good academic research

practices (Amaratunga & Baldry, 2001). Although terms such as validity and reliability

are derived from a quantitative and scientific research foundation, they can still be

flexibly incorporated to evaluate the credibility of a qualitative research study striving for

reliability (Carter, 1999). For the most part, validity and reliability are evaluated in

accordance with Yin‘s (1994) proposed qualitative case study design tests of construct

validity, internal validity, external validity and reliability to establish a level of research

60

quality needed to gain reliability and overall credibility, as seen in Table 3.5 (Parkhe,

1993; Yin, 1994; Amaratunga & Baldry, 2001).

Table 3.5 Validity and reliability of case study research

Tests Case study tactics Phase of research in which

tactics occurs

Construct validity Use multiple sources of evidence

and triangulate these sources

Establish chain of evidence

Ask key informants review draft

Develop case study report

Data collection

Data collection

Composition

Internal validity Perform within-case study analysis,

then pattern matching

Perform explanation building,

searching for the ‗why‘ behind the

relationship

Conduct time-series analysis

Data analysis

Data analysis

Data analysis

External validity Use replication logic (not

sampling) in multiple-case studies

Research design

Reliability Use case study protocol

Develop case study database

Data collection

Data collection

Source: adapted from Parkhe (1993) and Yin (1994)

Construct validity

The first quality measure is that of realism construct validity. This measurement is

similar to construct validity of a positivism study, as it reviews the information within the

construct of a particular theory. For this study, prior theory from parent disciplines

including international marketing, growth, and Internet marketing literature is

triangulated (Healy & Perry, 2000). However, no construct should be guaranteed in the

development of a theory, as the researcher should attempt to leave behind any bias of

preordained theoretical perspectives behind them (Eisenhardt, 1989). The researcher

must identify and evaluate the possible important issues pertaining to the research

problem. Therefore, the mindset of openness limits bias as much as is possible

(Eisenhardt, 1989). To achieve this level of construct validity, the research establishes

the appropriate operational measures for the pertinent issues within the study

(Amaratunga & Baldry, 2001). These measures are produced by using multiple sources

of information, establishing a chain of evidence through data collection, and triangulating

the data (Parkhe, 1993; Yin, 1994; Amaratunga & Baldry, 2001). This research project

obtains construct validity by incorporating all evidence concerning international market

61

growth from secondary sources (literature) and from the analysis of primary sources

(case studies interviews) then triangulating the evidence convergence through a Stage II

structural equation modelling process (Parkhe, 1993; Yin, 1994; Amaratunga & Baldry,

2001).

Internal validity

The second of the criteria for research quality is that of internal validity (Parkhe, 1993;

Yin, 1994; Amaratunga & Baldry, 2001). Internal validity verifies that a true and correct

relationship has been established, rather than fake or untrue effects (Yin, 1994; Carter,

1999; Amaratunga & Baldry, 2001; Amaratunga, et al., 2002). If the research

investigator draws incorrect conclusions about relationships that do not truly exist, then

the built or constructed theory is inappropriate and flawed (Yin 1994). In case study

methodology, however, this logic is not as important as in a quantifiable study.

Exploratory studies such as case studies are not necessarily concerned with a causal

statement (Yin, 1994; Amaratunga & Baldry, 2001). To address incorrect conclusions,

this investigator will question the correct influences, consider rival explanations and

possibilities, and converge all evidence with a high level of precision (Yin, 1994;

Amaratunga & Baldry, 2001). Questions of low internal validity are overcome by the

tactics of data analysis pattern matching and explanation building, which will essentially

weed out weak explanation, as illustrated in Table 3.5 (Parkhe, 1993; Yin, 1994;

Amaratunga & Baldry, 2001).

External validity

The third measure of quality in this Stage I is external validity, which concerns itself

with the ability of the research to be generalisable and applicable to an external

environment (Parkhe, 1993; Yin, 1994; Carter, 1999). Therefore, the findings from this

study may be applicable to other settings and situations. External validity can be

achieved by identifying theoretical relationships (Amaratunga, et al., 2002). It is not the

argued that theoretical generalisability can be applied to all international marketing

situations; however, applications may be generalisable to Internet international growth

decisions.

62

Higher external validity is achieved by using the research tactic of replication logic in

multiple-case study data collection (Parkhe, 1993; Yin, 1994; Amaratunga & Baldry,

2001). Replication logic includes both literal replication (predictions of similar results)

and theoretical replication (predicted contrasting results for predicted reasons) (Parkhe,

1993; Yin, 1994; Healy & Perry, 2000).

These factors aid in giving analytical generalisability to the study over that of statistical

generalisability objectives. A selection criteria is used to conform to the replication logic

ideology which in turn ensures better external validity and greater analytical

generalisability. Cases were chosen using standard criteria. These criteria included:

companies with the same product orientation

companies with the same customer orientation and

companies of the same size.

Reliability

The final measure of quality in social science research in the study‘s reliability (Parkhe,

1993; Yin, 1994; Amaratunga & Baldry, 2001; Amaratunga, et al., 2002). The reliability

of the research is measured by the dependability of the findings. That is, all questions

from the protocol about the Internet and international market growth are used to focus

the study, whilst allowing relevant unanticipated issues to be drawn from the interviews

(Carter, 1999). Thus, the study has a level of reliability if, in similar circumstances the

same results and conclusions would have been found by another investigator

(Amaratunga & Baldry, 2001). Further, a certain level of saturation is needed to draw out

all issues from respondents about the research problem (Gummesson, 2004). As many

cases as needed are used to gain redundancy. That is, redundant constructs are identified

at the point of saturation, whereby any more cases would yield little or no better

understanding (Gummesson, 2004). This research overcomes these reliability issues by

using a case study protocol for the in-depth interviews and by developing a database of

information in the data collection stage, as outlined in Table 3.5 (Parkhe, 1993; Yin,

1994; Amaratunga & Baldry, 2001).

63

With appropriate levels of appropriate validity and reliability established it is essential to

elaborate and expand on the case study design chosen for this research study Section

3.3.7 outlines further case selection criteria used in this research.

3.3.2 Case selection

This study incorporates multiple-case study methodology to aid in a holistic perspective

of the identified research problem (Gummesson, 2000). Rather than using a single

embedded case study, this study uses multiple-case study method (Yin, 1994) to better

understanding of the Internet‘s influence on international market growth. Thus, the

multiple-case study design illustrated in Figure 3.3 is used for this study.

Figure 3.3 Types of design for case studies

Single-case designs Multiple-case design

Holistic (single unit of

analysis)

Embedded (multiple

units of analysis)

Source: Yin (1994, p. 39)

Although a single case can give valuable data-rich information it struggles to generate

analytical generalisability, which is the desire in this study for the creation of theory

(Parkhe, 1993; Yin, 1994; Healy & Perry, 2000). This theory is underpinned by

replication logic within the multiple-case methodology to substantiate the constructed

theory, as previously discussed in Section 3.3.1 (Eisenhardt, 1989).

Initial case selection draws cases that provide data-rich evidence and both literal and

theoretical replication as seen in Tables 3.6 and 3.7, and as discussed in Section 3.3.1.

Stage I case selection draws from a similar and an opposing product orientation (physical

goods, and intangible services), customer orientation (business-to-business and business-

to-customer), and size of firm, small or medium sized firms, (measured by number of

employees), as seen in Table 3.6.

Type 1

Type 3

Type 2

Type 4

64

It has been suggested that the Internet would be less relevant in a business-to-business

(B-to-B) orientated firms context from an information search perspective (Deeter-

Schmelz & Kennedy, 2004) (theoretical replication). B-to B firms focus on relationship-

based aspects of the transaction; as such, Internet technologies implementation is used to

enhance the client relationship, for example, the use of customer relationship

management systems (CRM) (literal replication). Whereas, business-to-consumer (B-to-

C) focused firms use Internet technologies to facilitate traffic or the volume of customers,

for example with the use of e-commerce (literal replication). The size of the firm has

been shown to have a bearing on the depth of Internet technology used (Taylor &

Murphy, 2004). Thus, smaller firms may not have the capability to implement more

capital-intensive Internet systems such as e-commerce or CRM systems (theoretical

replication). Further, the product orientation of the firm has an impact on the ability to

use Internet technologies, for example, primarily service firms do not have physical

components that impede implementation of taking the product online (Bergstrom, 2000)

(literal replication), as discussed earlier in Chapter 2, Section 2.3.

Table 3.6 Case research design: replication logic

Note: G =physical good oriented product, S=service oriented product


Thus, case selection conformed to the replication logic selection process set out by Yin

(1994), as seen in Table 3.7. That is, the selection of start-ups (1, 2), small firms (3, 4, 5,

6) and medium firms (7, 8, 9, 10, 11, 12) ensured contrasting and similar-sized cases

were selected. Further, firms with a business-to-customer focus (1, 3, 4, 7, 8, 9) and

business-to-business focus (2, 5, 6, 10, 11, 12) were chosen, to achieve predicted similar

and contrasting results.

Firm size/

customer orientation

Business-to-

consumer (6)

Business-to-

business (6)

Start-ups

Small firms (1-19 employees) (6)

1 (Alpha) (G)

3 (Gamma) (G)

4 (Delta) (G)

2 (Beta) (S)

5 (Epsilon) (G & S)

6 (Zeta) (S)

Medium (20-200 employees) (6)

7 (Eta) (G)

8 (Theta) (G & S)

9 (Iota) (G & S)

10 (Kappa) (S)

11 (Upsilon) (S)

12 (Omega) (S)

65

Table 3.7 Literal and theoretical replication of case selection

Literal replication: predicted similar results

(Parkhe 1993; Yin 1994; Perry 1998; Healy

& Perry 2000)

Theoretical replication: contrasting results

for predicted reasons (Parkhe 1993; Yin

1994; Perry 1998; Healy & Perry 2000)

Cases 1, 3, 4, 5, 7, 11: All physical products Cases 1-12:All individually firms

Cases 2, 6, 8, 9, 10, 12: All service products Cases 1, 3, 4, 5, 7, 11 (goods) vs

2, 6, 8, 9, 10, 12 (services)

Cases 7-12:( medium firms) Cases 7-12 (medium) Vs

1-6 (small-medium)

Case 1-6: (small firms) Cases 2, 5, 6, 10, 11, 12 (B-to-B) vs

1, 3, 4, 7, 8, 9 (B-to-C)

Cases 2, 5, 6, 10, 11, 12 (B-to-B)

Cases 1, 3, 4, 7, 8, 9 (B-to-C)


Number of cases

In an ideal situation for case study methodology as many cases are chosen as to give

theoretical saturation (Eisenhardt, 1989). That is, the number of cases should fully

explain the situation. Further, all pertinent issues concerning the situation should be

uncovered. A researcher knows saturation of the situation and issues have been reached

when redundancy is achieved. Although there is no set specific ideal number of cases

that should be chosen (Patton, 1990), some authors advocate that there should be no less

than four cases selected, as selecting fewer than four can create difficulties in generating

the appropriate level of credibility when constructing theory (Eisenhardt, 1989; Perry,

1998). This PhD dissertation needed twelve cases for saturation.

3.3.3 Data collection method

In each of the twelve cases, a taped in-depth interview was conducted with an

international manager or marketer who had experience in the development of the Internet

and international markets. Each in-depth interview in this research took no less than 1.5

hours. Some interviews lasted three hours, but the average was over two hours. Due to its

in-depth nature, this type of interview can be classified as a single case study and is

recognised within the literature (Yin, 1994). Cases were drawn from contacts, including

government organisations such as Queensland State Development and industry

organisations such as Commerce Queensland and international business associations.

Once the findings from Stage I had helped to refine the constructs and multiple

66

hypotheses, a survey and preliminary model are developed (Chapter 4) from the

evaluation of the data (Yin, 1994; Perry, 1998; Carter, 1999).

Protocol

The convergence of evidence helps to focus the protocol into a more precise instrument

for obtaining rich data (Eisenhardt, 1989; Hastings & Perry, 2000). Reinforcement of the

protocol can be achieved through a pilot study to narrow the focus of the questions (de

Weerd-Nederhof, 2001). That is, a practice-type situation is used to explore the identified

research issues and the overall research question. Information is directed and extracted

through a semi-structured interview protocol. A concerted effort is made to avoid

phrasing questions in a leading way (Carter, 1999). The use of a protocol in this research

study allowed a level of control over the contextual environment (Yin, 1994; Perry,

1998). That is, even though literal and theoretical replication has been established, the

project needs direction for those respondents to best address the research problem.

However, a semi-structured protocol should not be a ‗straitjacket‘, as exploration is the

primary focus of the study (Hughes, 2002). That is, probing and the adaptation of

questions in the protocol is common as unpredicted responses help to refine construct

relationships about the research problem. Furthermore, a protocol allows for increased

reliability and credibility in data collection (Perry, 1998). Therefore, the protocol for this

research project is outlined next, and is also inserted in Appendix A.

Design of interview protocol

The protocol used in this study helped to focus respondents‘ answers to issues pertaining

to the research area (Perry, 1998). These questions are of particular importance to the

credibility of the research; thus, an outline of the interview protocol is shown in

Appendix A of this thesis and evaluated in this section. Each open-ended question in the

interview protocol is derived from elements of the literature and focused on the

exploration of a particular research issue, whilst still allowing for unpredicted or

unexpected responses, as seen in Table 3.8 (Yin, 1994).

67

Table 3.8 Developed protocol question for research issues

Part B C C C D D D E E E E F F F F F F G G G G

Question Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q5 Q6 Q1 Q2 Q3 Q4

R. issue 1 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

R. issue 2a √ √ √ √ √ √ √ √ √ √ √

R. issue 2b √ √ √ √ √ √ √

Note: RI.1 How has the Internet influenced the internationalisation process of the firm?

RI.2 How has he Internet influenced international a) market penetration and b) market development of the firm?


Part A is the introduction that gives participants information pertaining to the research,

the institution and the ethical considerations. The interview protocol, Part B, uses

probing questions to draw prior experience and knowledge about theoretical concepts

from respondents (Patton, 1990; Perry, 1998). Thus, at the start of the interview protocol,

preliminary questions invite the respondents to describe their experience, whatever the

research problem (Perry, 1998). These questions, seen in Part B, attempt to capture the

interviewee‘s perceptions as distinct from those of the researcher (Perry, 1998). Part B,

questions 1, 2 and 3, source information about the particular business environment and

the experiential perspectives of the interviewee pertaining to international marketing

strategy. Further, questions 4 and 5 probe the respondent about current product offerings

and international markets. All other major parts of the interview protocol use probing

questions that not only assist data analysis, but are also a framework for coding to be

constructed, as illustrated in Appendix A (Yin, 1994; Perry, 1998; de Weerd-Nederhof,

2001). Part C seeks to draw an understanding of issues relating to the Internet usage and

intensity of the firm. Part D, uses probing questions relating to current international

customers and country markets to seek a better understanding of past, present and future

international endeavours. These questions in Part D along with questions from Part E, F

and G, help to address the second research issue (as illustrated in Table 3.8).

Part E explores questions investigating critical events and the importance of

internationalisation along with the overall marketing elements used by the firm. Pivotal

to this research is the interaction or relationships between the Internet,

internationalisation and growth path of the firm, which is explored in Part F. Part G

investigates the path of internationalisation focusing strictly on the internationalisation

68

process. However, all major questions in Part C, D, E and F also evaluate the Internet‘s

impact on the internationalisation process for the firm to address Research Issue 1.

Conversely, Part E used questions that ask respondents about probable issues that they

perceive may be important to the research. These questions in Part E can sometimes draw

issues from respondents that may not be in the literature. ‗Why‘ questions are vital in the

exploration of the research areas, because they allow for the unexpected response (Perry,

1998). Thus, all questions apart from demographic questions are open-ended.

The last section of the interview protocol, Part H, is used to identify demographic

information about the individual respondent and the company in question. This Section is

incorporated to give the study pertinent information about the case‘s position within the

business environment. This research used a pilot study to help refine the exploration

through open-ended questions, which is outlined in Section 3.3.4.

3.3.4 Pilot case study

The pilot study used in this research project helped to refine the relevant issues needed to

explore the research problem (Perry, 1998). A pilot study is distinct from a pre-test study

and is used to develop relevant questions, to identify irrelevant questions (Yin, 1994; de

Weerd-Nederhof, 2001) and to identify ambiguous questions or academic terminology

that might be misconstrued (Yin, 1994). These inadequacies include probing questions

with involved technical academic jargon about international markets that interviewees

found confusing and ambiguous. Redesigning the protocol simplified these technical

questions without altering their meaning. Furthermore, using a pilot can give the

analytical procedure a greater level of reliability and credibility as it helps the study focus

on the research area, as long as this process does not restrict unpredicted responses. If

limited alterations are needed for the interview protocol, the pilot case and subsequent

data can be used as another source of evidence for the study. As only minor adjustments

were needed for the interview protocol and the essence of the protocol remained intact,

this study project used the pilot as an extra data source.

69

3.3.5 Analysis procedure of data from case studies

Once the pilot study has helped to refine the interview questions, greater analytical

reliability can be gained from the actual analytical method (Perry, 1998; de Weerd-

Nederhof, 2001; Amaratunga, et al., 2002). Data collected from the selected data-rich

sources formulate the essence of foundation for the constructed theory. That is, the

greater the reliability of the data the more credible the theory constructed (Eisenhardt,

1989; Amaratunga & Baldry, 2001). Furthermore, the exploration of data drawn from the

case studies is evaluated through a number of analytical techniques. The data analysis of

the cases uses within-case analysis, cross-case analysis or pattern matching and

explanation building (Eisenhardt, 1989; Amaratunga & Baldry, 2001; Amaratunga, et al.,

2002). These techniques help to identify, examine and illuminate the research problem

(Patton, 1990; Yin, 1994; Perry, 1998).

Within-case analysis

The analysis of multiple-case studies is based on a comparison of the case evidence with

the initial propositions developed in the early stages of the study (Amaratunga & Baldry,

2001). The purpose of the within-case study analysis is to become familiar with each

individual case through a detailed case write-up (Eisenhardt, 1989; Perry, 1998;

Amaratunga & Baldry, 2001; de Weerd-Nederhof, 2001). That is, within-case analysis is

the process conducted to view each case as a stand-alone entity, identifying unique

patterns prior to the analysis of between cases (Amaratunga & Baldry, 2001). These

write-ups are usually descriptive in nature and help to generate insight, as they support in

coping with the overwhelming amount of data (Eisenhardt, 1989). The greater familiarity

of individual cases is conducive to the cross-case analysis that follows in the cross-case

analysis Section (Perry, 1998; Amaratunga & Baldry, 2001).

Cross-case analysis

The within-case analysis gives a very descriptive evaluation of each independent source

of information and could be considered descriptive analysis (Perry, 1998). Conversely, a

cross-case analysis gives the research a more analytical sophistication and forces the

investigation to look beyond initial impressions (Eisenhardt, 1989; Perry, 1998). Also

known as pattern matching (Yin, 1989; Yin, 1994; Chetty, 1996; Amaratunga, et al.,

70

2002) or cross-case patterns (Eisenhardt, 1989) cross-case analysis (Stake, 1995; Perry,

1998; Amaratunga & Baldry, 2001) endeavours to give cross-case comparisons (Larsson,

1993; Amaratunga & Baldry, 2001). The frequency of statements is used to justify

patterns or themes and conclude differences between cases, finding reasons why answers

varied to the same questions (Patton, 1990; Perry, 1998; Carter, 1999). As a consequence

of the analysis, hypotheses are formulated at this phase in the research. That is, from the

evaluation of the data a number of hypotheses will be developed for confirmation or

disconfirmation in Stage II of data collection.

Explanation

Although each case can be seen as an entity in its own right (Yin, 1994; Amaratunga &

Baldry, 2001), cross-case analysis and the identification of patterns within this analysis

can help to build an explanation and to formulate further propositions (Amaratunga &

Baldry, 2001). That is, the goal of this qualitative study is to analyse the data so as to

build an explanation of the particular situation (Amaratunga, et al., 2002). This better

understanding or new insight into the phenomenon yielded an empirical validity for the

constructed theory into strategy and the influence of the Internet on the choice of

international market growth (Eisenhardt, 1989).

3.4 Limitations

As illustrated previously, the case study methodology is justified as the most appropriate

methodological process. However, criticisms and limitations still exist, and must be

identified so they can be addressed. The identification of case study methodological

limitations is outlined in this section and focuses on human interaction and the lack of

statistical generalisability of the study research method as illustrated in Table 3.9.

Interpretive discrepancies may exist due to human interaction within the data analysis

process (Yin, 1994; Amaratunga, et al., 2002). Thus, the accuracy of overall cross-case

analysis could be improved upon by trying to quantify the process in future research

endeavours; in this study, Stage II of data collection (Amaratunga, et al., 2002). Thus,

limitations are overcome by using quantitative confirmatory structural equation

modelling analytical processes in Stage II of the research.

71

Table 3.9 Limitations and criticisms of case study methodology research

Limitations and criticisms of case study

methodology

Tactics to overcome limitations

Human interaction (Hastings & Perry

2000; Amaratunga & Baldry 2001)

Strong knowledge

Personal interaction kills

Interview techniques

Appropriate question-framing ability

Tape recording with note summarising

Triangulation techniques

(Hastings & Perry 2000)

Getting appropriate knowledge from

respondents (Hastings & Perry 2000)

Snowballing techniques

(Patton 1990; Hastings & Perry 2000)

Overly complex constructed theory (Eisenhardt 1989; Parkhe 1993)

Tight interview protocol

Cross-case analysis

Unsuitability for statistical generalisability (Tsoukas 1989)

Aim for analytical generalisability over that

of traditional scientific generalisability (Yin

1994; Tsoukas 1989; Amaratunga & Baldry

2001)

Credibility maintained through employing a

reliable construct and internal and external

validity (Amaratunga & Baldry 2001).

Lack of generalisability (Amaratunga &

Baldry 2001)

Replication logic through literal and

theoretical replication gives the findings of

the study a greater level of generalisability in

alternative situations

Source: Eisenhardt (1989); Tsoukas (1989); Patton (1990); Parkhe (1993); Hastings and

Perry (2000); Amaratunga and Baldry (2001).

Another criticisms of case study research is that it suffers from a lack of rigour, as human

interaction and judgment is present during the data collection stage, affecting the internal

validity of the data (Amaratunga & Baldry, 2001). Human interaction within the data

analysis can also open the door to inaccuracies and misrepresentation of the data

collected (Eisenhardt, 1989). That is, either human error or the researcher‘s emotional

feelings about a particular topic can bias the data and consequently the results may lack

reliability (Amaratunga & Baldry, 2001). Because the interview serves as the instrument

for the data collection, human error must be of concern (Hastings & Perry, 2000). By

having strong knowledge of the research subject, personal interactive skills, experience

in interview techniques and appropriate question-framing abilities, the interviewer

alleviated these limitations of human error for this study to the best of their ability

(Hastings & Perry, 2000). Furthermore, within the researcher used interview tape

recordings along with note-taking procedures to bolster the validity of the study and to

72

alleviate the possible human error factors that may have occurred (Hastings & Perry,

2000; Hughes, 2002).

Each chosen case study must also have a respondent with the appropriate knowledge and

experience pertaining to the subject matter for the purpose of addressing the research

problem (Hastings & Perry, 2000). Not only must the respondent have the ability to

contribute data-rich information about the research topic, but also they must be willing to

communicate the information in the interview, or otherwise the research findings may

not be meaningful (Patton, 1990; Hastings & Perry, 2000; Sekeran, 2000). Thus, the

selection of the case study respondent distinguished the international manager, marketing

managers, general managers or the CEO‘s who are willing, knowledgeable and

experienced in the research area from those who are not, prior to the interview stage of

the research. Snowballing interview techniques are used to identify respondents with

adequate knowledge and experience in the research area (Patton, 1990; Hastings & Perry,

2000).

Another perceived limitation of case study methodology is the over-complication of a

situation. That is, the formulation of theory from case study research can over justify data

from the particular situation under investigation, which may lead to a theory that is

overly complex and tries to incorporate everything (Eisenhardt, 1989; Parkhe, 1993).

With the overload of information in case study research there is a temptation to build or

construct theory that tries to include everything learned no matter how trivial

(Eisenhardt, 1989; Parkhe, 1993). This research project used a tight interview protocol

and cross-case analysis to focus the data toward the research problem and to identify only

the pertinent issues raised by decision makers. These tactical approaches channelled or

narrowed the focus of the data collected and helped to simplify an otherwise over-

complex constructed theory (Eisenhardt, 1989).

The final major criticism of case study methodology is that it cannot give traditional

scientific generalisability (Tsoukas, 1989; Yin, 1994; Amaratunga & Baldry, 2001). In

Stage I of this research project, an external validity of analytical generalisability is

established in contrast to statistical generalisability (Tsoukas, 1989; Amaratunga &

73

Baldry, 2001). The results gained from the study may not give definite global inferences

as they have been drawn from a complex unique situation, but they can help to

understand theoretical links and patterns that can be used as theoretical constructs for

similar situations (Amaratunga & Baldry, 2001). This case study project design abides by

the methodological tests for a reliable construct and internal and external validity as seen

in Table 3.5 of Section 3.2. Furthermore, the study uses triangulation techniques to

overcome limitations of validity and reliability to give the findings of this study the

desired credibility.

From case study research it is difficult to generalise findings in different settings as the

contemporary phenomenon and the context may be dependent on each other

(Amaratunga & Baldry, 2001). The external environmental conditions may produce

variations in the phenomenon that hinder the generalisability or external validity of the

study (Amaratunga & Baldry, 2001). Even though the results from multiple-case studies

can be considered more robust than those from a single case study, constructed theory

may depend on the complexity of external validity (Amaratunga & Baldry, 2001). Thus,

validity derived from replication logic assist in creating analytical generalisability outside

the current situation (Parkhe, 1993; Yin, 1994; Healy & Perry, 2000).

All forms of methodology suffer from limitations and criticism. Case study methodology

is no exception, as outlined in this section. Understanding and addressing these

limitations is essential to the credibility and reliability of any findings from this study.

Ethical considerations must also be investigated in order to understand and addressed any

limitations of ethical standards. These will be outlined in Section 3.5.

3.5 Ethical considerations

The researcher endeavoured to identify and alleviate any ethical considerations pertinent

to the investigation. Maintaining the confidentiality of respondents, misleading

interviewees and coercing individuals are identified as potential ethical issues and are

addressed in this section. More information on these issues appears in Appendix A, the

interview protocol and the information sheet.

74

The ethical or unethical conduct and behaviour used to undertake this research is

paramount to the moral ideology of contemporary business qualitative research (Sekeran,

2000). Ethical conduct applies to the individuals performing the research and to the

respondents who provide the necessary data (Sekeran, 2000). One of the most important

considerations in this project is confidentiality (Patton, 1990; Suzuki, 1999). The

information given by respondents must be dealt with in the strictest of confidence.

Confidentiality and anonymity of respondents and their data is paramount to the ethical

ideological considerations in this research (Suzuki, 1999). Even incidental identification

of the respondent and case firm is not be possible, as steps are made to disguise all

participants.

Other major ethical considerations identified in this study include possible coercion and

misleading conduct by the researcher (Sekeran, 2000). That is, participants of the study

participate on a voluntary basis and are not pressured in any way. Respondents are

advised that they can leave or withdraw from the study at any time without any loss of

benefit, and this will not affect future involvement with the university, as seen in

Appendix A, information package. Furthermore, misleading or misrepresenting the study

or facts about the research is avoided in this research project, as ethical standards are not

compromised (Sekeran, 2000). Ethical misrepresentation is rejected in this research

project as promises of delivery are honoured (Patton, 1990; Sekeran, 2000). An

illustration of the compliance with ethical considerations is the promise and delivery of

disguising the data from the interviews, thus maintaining the anonymity of firms in the

final report at the end of the study. Finally, this research adhered to those strict ethical

guidelines set by the Queensland University of Technology. Subsequently, the university

Human Research Ethics Committee granted ethical clearance to proceed with the study.

3.6 Conclusion

In Chapter 3, the appropriate paradigm for the ideological foundation of this research

study was identified. The realism paradigm guided the research with the correct

conceptual psychological framework needed for the investigation (Milliken, 2001). The

choice of paradigm is selected due to the belief systems of ontology (reality),

epistemology (the relationship between researcher and that reality), and methodology

75

(techniques used to discover that reality) that underpin the investigation (Guba &

Lincoln, 1994; Perry, et al., 1999). These same belief systems not only help to identify

the appropriate paradigm of realism but also help to eliminate positivist, critical theory

and constructivist paradigms, as they are not conducive to the ideological paradigms that

would be used in this investigation (Guba & Lincoln, 1994; Perry, et al., 1999).

The methodology of case studies used to investigate this reality of ‘the Internet’s

influence on international market growth’ has significant advantages that justify its

selection for this project. Case study methodology gives a holistic perspective to a

particular complex situation or phenomenon (Larsson, 1993; Miles & Huberman, 1994;

Gummesson, 2000). Furthermore this methodology of ascertaining reality helps to

construct theoretical concepts where no set standard or procedure existed before, due to

the limited research and lack of empirical confirmation in the area. Thus, case study

methodology lends itself to investigation of the Internet and international market growth.

This project identified two main dimensions of selection for cases in this research.

Firstly, cases had to fit the criteria addressing the research question: that is, firms had to

be Australian, use the Internet and trade internationally. Additionally, companies needed

to have a representative who dealt with international markets, so as to best address the

research issues. Secondly, the cases chosen from this pool fell within the boundaries of

replication logic, thus giving the literal and theoretical replication needed for analytical

generalisability to construct a credible theory (Yin, 1994).

To give the research a significant level of credibility this study used several tactics to

enhance the construct, external and internal validities, and reliability of the findings

(Amaratunga & Baldry, 2001). The level of credibility established within the research is

founded on the design of the case studies. Using replication logic and data-rich criteria to

select the cases, a semi structured interview protocol for internal accuracy and direction,

and cross-case and within-case analytical procedures, relevant information is drawn from

these data-rich sources to best investigate and illuminate the research question (Perry,

1998).

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4.0 CHAPTER 4: ANALYSIS OF CASE STUDY DATA

4.1 Introduction

As discussed previously in Chapter 3, Section 3.3, the appropriate methodology of case

study in-depth interviews was employed to gather data for the research. The analysis and

presentation of the data was founded on the in-depth interviews conducted with

international managers and decision makers from twelve individual international firms.

The data analysis procedure for this research project evaluated the information in

accordance with both within-case analysis and cross-case analysis, as seen in Figure 4.1

(Eisenhardt 1989; Amaratunga & Baldry 2001; Amaratunga, Baldry, Sarshar & Newton

2002). These techniques of within-case analysis (Section 4.2) and cross-case analysis

(Section 4.3) helped identify and examine pertinent issues related to the research problem

(Patton 1990; Yin 1994; Perry 1998).

Figure 4.1 Overview for Chapter 4, data analysis


Cross-case analysis (4.3)

Within-case analysis (4.2)

Introduction (4.1)

Conclusion (4.4) Research

Issues (4.3.3)

Systematic

coding (4.3.2)

Coding

techniques

(4.3.1)

Research Issue 2: How and why has the

Internet influenced international market

penetration and development growth?

Research Issue 1: How and why has

the Internet influenced the

internationalisation process of the firm?

77

4.2 Within-case analysis

Initially, the analytical process concentrated on a within-case analysis to formalise each

case through a succinct case write-up (Eisenhardt, 1989; Chetty, 1996; Perry, 1998;

Amaratunga & Baldry, 2001; de Weerd-Nederhof, 2001). The process of within-case

analysis was conducted so that each individual case could stand alone as an independent

entity prior to the cross-case analysis, shown in Section 4.3 (Perry, 1998; Amaratunga &

Baldry, 2001; Amaratunga, et al., 2002). Additionally, the within-case analysis gives

further credence to the richness of the data sources. These individual within-case

analyses were summarised into a number of categories including firm code, firm size,

product orientation, number of employees, customer type, regional focus, international

market proportion, turnover, age, number of outlets, position held by interviewee, and a

short description of the firm‘s business as shown in Table 4.1. However, in Table 4.1 and

in the within-case analysis information may have been altered slightly or omitted to

ensure the confidentiality of the firms involved. These changes or omissions do not,

however, affect the quality of the data or its interpretation and findings. Now that the

within-case summary table has been presented, an outline of each case will follow.

78

Table 4.1 Within-case study analysis matrix

Note: Each case has been given a Greek letter to represent the company, as the anonymity of firms is an imperative ethical consideration. ‗Start-up‘ denotes an Internet company

that started online. Conversely, if not indicated, the firm is not a start-up.

*A broader scope of SME definition was used for the first phase of exploration to get a better understanding of a range of key issues. For example, Case 9, Iota has 500 employees

(seasonal), and falls beyond the definition by the Australian Bureau of Statistics (ABS, 2002). However, this falls within the OECD definition of SME, as outlined earlier in

Chapter 1 (OECD, 2002).


Company

case code

Company

type/size

Product

orientation

Number of

employees

Customer

type

Regional focus Proportion (%)

of total Business

is International

Turnover

per/ ann.

Age/ # of

outlets

Interviewee position Description of firm

Case 1:

Alpha

Start-up Goods

2 B-to-C Global

US/ UK

70% <$1 mill. 3 years

2 outlets

Managing Director Online bikini retailer

Case 2:

Beta

Start-up Service

Digital product

8 B-to-B US/ Europe 99% $15 mill. 5 years

3 outlets

CEO Adult entertainment online

Case 3:

Gamma

Small Goods

4 B-to-C US/ UK 35% $1.75 mill. 30 years

1 outlets

Owner Jewellery retailer

Case 4:

Delta

Small Goods

2 B-to-C UK/ US 100% <$1 mill. 2 years

1 outlets

Owner Specialised artwork and images

Case 5:

Epsilon

Small Good and Service/ digital

goods

7 B-to-B NZ/UK/ HKG 10% <$1 mill. 5 years 1 outlets

Managing Director Retail point of purchase software and hardware

Case 6:

Zeta

Small Services

13 B-to-B Asia/ South America

100% <$1 mill. 2 years 3 outlets

Marketing Manager Secondary education exporter

Case 7:

Eta

Medium Goods 38 B-to-B B-to-C

Asia/ US 75% $1–$2.5 mill. 4 years 4 outlets

Business Development Director

Stored value cards: financial payment solutions

Case 8:

Theta

Medium Service &

goods

140 B-to-C US/UK/ Asia/

Europe

40% $5–$10 mill. 90 years

1 outlets

Marketing Director Tourism destination/

accommodation

Case 9:

Iota

Medium Service &

goods

500 * B-to-C NZ/ Asia/ North

America

20% $10 mill. + 23 years

4 outlets

General Manager, Sales and

Marketing

Tourism attraction

Case 10:

Kappa

Medium Service

50 B-to-B Global 60% $10 mill. + 11 years

5 outlets

General Manager, Asia–

Pacific

Business services franchiser

Case 11:

Upsilon

Medium Service 150 B-to-B Global 7-70%

$10 mill. + 39 years

20 outlets

Business Development

management Australasia

Catering and hospitality contracts

Case 12

Omega:

Medium Services 49 B-to-B NZ/UK/ South Asia/ Middle

East/ UAE

10-20% $5–$10 mill. 18 years 5 outlets

Managing Director Asset management software

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Case 1: Alpha

Alpha is an Internet start-up firm. This small online bikini retailer was established in

2002. The firm was pre-conceived as an international company, and thus was

instantly internationalised as it ‘went from garage to global’ (Alpha, 2004). Alpha

produces and designs bikinis, outsourcing the manufacturing to independent

contractors in Australia. The two founders had extensive experience in Internet

development. Designing bikinis and undergarments was assessed as a good venture as

the founders understood from their Internet experience that ‗sexy sells online’ (Alpha,

2004). That is, their primary target market is men purchasing sexy undergarments for

wives and girlfriends. The firm has a business-to-customer orientation. The company

distributes to more than 45 international markets including Alaska, Iceland, Russia,

Chile, United Arab Emirates, Nigeria and the Seychelles, within a three-year period.

However, the major international markets for Alpha were the United States (US) and

the United Kingdom (UK). The international component of the total business is 70%,

as shown in Table 4.1. Further, the Internet is the primary mechanism for

international sales. However, the online brand and public relationship success has

spawned new international market growth in the UK through more established

retailers, because of this success online success.

Case 2: Beta

Beta is also a Internet start-up firm. Beta is an adult entertainment company, which

focuses primarily on business-to-business transactions and has a turnover of more

than $15 million per annum. The firm has both a broad online multi-site strategy and

an affiliate program. That is, the firm not only creates an affiliate program for

intermediaries and producers of adult material, but also develops a broad range of

end-customer-focused products in the adult industry. From inception the firm was

international, as the domestic market was perceived to be somewhat less desirable.

The firm capitalises predominantly on international markets over domestic markets,

as the firm ‘don’t care if we don’t get another Australian customer’ (Beta, 2004).

Between 0–1% of revenue is generated in the domestic Australian market, with more

than 99% in international markets. More specifically, the US market makes up 75%,

Germany 5%, the UK 5% and others countries 15%. Beta uses the Internet as the sole

mechanism for international growth.

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Case 3: Gamma

Gamma is a small retail jewellery firm. Gamma was an offline traditional jeweller

that entered the virtual world. Established more than thirty years ago, Gamma is a

jeweller with a niche product range. Thus, the firm has extensive industry experience.

The retail firm distributes jewellery all over the world, with an international

geographical focus that includes the US, the UK, Canada, Japan and France.

International distribution was direct to customers through postage. For example,

FedEx postage was chosen for postal distribution because of the domination of its US

customer development online, as FedEx is a well-known brand in the US. Pre-

Internet the firm had no international customers. As a consequence of the Internet

business, over the last five years revenue has increased 200 fold, with 35% of

business generated in international markets. The firm now turns over $1.75 million

annually. The firm had the capacity to internationalise only because of their Internet

and web presence, which Gamma affirms: ‘we had no international business other

than tourists before the Internet’.

Case 4: Delta

Delta is a retail art firm. The firm sells both the artwork and augmented products

developed from the artwork. Currently, Delta deals predominantly in international

markets, with the international component accounting for more than 80% of total

revenue. The owner-manager uses third-party virtual network intermediaries online

(eBay) as a conduit for international transactions. Further, email was the primary

mechanism used to facilitate international transactions and maintain customer

relationships, due to the vast geographical distances between company and customers.

However, growth is generated not only through virtual markets such as eBay, but also

primarily through more traditional methods of networks. The ability to digitalise the

artwork was perceived as a significant innovation that helps to accelerate and

facilitate internationalisation. For example, the firm not only has the ability to

digitalise the artwork, but also has the capacity to do so with a very high level of

image quality, which is seen as crucial for international customers. That is, the quality

of the representations of augmented images from the artwork was the most significant

advancement in capitalising on new customer markets. However, the firm‘s own

website was not used in the growth, as virtual network intermediaries such as e-bay

could generate a larger market than a firm-based website.

81

Case 5: Epsilon

Epsilon is a small retail technologies firm. The firm produces technologies for retail

point of purchase use for the client‘s offline and online retail. Consequently, Epsilon

is a business-to-business operator. The firm has been operating predominantly in the

domestic market. However, the firm does have international customers, which

account for more than 10% of its total revenue. The firm has international customers

in New Zealand, the UK, Japan, Sri Lanka and Hong Kong. The firm is still,

however, in its international infancy. Epsilon perceived international markets to be

their greatest chance for revenue, profit and growth: ‘We see future firm growth in

Hong Kong and the United Kingdom.‘ (Epsilon, 2005). The company has recently

adjusted the product to be more digital in nature. Digitalisation was used to support

international growth aspirations—for example, through the implementation of a self-

install system. Growth is generated predominantly through traditional networks and

marketing activities, such as trade shows and word of mouth. The firm uses e-mail,

website real-time support systems and digital automation of processes to satisfy

clients. In addition, the website gave the firm legitimacy in markets where the firm

does not have a physical presence.

Case 6: Zeta

Zeta is a small education exporter intermediary offering a service for international

students looking to study in Australia. Consequently, the firm generates 100% of its

business in international markets. The firm has grown international markets in Korea,

Japan, Taiwan, China, Indonesia, Thailand, Russia, and South America.

Predominantly, Zeta generates new business in international markets through

traditional means, such as personal networks, agents and other referral processes.

Thus, the firm has a business-to-business focus. Therefore, the Internet is not used as

a major source of growth in International markets. However, email was used

significantly with third parties in the network relationship-building process. The

Internet was also used as a source of legitimacy for the firm. That is, the firm may

develop initial leads through traditional networking methods, while the Internet was

used as a secondary source by both agents and students to check the legitimacy of the

firm. As Zeta states: ‗we have to have a web presence, otherwise you are not

considered real’ (Zeta, 2005).

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Case 7: Eta

Eta is a medium-sized financial payment systems firm, which employs 38 staff and

has three offices: Singapore and the United States, in addition to their domestic

presence in Australia. Eta conducts business in the United States, New Zealand,

Malaysia, Hong Kong and Singapore. China was also being developed presently. The

firm generates between $1–2.5 million in revenue annually, with more than 75% of

total business from international markets. The product is a range of stored value cards

with both a physical and digital component that facilitates transactions in multiple

payment situations. The financial system product is a consumer good; however, the

firm generates the bulk of their revenue predominantly through business-to-business

transactions. Thus, the firm has a dual focus in product delivery. The firm uses

traditional mechanisms such as business networks to grow new international

customers. However, the Internet was used in all facets of the internationalisation

process, as ‗without the Internet our office would shut down‘ (Eta, 2004). For

example, Eta uses live website virtual helpdesks, email and a sophisticated website

with personalised financial payment systems.

Case 8: Theta

Theta is a medium-sized tourism service provider. The focus is on tourism

destinations, with an accommodation services export focus. Consequently, the firm

has predominantly a business–to-consumer product; however, operations tend to be

business-to-business focused through agents. The business was established 90 years

ago and now employs over 140 people, with an annual turnover of between $5–10

million. The international proportion of the total business turnover was 40%. The

bulk of business is in western international markets including North America, the

United Kingdom, and Europe, although Asia is a growing market. Consequently,

mature international markets can be developed online where travellers prepare their

own travel itineraries, e.g. in the US, the UK, Japan and Singapore. However, in non-

mature markets, such as China and Taiwan, group bookings are made through agents.

Networks remain the predominant form of marketing, as ‗aggressive marketing is

primarily done through the travel trade in all markets’ (Theta, 2005). That is, ‗we

promote through the travel trade by going into markets and participating in

marketing activities that may be led by body organisations such as tourism Australia‘

(Theta, 2005).

83

Case 9: Iota

Iota is a medium-sized tourist attraction. A significant proportion of profit is

generated through business-to-business. The firm relies on network mechanisms for

growth in non-mature international markets. Conversely, more contemporary virtual

network intermediaries were established for mature independent international

travellers. For example, online affiliate programs generate new growth in the

independent traveller market. The company has been established for more than 20

years. The firm has a well-known brand with multiple sub-brands and has a high level

of positive association in the domestic market. Currently, the firm generates more

than $10 million annually, with international markets accounting for more than 20%

of that figure. Presently, Iota has customers travelling from New Zealand, North

America, Europe, Japan, China, Korea, and Taiwan. Additionally, ‘China has the

greatest international market potential, as statistics indicate significantly more

Chinese travelling to Australia in the near future’ (Iota, 2005). The firm developed

the website in multiple languages—simple Chinese, traditional Chinese, Korean and

Japanese— in conjunction with the English website. The Internet presence in China is

not seen as being as important as relationship-based networks with agents.

Case 10: Kappa

Kappa is a medium-sized franchiser of business services. It was established 12 years

ago and currently employs 50 staff in five offices. With a turnover of over $10

million per annum, Kappa has established business in Australasia, Europe and the

United States. The international component is more than 60% of total revenue. Future

growth will be focused on Asia: more specifically, China. However, business in Asia

requires face-to-face relationship building. Kappa saw a larger risk of intellectual

property infringement in Asia. Predominantly trade shows were used to access new

international customers. However, approximately 23% of new business is generated

through the website: ‗The Internet currently equates for 90% of the success of the

firm. However, the Internet is limited in Asia’ (Kappa, 2005). The firm uses online

system support to maintain customer relationships and generate new business through

referrals. Kappa has invested a large amount of resources to integrate the business

online. All processes and procedures occur online. For example, customers have a

personalised web-space and can interact with each other, franchisee-to-franchisee, as

well as franchisor to franchisee.

84

Case 11: Upsilon

Upsilon is a medium-sized hospitality and catering services company. The firm

currently generates more than $10 million turnover per annum, with the international

proportion of that turnover ranging up to 70% depending on the contracts at the time.

Besides Australia, Upsilon has contracts in Papua New Guinea, the Middle East,

Russia, the United Arab Emirates, New Zealand, Africa, and China. The contracting

of tenders means the firm has a business-to-business customer orientation.

Established approximately 40 years ago, the firm employs 150 staff in 20 offices,

both domestic and international. The firm uses traditional methods of referrals and

networks to gain new international business. However, the Internet was used to grow

business in two ways: firstly, email was used extensively in the negotiation process of

the contract. Secondly, virtual intermediaries were used to access tenders in

international markets. The firm uses the Internet for the maintenance and facilitation

of contracts: ‘the Internet is like the provider of life to our business, just like

electricity’ (Upsilon, 2005). Further, as Upsilon explains, ‘the website is used as an

introductory tool and then we go into building relationships through e-mail.’

Case 12: Omega

Omega is a medium-sized asset management software firm. The product is both an

asset management software program and personal service provider. Thus, ‘the

company needs to have some level of physical presence or interaction with the client

in the international market’ (Omega, 2005). Established over 18 years ago, the firm

currently employs 49 staff and has five offices. Omega now generates between $5–10

million per annum, with the international proportion accounting for between 10–20%

of that turnover, depending on contractual agreements. Omega presently has

international markets in New Zealand, the United Kingdom, Malaysia, Indonesia, the

Middle East and the United Arab Emirates. Although a technologically based

business, the firm uses more traditional methods for development in international

markets. The website was used for clients to crosscheck the firm‘s credentials.

Indeed, the firm directs potential international clients to the website to check that the

company is legitimate. Thus, the firm uses the Internet as a mechanism to facilitate

international business, rather than to generate new market growth. That is, Omega

used more traditional methods, such as relationship-based networks through agents,

to pursue international clients.

85

4.3 Cross-case analysis

Cross-case analysis gives the research a more analytical sophistication and forces the

investigation to look beyond initial impressions, giving results more meaning

(Eisenhardt, 1989; Perry, 1998). The frequency or emphasis of statements can be used

to justify patterns or themes and to conclude similarities and differences between

cases (Patton, 1990; Perry, 1998; Carter, 1999). Cross-case comparisons are used to

counteract premature and untrue biases. Finally, the proposed model developed from

the cross-case analysis is presented in Figure 4.3. That is, the proposed model was

developed from the evaluation of the cross-case analysis, and will be examined next.

Due to the large amount of information accumulated from the in-depth interviews,

analytical coding techniques were used to manage the data (Strauss & Corbin, 1998).

A line-by-line and phrase-by-phrase open coding process was used to break down

each interview so it could be labelled and categorised (Strauss & Corbin, 1998). This

form of conceptualising or categorising analytically represented the information

obtained in the study (Marshall & Rossman, 1999). Additionally, content analysis

was used to examine frequency of themes on a question-by-question basis (Bouma,

1996). The process of content analysis includes; what are the concepts involved,

identification of variables, a devised way to measure these variables and a devised

way in which to summarise these variables (Bouma, 1996). Furthermore, protocol

questions are related to the pertinent research issues so as to help resolve the research

problem.

As seen in Table 4.2, Research Issue 1 (RI1) incorporates the concept of Internet

usage or intensity and the internationalisation process. Research Issues 2 (RI 2)

incorporates the concept of international market growth elements of market

penetration and market development. Research Issue 1 will be assessed next.

86

Table 4.2 Cross-case analysis

Research

issue

Protocol section

and question


concept

Related section

RI 1

(Section

4.3.1)

Part B : Q4

Part C : Qs1,2,3

Internet technology

usage

Internet usage and intensity

Part D : Qs1,2,3

Part E : Qs1,2,3,

Part F : Q 3

Part G :

Qs1,2,3,4,5,6


process

Internet use -

Internationalisation orientation

Information

Knowledge

Interaction—trust and branding

Psychic distance

Digitalisation—product

specificity

Networks

Pace and international mindset

RI 2

(Section

4.3.2)

Part B

Part C: Qs 2,3

Part D : Qs1,2

Part E : Qs3,4

Part F: Qs1,3,4,6

Part G: Q1

International market

growth

Market growth

Market penetration

Market development

Note: RI = research issue


Research Issue 1: How and why has the Internet influenced the

internationalisation process of the firm?

Research Issue 1 incorporated two main concepts: Firstly, the concept of Internet

usage and intensity is assessed. Secondly, the impact of the Internet on the

internationalisation process is assessed—shown in Table 4.2 and outlined in the next

section. Each of these concepts will now be discussed.

Internet technology usage and Internet intensity. The first concept addressed was

that of Internet technology usage. To address this concept, all firms were asked two

questions: what Internet technology they used, and which Internet technology they

considered most important, even if they were not using that technology at the time of

interview. This is shown in Table 4.3.

87

Table 4.3 Internet usage/importance identified

Case Case

Used & level of

importance

Used or not used

Comment

e-m

ail

Web

site

in

form

ati

on

Ch

at

roo

ms

Dig

ita

l n

oti

ce b

oa

rds

e-m

ail

Web

site

in

form

ati

on

Intr

an

et

Tra

nsa

cti

on

on

lin

e

On

lin

e su

pp

ort

Cu

sto

mer

web

sp

ace

Ex

tra

net

Ch

at

roo

ms

Dig

ita

l n

oti

ce b

oa

rds

1. Alpha VSI VSI MI LI √ √ X √ √ X X X X Total dependency on the website

Personalised email support system

2. Beta VSI MI LI SI √ √ √ √ √ X X X X Trillion pro instant messaging

system- interaction with business

networks

3. Gamma VSI VSI VSI LI √ √ √ √ √ √ X X X Web-based support system, live

helpdesk

Personalised customer web-space

4. Delta VSI MI NI NI √ √ X X X X X X X Limited website usage. e-mail used

heavily in transaction/delivery of

product

5. Epsilon VSI VSI NI SI √ √ √ √ √ X X X X e-mail support system

Newsletters

6. Zeta VSI SI NI LI √ √ X X X X X X X Limited use of Internet technology

Agent-based network

7. Eta SI MI SI LI √ √ √ √ √ √ √ X X Live helpdesk

Newsletters

8. Theta VSI VSI NI LI √ √ √ √ X X X X X Sophisticated backend system that

assesses website efficiencies

9. Iota SI VSI LI LI √ √ √ √ X X X X X Heavy dependency on co. website

& third-party websites for

transaction

10. Kappa VSI VSI VSI VSI √ √ √ √ √ √ √ √ √ Intense dependency on Internet for

all business

11. Upsilon

SI MI NI LI √ √ √ X X X X X X Third-party online databases for

tenders

e-mails are used for negotiations

12. Omega

VSI MI NI NI √ √ √ X X X √ X X Extranet distributes product- e-

mail used in relationship with

agents

VSI SI MI LI NI

9

3

-

-

-

6

1

5

-

-

2

1

1

2

6

1

2

7

2

-

12 12 8 7 6 3 3 1 1

Notes:

VSI Very strong importance

SI Strong importance

MI Moderate importance

LI Low importance

NI No importance

√ use of this technology

X does not use


All firms acknowledged that the Internet plays a vital role in the process of

internationalisation, although different firms used different technologies in

international market growth. Internet technologies, e-mail and websites were viewed

as important by all cases (12/12). Specifically, email was deemed to be of strong to

88

very strong importance (9 = VSI; 3 = SI). Websites were viewed as being of very

strong importance by six cases; one case viewed them as being of strong importance;

and five commented that they were of moderate importance. Other Internet tools,

such as customers‘ personalised web-spaces (B-B & B-C) and intranet systems, were

identified as important for internationalisation and thus helped to give a more specific

understanding of Internet technologies use in these firms. For the most part B-to-B

orientated firms use Internet technologies for the facilitation of client relationships,

for example, the use of extranets and intranets (as predicted in Section 3.3.2 case

selection, replication logic). Whereas, B-to-C orientated firms used e-commerce

Internet to facilitate traffic and sales. As argued by Taylor and Murphy (2004) the

size of the firm also has an impact on Internet adoption. In this PhD study, mainly

larger firms used more capital intense Internet technologies such as extranets (3/6)

and intranets (6/6), compared to the small firm use of extranets (0/6) and intranets

(3/6), as seen in Table 4.3.

Conversely, technologies such as digital noticeboards and, to a lesser extent, chat

rooms, were considered of limited importance to firms when internationalising. Other

forms of Internet technologies, such as online support systems, were evaluated as

important by some firms, but usage of these tools was product-specific. For example,

live help desks, instant messaging systems such as trillion pro (a customised instant

messaging software) and sophisticated automated and non-automated e-mail systems

were used by these firms in support system roles. Other technologies identified by

international firms as important included extranets (B-B), personal web-spaces (B-C)

and intranet systems, as highlighted previously. For the most part, the extensive use

of these Internet technologies in firm‘s highlights the importance of Internet usage for

the internationalisation process, which is assessed next.

Internationalisation process

Eight concepts were identified relating to the internationalisation process:

Internet/international orientation, information, knowledge, interaction, psychic

distance, digitalisation and networks, as outlined previously in Table 4.2. Each of

these concepts will be addressed, beginning with the concept of Internet/ international

orientation.

89

Internet/ Internationalisation orientation. The first concept addressed was the

orientation of the decision maker toward internationalisation. Orientation to Internet

usage is also an indicator of international orientation toward internationalisation

(Aspelund & Moen, 2004). That is, the more positive the Internet implementation, the

greater the propensity to implement a broader and deeper scope of

internationalisation. The data from this study found that the key personnel in the

firms Alpha (website consultant experience), Beta (IT education and experience),

Gamma (IT education staff), Eta (previous experience in web-based firm), Epsilon

(IT education), and Kappa (internal IT department) all had very strong Internet

orientations. These decision makers demonstrated high levels of Internet and

international orientation. In contrast, firms such as Omega, Upsilon, Zeta and Delta

had decision makers who thought the Internet was limited in its capacity to develop

business. However, these firms also displayed international orientation.

Information. Information was the second concept to be discussed. The Internet‘s

influence on obtaining information was found to be one of, if not the most, important

elements affecting the firm‘s internationalisation process. More specifically, nine

firms positively identified international market information as being the most

important Internet-based capability for internationalisation. Two firms rated it as of

less than moderate importance. Further, the ability to gain information about

competitors was also perceived as important, with 10 firms rating it as being of

moderate or higher importance. Conversely, information concerning customers in

international markets was viewed as being of moderate or higher importance by seven

of the twelve interviewees. The other five firms indicated two on the five-point scale

of importance. Of least importance was the use of the Internet to gain information

about resources, with only four of the twelve interviewees indicating a moderate or

higher level of importance. Thus, the data confirms the argument that firms

positively perceive the Internet‘s capacity to gain both information about customers

and competitors in international markets (Hamill & Gregory, 1997). Finally, the

ability to source information about resources in international markets was considered

of least importance by two-thirds of respondents, as seen in Table 4.4. However, this

is not to say these forms of information are not important, as interviewees were asked

to rank from most to least important. These findings indicate that the Internet has a

positive effect on the availability of information in the internationalisation process.

90

More specifically, information pertaining to the market, competitors and customers

was perceived as more important than suppliers and resources.

Table 4.4 Internet usages in information components of internationalisation


Knowledge. Knowledge was the third concept identified. Interviewees were asked

about their firm‘s ability to use Internet technology in knowledge building within the

internationalisation process. Cases indicated formal and/or informal Internet process,

analyse and evaluate of information in knowledge building where the Internet was

used. All firms (12/12) identified that the Internet influenced knowledge transference

(refer to column F, Table 4.5), but only at a basic level.

Overall, the Internet was found to enhance internationalisation through the

proliferation of information and basic knowledge. Tacit or experiential knowledge

(transferred) was not evident. This finding confirmed suggestions by Petersen et al.

(2002) that the Internet has influenced objective knowledge, but not tacit knowledge.

That is, there was evidence that basic knowledge was positively influenced by

Internet use. Both formal and informal systems were used to transfer objective

knowledge, with varying effects. That is, not all firms (9/12—refer to column G,

Least

important

Most

important

Aggregate

Level of

importance

1 2 3 4 5

Gaining

information

about the

market

Beta (1)

Gamma (1)

Kappa (1)

Eta Theta

Omega

(3)

Alpha Delta

Epsilon

Zeta Iota

Upsilon

(6)

Most important (9) Moderately important (1)

Least important (2)

Information

about

competitors

Eta

Iota

(2)

Beta

Epsilon

Zeta Upsilon (4)

Alpha

Delta

Theta Kappa

Omega

(5)

Gamma

(1)

Most important (6)

Moderately important (4)

Least important (2)

Information

about customers

Gamma Delta

Zeta

Kappa Omega

(5)

Beta (1)

Epsilon Eta

Theta

Iota Upsilon

(5)

Alpha (1)


Least important (5)

Information

about resources

Alpha Gamma

Delta

Zeta Eta

Theta

Iota (7)

Kappa (1)

Omega (1)

Beta Upsilon

(2)

Epsilon (1)


Least important (8)

91

Table 4.5) used formal systems such as an intranet or database systems to generate

knowledge transference. The other three firms used more informal e-mail systems.

Informal systems were related to the firm‘s financial capability, limited awareness,

education and training of knowledge management. This has also been found in recent

SME knowledge management research (Koh & Maguire, 2004). More successful

knowledge transference within the internationalisation process requires a formal

integrated intranet system to capture more sophisticated information and knowledge

for transference within the firm (Poon & Swatman, 1997).

Table 4.5 Internet’s influence on international information/knowledge elements

Case

Information Knowledge orientation

J

K

Comments

A B C D E F G H I

Info

rm

ati

on

Ma

rk

et

info

rm

ati

on

Co

mp

etit

or

info

rma

tio

n

Cu

sto

mer

in

form

ati

on

Reso

urc

e i

nfo

rm

ati

on

Kn

ow

led

ge

tra

nsf

ere

nce

Fo

rmal

syst

em

Info

rm

al

syst

em

Pro

du

ct

orie

nta

tio

n

B-B

pred

om

ina

ntl

y

B-C

pred

om

ina

ntl

y

Alpha √ √ √ √ √ √ √ The Internet has driven all of the

internationalisation.

Beta √ √ √ √ √ Terminal servers and in-house networks that

can analyse conversion measurements

Gamma √ √ √ √ √ Backend website analytical system breaks down data for better conversion rates

Delta √ √ √ √ √ √ Simple intranet system

Epsilon √ √ √ √ √ √ √ In-house database. Communications tracked-patterns, conversion rates are

measured

Zeta √ √ √ √ √ E-mail system: an informal e-mailing system is used (limited)

Eta √ √ √ √ √ √ ‘Osmosis of information.’ It happens

through e-mail and our intranet.

Theta √ √ √ √ √ √ √ Formal system. e-mail (building a better

picture), keeping master files

Iota √ √ √ √ √ √ An integrated departmentalised intranet system. Integrates information technology,

international marketing in both in domestic

and international.

Kappa √ √ √ √ √ ‘It fundamentally changed the entire process

of internationalisation.’ Very sophisticated

system

Upsilon √ √ √ √ √ √ √ Product supplier information is kept on a server. Specific market particulars are

continually developed in an intranet system

Omega √ √ √ √ √ √ Feedback systems in-house reports and database profiling system

12 9 6 6 3 12 9 3

Source: developed for this research √= denotes positive importance to the firm

92

Interaction. The fourth concept was interaction. Interaction refers to how the Internet

is used as a method of engagement in the internationalisation process between the

company and stakeholders, as shown in table 4.6.

Table 4.6 Interactive levels online

Case Overall

interaction

A

Information

B

Transaction

capability

C

Website

collaboration

D

1. Alpha VSI VSI SI VSI

2. Beta MI MI VSI LI

3. Gamma VSI VSI VSI VSI

4. Delta VSI MI LI LI

5. Epsilon VSI VSI MI MI

6. Zeta SI VSI LI SI

7. Eta VSI VSI VSI SI

8. Theta MI VSI SI LI

9. Iota MI VSI SI VSI

10. Kappa VSI VSI VSI VSI

11. Upsilon LI MI NI NI

12. Omega VSI LI LI NI

VSI

SI

MI

LI

NI

7

1

3

1

-

8

-

3

1

-

4

3

1

3

1

4

2

1

3

2

Notes:

VSI Very strong importance

SI Strong importance

MI Moderate importance

LI Low importance

NI No importance


Cases Beta, Gamma, Epsilon, Eta and Kappa (column A, Table 4.6) developed

sophisticated interactive systems to either support customers online or to provide

easier communication tools for client–company interaction. That is, business-to-

customer companies were at the sophisticated end of the interactivity spectrum. For

example, live help desks (Gamma and Eta) and e-mail help facilities (Alpha and

Epsilon) are used by firms for servicing customers. Conversely, business-to-business

firms at the sophisticated level used technologies such as trillion pro (instant

messaging system—Beta) and large high-tech extranets to facilitate company–client

and client–client interaction (Kappa).

However, most firms commented that they didn‘t necessarily want customer-to-

customer interaction and preferred to restrict communication and control the

93

dissemination of information pertaining to the company and product(s). The

exception was Kappa, as noted above, as this firm‘s strategy generates growth

through customer-to-customer interaction, as the business-to-business orientated firm

has high website intensity. Kappa therefore generates growth through business word

of mouth and reputation or through e-word of mouth as an integrated part of the

process. Thus, the interaction within the website was advantageous for growth

through new business from existing clients, through increased usage (penetration) and

through new clients (development) (Kappa, 2005).

Firms mostly did not embrace website collaboration. Only six of the twelve indicated

it to be either of strong importance or of very strong importance, as seen in Table 4.6.

Upsilon and Omega saw no importance in website collaboration with clients, as their

businesses tend to be based on the development of personal relationships and

personal trust between firm and client, but did concede that the Internet helped to

facilitate the process of relationship building.

Eight of the twelve cases used transactional facilities on the website, as seen in Table

4.6, column C. Firms dealing with multiple countries and customers indicated that the

Internet was influential, as international electronic transactions were commonplace.

Therefore, many different types of payment systems were identified. All firms using

transactional facilities online were firms that had consumer-based products, even if

they transacted with other businesses. The next concept examined was trust and its

effects on the internationalisation process.

Trust, legitimacy and branding issues. The fifth concept considered was trust.

Firms in this research identified seven issues relating to trust and the Internet: trust

itself, legitimacy, branding and the associated issues of brand awareness, brand

association, brand equity and brand consistency.

The existence of a website helped to create trust, as firms on the whole (7/12) found

the Internet to be essential in developing legitimacy in international markets, as seen

in Table 4.7. That is, without the website firms were not perceived to be legitimate, as

customers used the company website as a cross-checking tool to ascertain legitimacy:

‗without a website customers and agents would not believe that we are a real

94

company in international markets‘ (Zeta 2005). Firms were not specifically asked

about legitimacy. However, seven firms identified the concept of legitimacy and the

ability of customers to cross-check on the firm as pivotal tools for gaining the trust of

prospective clients. These findings confirm recent results that indicate firms perceive

the website as a mechanism that legitimises the firm for the outside world (Rudolph,

et al., 2004).

Interviewees also mentioned branding in the context of trust. Branding was perceived

to be pivotal to the development of customers‘ trust: 'people give us money that we

haven’t met before, so they are trusting the brand‘ (Eta 2004). More specifically,

branding consistency, awareness and overall equity helped to develop the firm‘s

reputation by reducing the risks customers perceived were involved in international

transactions. Overall, most firms viewed the website as an extension of the brand

offline. Nine of twelve firms viewed branding as important, and more than half (7/12)

of firms identified a consistent branding strategy online and offline as an optimal

position, as seen in Table 4.7. However, Eta and Upsilon differentiated between

online and offline brand. Further, Upsilon also differentiated between domestic and

international markets.

In addition, nine firms perceived brand awareness to be a beneficial element of the

Internet, as the Internet helped represent the firm internationally. Brand associations

were also considered important—six of the firms acknowledged that websites could

promote positive associations toward the brand and the firm, as seen in Table 4.7.

Four firms—Alpha, Gamma, Eta and Iota—perceived the Internet to be influential in

strengthening the brand equity or value of the firm. Overall, the Internet enhanced the

firm‘s brand awareness and associations through the firm‘s branding exposure to

potential customers beyond current geographical boundaries.

95

Table 4.7 Website marketing elements and trust issues Case code

Tru

st

Leg

itim

acy

Bra

nd

ing

Bra

nd

aw

are

nes

s

Bra

nd

ass

oci

ati

on

Bra

nd

eq

uit

y

Bra

nd

co

nsi

sten

cy

Comments

Alpha S S √ √ √ √ √ URL is the brand. .No physical catalogue exists; thus

online reputation is essential

Beta S S √ √ Reputation is pivotal.

Gamma √ √ √ √ √ √ X Differentiated branding

Use of FedEx hyperlink for brand recognition

Delta - √ √ Not really used for marketing of the firm

Epsilon √ √ √ √ √ Website is used as a follow-up from tradeshows

Website makes us a legitimate company

Zeta √ √ √ Website is limited for marketing. However, website is

pivotal for gaining legitimacy in international markets

Eta √ √ √ √ √ √ X The use of MasterCard logo for brand recognition

Brand is the key to reducing high perceptions of risk

Theta A

D

A

D √ √ √ √ Web-branding leads—everything else follows. Website

helps tell the story. Careful not to be seen as

circumventing agents

Iota A

D

A

D √ √ √ √ Representation of product. Brand reduces perceived risk

online. Must not be seen to circumvent agents

Kappa √ √ √ √ √ Website gives a call to action

Alleviates perceived risk

Upsilon √ √ √ X International customers are differentiated online

Omega √ √ √ Website gives clients a point of cross-checking

7 7 9 8 6 4 7(3)

Notes:

S Start-up

A Agent-dependent

D Destination


The Internet enhanced trust through, ownership of a website legitimised firms,

providing brand awareness, brand association, and, in some cases, brand equity.

These findings highlight the importance of the Internet in building a platform of trust

for the internationalisation of the firm.

Psychic distance

The sixth component examined was psychic distance. All of the firms interviewed

operate in multiple non-English foreign markets (as seen in Table 4.11). However, it

was not evident that firms used multilingual websites for localisation, despite the

availability of multilingual website technology for adapting the website for the local

market. Only two firms, Kappa and, to a lesser degree, Iota, have multilingual

96

websites, as seen in Table 4.8, column C. Kappa has an in-house native Chinese

speaking staff member whose role is to ensure quality and to minimise errors, but this

case is an exception to the rule. Therefore, although Alpha, Gamma and Epsilon have

online currency conversion and advanced search engine optimisation strategies, only

Kappa had a multilingual websites approach to internationalising.

So why did firms, in the main, not adapt their websites to the local international

language of operations? Although not articulated explicitly, an appropriate

explanation is psychic distance, as it was suggested that there was no need to offer

any other language than English: ‗English is the universal language for business‘

(Upsilon, 2005). Further evidence of this attitude was apparent. For example, all firms

trade predominantly in English, despite 11 of the 12 firms having significant sales in

non-English markets. These firms felt more comfortable when operating in English-

speaking markets or with English-speaking clients in foreign markets. Firms also

perceived less risk associated with transacting or communicating in English,

compared to an unfamiliar language or culture. Thus, English markets are perceived

to be geographically neutral markets by firms. However, psychic distance remains an

impediment to the Internet‘s influence on the internationalisation of these firms, as

illustrated in Table 4.8.

Table 4.8 Website localisation integration

Case International

markets

Non-English

markets Website

language

Currencies

used

International

implementation

A B C D E

1. Alpha US/UK/ global Yes English AUD, USD,

YEN Global

2. Beta US/ Europe Yes English Global

3. Gamma US/ UK No English AUD, NZD,

Euro, YEN,

WON, GBP,

CAD

Global

4. Delta UK/ US Yes English Global

5. Epsilon NZ/UK/ HKG Yes English AUD, USD,

Euro Global

6. Zeta Asia/South

America

Yes English

(Asian images)

Passive

7. Eta US/Asia Yes English Global

8. Theta US/UK/Asia/

Europe

Yes English Global

9. Iota NZ/Asia/North

America

Yes English,

Minimal info:

Japanese,

Chinese,

AUD

Currency

converter

Global–glocal

97

Korean

10. Kappa Global Yes English,

Spanish,

Chinese,

German,

French,

Swedish

Glocal

11. Upsilon Global Yes English Passive

12. Omega NZ/UK/South

Asia/Middle

East/ UAE

Yes English Passive

Summary Markets Non-English:

11 English:

All

English: 12/12

Non-English:

2/12

Multiple

currencies:

4/12

Passive: 3/12

Global: 8/12

Glocal: 2/12


Digitalisation: product specificity. Digitalisation was the seventh concept explored.

Digitalisation refers to the concept of transforming a product into an intangible

component: more specifically, a digital component. Digitalisation is used for

integration with the Internet. Differing levels of digitalisation existed: some firms

such as Beta, Kappa and Eta, digitalised their firm product offerings extensively,

whereas other firms, such as Zeta, with its simple e-mail and website implementation,

operated at a basic level. This is illustrated in Table 4.8. For example, the start-up

Alpha had digitalised its catalogue, transactional facilities, and service components of

the product offerings. However, Alpha was restricted in its ability to digitalise, as it

sells a physical product (bikinis). Further, the majority of the other firms digitalised

product offerings at a moderate level, such as; Delta, Upsilon, Iota, Epsilon, Theta,

Gamma and Alpha, as seen in Table 4.9. Epsilon was proactively developing

digitalised elements of product offerings to accelerate Internet internationalisation.

For example, Epsilon standardises product offerings by reducing human or physical

components of the product offerings, to facilitate an accelerated internationalisation

process through the Internet.

Product orientation was more complex than initially proposed in this study (Section

3.3.2 case selection, replication logic), as some firms had a dual product offering of

both a good and a service (5/12). Where services could be automated the Internet had

a dramatic impact on the service-orientated firm. Whereas, if services had a complex

component such as a human element to the product offering the Internet was limited.

Further, the more physical the product offering the less the Internet had an impact.

98

Thus, the more of the product that can be digitalised for the Internet, the greater role

the Internet will play in the internationalisation of the firm.

Table 4.9 Digitalisation capacities of product offerings

Case A B C D E F G Comment

Pro

du

ct o

rien

tati

on

Ph

ysi

cal

go

od

s

Ser

vic

es c

om

po

nen

t

Co

mb

ina

tio

n

Dig

ita

lisa

tio

n

No

dig

ita

lisa

tio

n

Lo

w d

igit

ali

sati

on

Med

ium

dig

ita

lisa

tio

n

Hig

h d

igit

ali

sati

on

Alpha √ √ Digitalised the catalogue online, pre- and post-

services

Beta √ √ High quality image digitalisation. All areas of

business are online.

Gamma √ √ High quality image representation of jeweller.

Online catalogue, services, personal web-space

and online helpdesk

Delta √ √ Artwork is converted into high level images in a

digital format for delivery

Epsilon √ √ √ √ ICT firm: software, and services are digitalised.

Software standardisation, pre- and post- services

Zeta √ √ Some information. Some forms have been

digitalised. Simple website: information

Eta √ √ √ √ Everything can be done online for customers.

Very small component is physical.

Theta √ √ √ √ Automation of services and information. Images

help tell the story. High-end transaction system.

Iota √ √ √ √ Mostly information-based digitalisation. Images

help add entertainment. Multimedia and low-

level transactions

Kappa √ √ Everything can be done online for customers.

Very sophisticated.

Upsilon √ √ √ √ Video caption helps prospective clients

understand and evaluate product. Customer

software is streamed to international customers.

Omega √ √ ICT firm: high-end data transference. Minimal

amount of service component digitalisation for

development

7 10 5 - 1 8 3

Note: Bolded names indicate a high level of digitalisation, as shown in column G.

Source: developed for this research.

Finally, those firms at the extreme end of the digitalisation spectrum digitalise most,

if not all of their product offerings. For example, Beta and Kappa have the total

product offerings digitalised, while Eta has the majority of the product offerings

digitalised. High Internet usage firms were more likely to use the Internet to facilitate

digitalisation for internationalisation, as illustrated in Figure 4.2.

99

Figure 4.2 Digitalisation of the product offering

High

ICT product (optimal position for Epsilon)

(Information Communication Technologies (e.g. software)

Digitalisation Standardised services

Personal service

Low Complex knowledge-intense product (Upsilon, Omega)

Slow Fast

Internationalisation acceleration


Networks. The eighth concept identified was networks. The Internet plays a

fundamental role in creating growth, whether that growth is via the traditional

network, the virtual network, or both. The Internet‘s influence could not be separated

from the evolution of the relationships within the traditional networks of the firms.

That is, the Internet was used significantly to help create, maintain and develop

longevity within these business relationships. Thus, the Internet altered the

internationalisation process of the firm, primarily because of the role of business

network relationships and the evolution of virtual network intermediaries (VNI) for

many firms, as illustrated in Figure 4.3.

Figure 4.3 Internetalisation and networks

Business network intermediaries

= increased usage for international market growth


Internet usage

Primary mechanism

Complimentary

mechanism

Trad

ition

al netw

ork

s

Virtu

al netw

ork

s

Cases:

Alpha, Beta, & Gamma

Cases:

Eta, Iota, Upsilon, & Kappa

Cases:

Delta, Epsilon & Theta

Cases:

Zeta & Omega

100

Notwithstanding the important role of the Internet, firms identified network

relationships as the most important element in the internationalisation process. For

example, 10 of the 12 cases indicated networks to be the most important element of

internationalisation, as seen in Table 4.10. Furthermore, all 12 cases indicated that

networks played some role in the internationalisation of the firm, though Alpha did

not view networks to be as important to the firm‘s international growth. Specifically,

the firms Epsilon, Kappa, Upsilon and Omega indicated that traditional networks

were the predominant pathways of internationalisation. More importantly, from an

international growth perspective, networks offered a richer explanation for

Internetalisation.

Table 4.10 Ranking of elements influencing internationalisation of the firm

Case code Network

relationships (a)

Relations with

supply chains (b)

Experience and

knowledge (c)

Sourcing of

resources (d)

Efficiencies in

production or

markets (e)

Alpha 4 5 1 3 2

Beta 2 4 1 3 5

Gamma 1 N/A N/A N/A N/A

Delta 1 2 4 3 5

Epsilon 1 3 2 4 5

Zeta 1 2 N/A N/A N/A

Eta 1 4 2 3 5

Theta 1 1 2 3 4

Iota 1 1 3 4 5

Kappa 1 N/A 2 N/A N/A

Upsilon 1 2 3 5 4

Omega 1 5 2 3 5

Importance level

Most 11

Neutral --

Least 1

Most 5

Neutral 3

Least 4

Most 7

Neutral 4

Least 1

Most --

Neutral 9

Least 3

Most 1

Neutral 3

Least 8

Notes:

Index ranking: 1 = most important element, 5 = least important element

N/A= not applicable: interviewee did not think this applied to them


Virtual network intermediaries—for example, infomediaries such as portals, search

engines and electronic marketplaces such as eBay, tendermatch.com, tenderlink.com

or dgmarket.com—were identified for most firms (Alpha, Beta, Gamma, Delta,

Epsilon, Theta, Iota, Kappa and Upsilon) as the conduit for internationalisation.

These virtual network intermediaries are less relationship-based than traditional

network relationships, but are vital for the firm.

101

For example, the firm Alpha is a start-up that relies almost exclusively on website

sales. Further, although Gamma indicated that it found traditional networks to be the

most important elements for domestic business, this may be because the firm has

relied on traditional networks for almost 30 years for business growth. Gamma also

relies almost exclusively on its website for the international component of revenue.

Further, Gamma, like Alpha and Beta, relies heavily on virtual network intermediaries

such as search engines to generate markets (customers) through traffic. Thus, the

more these firms rely on their websites to generate sales in international markets, the

less they will rely on traditional networks and the more they will rely on virtual

network intermediaries. Moreover, Alpha, Beta, Gamma, Delta, Epsilon, Theta and

Iota all use virtual network intermediaries in their path to internationalisation.

Path of internationalisation. The traditional path of a series of stages or incremental

internationalisation (Johanson & Weidersheim-Paul, 1975; Johanson & Vahlne,

1977) has been replaced, in part, by a new rapid avenue of internationalisation

mediated by the Internet, a concept known as Internetalisation. Three alternative

paths for internationalisation were identified in this study: traditional networks,

virtual network intermediaries and incremental or staged internationalisation.

Similarly, three alternative paces of internationalisation were identified; instantly

international, rapidly international, or traditional slow, incremental evolution.

Some firms were totally dependent on the Internet for internationalisation. For

example, start-up Internet firms, Alpha and Beta as well as dot.coms Gamma and

Delta viewed the Internet as the ‗only‘ mechanism for internationalisation.

Conversely, other firms used the Internet either as an efficient conduit for

internationalisation or as an essential complement.

It is evident that firms use multiple paths for achieving internationalisation, as

illustrated in Table 4.11. However, personal relationships or business networks in

international markets were perceived as the vital element in the path towards

internationalisation. Notwithstanding the importance of traditional networks, the

Internet is still essential to developing and maintaining business relationships, even if

only as a complement to the traditional network.

102

Table 4.11 Internationalisation path and pace

Case Path

A

Path

B

Path

C

Pace

D

Pace

E

Pace

F

Comment

Inte

rn

ati

on

ali

sati

on

pa

th a

nd

pa

ce

Tra

dit

ion

al

netw

ork

s

Vir

tual

netw

ork

inte

rm

ed

iari

es

Increm

en

tal

or

stag

es

Inst

an

tly

inte

rn

ati

on

al

Ra

pid

ly i

nte

rn

ati

on

al

Tra

dit

ion

al

slo

w

incre

men

tal

evo

luti

on

Alpha

√ P

√

POST

√

Women‘s apparel start-up firm. Internationalised from inception

and through virtual network intermediaries. Recently developed

more traditional networks in more mainstream retail.

Beta √

P √

√

Adult entertainment start-up, business-to-business firm. Developed internationally from inception. Evolved

predominantly through international virtual networks.

Gamma P √

√

*

√

√ A well-established jewellery retailer (30 years). * However, once the firm developed a website, it became international

within six months. Physical firm non-international: web virtual

firm international.

Delta

√ P

√

√

Artwork and images. Rapid internationalisation path through

sales generated on e-Bay, also with traditional business network

creation through personal relationships.

Epsilon P √

√

√

Software/ hardware technology firm. Primarily uses traditional networks to generate sales in international market (tradeshows

and referrals). Also uses search engine optimisation to generate

web traffic.

Zeta S

√

√

√

Education export firm. 100% international through a key agent

system of networks in each country. International only, as firm

does not service domestic customers.

Eta P √

POST

√

Financial product. Traditional networks for internationalisation—lowers risk. Firm grew rapidly in

international markets, as it was conceived as an international

company.

Theta P

√

√

√

Tourism. Uses a myriad of networks: international agents,

government departments, and industry organisations. Also

developed an extended network in a virtual environment.

Iota P √

√

√

Tourism. Networks in international markets drive internationalisation (agents). Website is well developed and

search engine optimisation needed.

Kappa P √

√

√

Business service. Uses referrals and word of mouth to generate new international clients (franchisers). Heavily reliant on the

development of international network structures. Also took an

incremental stages-type process of internationalisation.

Upsilon P √

√

√

Catering and hospitality contracts (domestic & International.). Predominantly uses established traditional networks in the

industry. Internationalised as a consequence of a saturated domestic market.

Omega P

√

√

Software developer—relies primarily on traditional networks to

foster internationalisation and growth.

11 9 4 4 3 6

Note:

S = sole for internationalisation

P = primary for internationalisation

POST = after initially internationalising the firm incrementally moved into new international

markets


Path of internationalisation and international mindset

Firms were also asked about the steps they took to internationalise, and whether these

steps were simultaneous or sequential (refer to Table 4.10, column C). The firms in

103

this study obtained knowledge about markets and then moved into new markets, so

subsequent international market growth could be considered to be incremental,

although at an accelerated rate. Thus, the international stages model still has

relevance, albeit a diminished relevance. However, firms have also acquired

customers in multiple international markets simultaneously.

Additional information was collected about the pace of the internationalisation (refer

to Table 4.9 columns D–F). The pace of internationalisation was influenced heavily

by the international mindset or orientation of the decision maker, as discussed

previously in this chapter. Firms Alpha, Beta, Zeta and Eta were all instantly

international. Alpha and Beta (start-up Internet firms) and Delta were instantly

international, specifically due to the Internet. Further, Gamma, after thirty years of

domestic trading rapidly internationalised (within 6 months) after integrating an

Internet website strategy. This finding affirms the ability of the firms to become

rapidly or instantly international if positively orientated toward the Internet and


Conclusion

The Internet has positively affected the internationalisation process through

enhancing the information and knowledge capacities of the firm and through

enhancing the firm‘s ability to interact with stakeholders. A firm‘s website can reduce

the perceived risk associated with international transactions. Further, the level of

interaction that can be obtained through the Internet can also positively enhance the

level of trust. Lastly, the ability of the firm to digitalise product offerings helps to

accelerate the process of internationalisation. As the elements of international

orientation, information, knowledge, interactivity, trust, psychic distance,

digitalisation and networks within the internationalisation process have been

evaluated, the next component to be analysed is the international market growth of

the firm—specifically, market penetration and development.

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Research Issue 2: How and why has the Internet influenced international market

growth?

This section analyses the data, which was collected to answer Research Issue 2.

Specifically, two key elements of market growth are addressed: market penetration

and market development. Each will be discussed in turn.

Market Penetration

Resource efficiencies can be gained by using a penetration strategy that capitalises on

the firm‘s existing international customers. That is, firms can increase the yield from

existing customers because of the Internet. International customers were seen to be

difficult to find, let alone evaluate.

All twelve interviewees identified the Internet as being crucial for market penetration

growth, as seen in Table 4.12. Therefore, the creation of value adding to retain

existing clientele was seen to be both efficient and prudent, as ‗the cost of acquiring

customers is much higher than keeping existing ones‘ (Alpha, 2004). Thus, keeping

customers satisfied and capitalising on the loyalty of international customers is a

cheaper and more efficient means of growth.

Table 4.12 International market growth through penetration

Case code Penetration (P)

Alpha ‘Everything is about the Internet for us.’

P: 10% of customers are coming from existing markets. That is, 10% are loyal return customers. The cost of acquiring customers is much higher than keeping existing ones.

Beta ‗We are in the business of traffic.‘

P: Retention is usually about 20% on average. However, ‗we were getting 31% retention and made some recent changes, which have yielded 37-38%; that is really good.‘

Gamma ‘We wouldn’t be international if it wasn’t for the Internet.’

P: Approximately 8% of customers are return. These customers are targeted not too frequently by direct marketing e-mails with new product information.

Delta ‘e-Bay.’

P: Relationships can be built up through e-mail, which can lead to purchases down the track.

Epsilon ‘Word of mouth through buying groups’

P: e-mail newsletters are distributed a few times a month. Most of the new business is generated from word of mouth

from existing customers.

Zeta ‘Long term relationships through agents’

P: Agents are the point of finding information for customers. Thus, e-mail as opposed to the website is used with

agents to generate a relationship and gain further growth. Totally agent-dependent.

Eta ‘It’s a tool.’ ‘The Internet on its own is not going to solve all of your issues for you’.

P: Internet backs up good customer service and branding. The website helps us to increase usage, which in turn increases commitment.

Theta ‘Geography really makes a difference here.’ ‘It’s market-dependent’

P: Usage of agents. Relationships are formulated with agents through e-mail and relied upon heavily.

105

Iota ‘It’s dependent on the market’. Independent or dependent travellers

P: Agents. Relationship building/ information through the website (also hyperlinks with the agents‘ websites). It is

used as a support for agents. Increased communications efficiencies with customers and agents. Helps to develop a better yield from agents.

Kappa ‘Everything is done on the web.’ P: Very sophisticated: integrated referral system, direct marketing-newsletter. Predominantly, the Internet is there for

existing clientele to recruit new clients due to incentives.

Upsilon ‘We do get a lot of new business from existing clientele.’ P: Work is commonly generated through current clients. This is significantly helped as a result of e-mail building

relationships.

Omega ‘Alliances are needed; the Internet has a support role for this.’ P: Current customers use Internet technologies extensively. However, this is more to develop existing customer rather

than find new customers.


The most common method of market penetration for international customers was the

use of Internet technology such as e-mail and websites. Further, all firms viewed the

e-mail and website as excellent ways to penetrate existing customers in international

markets, either by servicing existing customers with information on the website or

through database direct marketing. The latter targets communications via e-mail to

generate a better yield and profit returns from customers, as illustrated in Table 4.13.

Some firms used information obtained through collecting client data to generate e-

mails, newsletters and direct marketing activities. That is, Internet interactivity gives

the firm the ability to solicit new business from existing clientele (Gibbs & Kraemer,

2004, p. 133). Firms Alpha, Beta, Gamma, Epsilon and Kappa used database

marketing to penetrate existing markets and maintain relationships with customers.

Gamma used mechanisms such as database marketing, e-mail and website strategies.

Five firms used database marketing to facilitate growth from existing customers:

Alpha, Beta, Gamma, Epsilon and Kappa. Firm database profiles and purchased

databases were considered by both the start-up firms (Alpha and Beta) as the best way

to generate growth. Conversely, most firms when asked did not view database

marketing as a way to generate new growth through existing customers. As the

website was the most-used mechanism for international market penetration, the firm‘s

Internet experience was linked to adopting database technologies.

International market development

International market development was perceived to be one of the greatest benefits of

the Internet for these firms, as shown in Table 4.13. Three firms used the Internet as

the sole mechanism for international market development: Alpha, Beta, and Gamma.

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These firms found reputation and traffic generation to be pivotal in capitalising on

market development opportunities. Further, without generating Internet traffic,

market growth was seen as impossible. For example, the jewellery retailer Gamma

had 8% of customer turnover from returning customers (market penetration) through

a niche jewellery product such as a wedding ring. The other 92% of all customers

were new (market development growth). Thus, generating new customers through

website traffic is vital, considering the firm‘s international customers are obtained

solely from the website.

The use of search engine optimisation (SOE—the mathematical algorithms used by

search engines to manipulate product category listings) strategies helped generate the

necessary Internet traffic needed for sustainable international market growth through

a website strategy. Further, most firms (Alpha, Beta, Gamma, Epsilon, Theta, Iota

and Kappa) used SEO in some capacity so that potential clients could find the firm

website. However, Epsilon, Theta and Iota guided prospective customers to the

website only after a more traditional mechanism of introduction, such as a trade

show. The website gives the firm another level of legitimacy to support a platform of

trust for these prospective customers.

Conversely, Eta and Zeta firms did not see the Internet as the most important element

of their overall businesses. However, these firms viewed the Internet as an integral

part of international market development—as Eta stated, ‗Without the Internet we just

could not do what we do‘. Further, firms with service-orientated products trading in

Asia (Zeta, Eta, Theta and Iota) depended on more traditional networks to develop

international markets. For example, even though the Internet can reduce barriers to

trade, face-to-face or personally based international market development was seen as

necessary in the development of new international customers in Asia.

The more a firm used website strategies (for example, Alpha, Beta and Gamma), the

less dependence was placed on interpersonal interaction. That is, the more Internet-

intense the firm, the less reliance was placed on traditional personal relationships.

Overall, international market development for some firms was only possible due to

the Internet and all firms indicated that without the Internet as either the sole or

complimentary mechanism, they would either not be international or could not

107

develop as many international markets as they have. Further, all firms interviewed

saw their future international markets as those with the greatest growth opportunities.

More specifically, those firms using the Internet intensely saw the US market and

English-language-based European markets as having not only much larger customer

bases, but also as markets where consumers are willing to transact online. For

example, ‗US is such a big market we really don’t need to go anywhere else‘

(Gamma 2005).

Conversely, foreign markets such as Asian markets, although perceived to be

important for international development growth, were considered problematic and

difficult to cultivate through the Internet. That is, Asian markets online were simply

perceived as too foreign and costly, both intellectually and financially. The

exceptions to this view were Japan, Singapore and, to some extent Korea, all of which

were considered to have either mature consumers or sufficient market maturity (Iota

& Theta 2005). Overall, however, firms viewed the US and UK markets as desirable

and ample enough for the firms to gain sustainable growth for the foreseeable future.

This attitude reinforces the argument that psychic distance moderates the effect of

Internet use on international market growth.

Table 4.13 International market growth and evaluation of potential

Case code Development (D) and evolution (E) of potential customers

Alpha ‘Search engine optimisation.’

D: 90% of customers are new. Customers are predominantly generated through traffic from search engine optimisation (Google Ad words), strategies and affiliate programs. The key is publicity and positive brand exposure.

E: Cross-referencing key words helps calculate potential of online markets. For example, how many people are looking for

bikinis, sexy bikinis and bikinis for sale.

Beta ‗Traffic through affiliates and search engines.‘ D: Traffic: Development of new customers is generated through search engines and affiliate programs. ‗Search engine

optimisation through a better understanding of changing algorithms used by search engines is the key.‘

E: ‗We don‘t really do it. Our industry is a little unorthodox‘.

Gamma ‘100 000 visits per month.’

D: Traffic is the key for the company through search engine optimisation strategies (SEO). ‗It doesn‘t matter how good your site is if no one finds it‘. ‗However, if you haven‘t got what customers want, they just won‘t buy‘. The website

generates 100 000 new visits per month. Generating traffic generates revenue.

E: ‗Search engines can help evaluate demand by analysing what is out there‘.

Delta ‘Virtual market e-Bay.’

D: Development of new customers is done either through traditional relationships or through virtual network intermediaries

(e-Bay). E: ‗I can‘t do it, you just don‘t know who is out there and who wants your product. You can never exclude a market‘

Epsilon ‘The Internet is key to our international market expansion’

D: Search engine optimisation is used for markets such as the US and UK Word of mouth helped to establish sales in Japan

and UK More traditional mechanisms are used to develop new customers. E: Background information and competitors. ‗What buying groups are out there, what are they doing and what products are

they using.‘ ‗Otherwise you don‘t know what you are getting into‘.

Zeta ‘It makes us a real company’ D: The website helps to give a point for credibility: ‗it makes us a real company‘.

E: Government statistics and services are a good source for better understanding the possible market.

108

Eta ‘It’s not a sole mechanism’

D: The website attracts new customers looking for our type of product. It cannot be used as a sole mechanism for

development. E: ‗It is really hard to evaluate potential online markets. It is very hard to trust the data you get from the Internet—it‘s like

a blind situation‘. ‗You need to be on the ground.‘

Theta ‘A shift in power to online intermediaries.’ D: Intermediaries: agents (access to customer relationship systems—CRS). Independent markets (US and Europe).

Influences research. ‗It puts our product out there on the global marketplace shelf. Search engines have allowed us to generate traffic and potential customers (SEO)‘. Increased activity in markets. Shift in power to virtual network

intermediaries. Increased need to develop virtual network intermediaries. Reduction in yield. Needs to be an ROI online as

well. Niche products have a differentiation point; others are at the whim of virtual network intermediaries (a product is becoming a commodity).

E: Government statistics or organisational statistics (heavily uses these statistics). Very reliable.

Iota ‘Only independent travellers’

D: Not really. Networks with government and tourism organisations more important. Market development is evident, however, only with independent travellers and agents.

E: Tourism organisations websites. Government and tourism organisational websites.

Kappa ‘Our website generates 23% of new business.’ D: ‗We are constantly getting referrals either through the website or other clients. Our website generates 23% of sales. For

example, in Mexico once a relationship was established (from the website) with one person the market grew‘.

E: ‗Language barriers hinder evaluation‘.

Upsilon ‘Third-party websites are a great source for new business.’

D: Not really through the firm‘s website. However, the firm does access most jobs through third-party tender websites. This generates the majority of new business. The sourcing of new business through the Internet has become very easy, as

intermediaries pool jobs so they can be easily found and tendered for.

E: ‗One of the biggest advantages of the Internet is that we can find new contracts on tender websites‘.

Omega ‘Internet has a support role for new business.’ D: The product is agent-based. The website does help direct possible agents through to the company. However, they then

have to be evaluated accordingly. Thus, the Internet takes a support role.

E: ‗An e-mailing system helps us to evaluate potential agents in countries or markets as the product is specialised. This is done with relative ease and low cost‘.


Conclusion

There is clear evidence from the research that the Internet accelerates the

internationalisation for firms. However, it was also evident that there are still

significant limitations for firms using a market development strategy online in

international markets. That is, limitations in Internet expertise, resource capabilities

and psychic distance inhibit Internetalisation.

Those goods and services with digital attributes significantly increase the efficiency

of the market transaction and therefore change the nature of the internationalisation

by accelerating the process. Hence, this qualitative stage of the data collection

confirmed that the ability to digitalise the firm product offering positively affects the

Internet‘s influence on the acceleration of international market growth.

Customers understand the virtual environment that now exists and are becoming more

trusting as they become more experienced. It was evident that firms view the Internet

as a primary mechanism for generating international market growth, now and in the

future. That is, even if the Internet was not the sole mechanism for international

109

market growth, it was used as a complement. Legitimacy in more traditional and

contemporary channels was essential in creating the trust needed to generate new

international customers. One way of achieving this trust is through affiliate virtual

network intermediaries. Therefore ‗if we build it they will come‘ was seen as an

inappropriate marketing philosophy for an Internet strategy, as traditional

perspectives of geography and store location are replaced by Internet traffic, search

engine optimisation and search engine marketing. Lastly, relationships through virtual

or traditional personal networks are key to accessing international growth, regardless

of the type of firm. Thus, the key issues of internationalisation, information,

knowledge, interaction, international mindset, networks and psychic distance in

relation to the Internet intensity of the firm and international marketing growth

identified in the cross-case analysis were incorporated into the full proposed model.

Evidence from this research highlighted the extent of Internet usage within the

internationalisation process. That is, Internet intensity, which is the implementation of

the Internet into marketing activities as opposed to simple usage, gives the research a

better understanding of the implications to the internationalisation process. RI1

identified and confirmed key internationalisation process components, which the

Internet affected: international orientation, information, knowledge, interaction,

psychic distance, and networks. Internet intensity is not argued as the sole measure or

explanation for internationalisation, but a partial explanation. That is, Internet

intensity is only partially responsible for the internationalisation process components

identified. Hence, Internet intensity is explained best as having a mediation role

between internationalisation components and the international market growth of the

firm. This will be evaluated next, together with the development of the relevant

hypotheses.

4.4 Cross-case evaluation (hypotheses and model development)

Based on the analyses in the previous section and in the context of the two research

issues, hypotheses were developed for the second-stage quantitative modelling, as

shown in Table 4.14. In addition, a pre-structural equation model (Figure 4.6) is

presented. The concepts relating to that model are incorporated into Table 4.14.

110

Table 4.14 Research issues: variable identification and hypotheses

Research issue Qualitative protocol

questions

Construct-factors

findings

Conclusions: hypotheses

RI1 How has the

Internet altered the

process of


for the firm?

Part B : Q4

Part C : Q1,2,3

Part D : Q1,2,3

Part E : Q1,2,3,4

Part F: Q3

Part G: Q 1,2,3,4,5,6


process

Information available

(f1)

Information usage (f2)

Interaction

communication (f3)

International mindset

(f4)

Business relationships

(f5)

Psychic Distance (f6)

Internet intensity (f7)

H1. Information availability has a direct relationship with

international market growth.

H2. The information availability of the firm is mediated by

the Internet intensity of the firm.

H3. International information availability has a positive

relationship with perceived information usage of the firm.

H4. The usage of information has a direct relationship with


H5. International information usage is mediated by the

Internet intensity of the firm.

H6. The information usage of the firm has a positive

relationship with the interactive communication of the firm.

H7. Interactive communication has a direct relationship with

international market growth

H8. Interactive communication is mediated by the Internet

intensity of the firm.

H9. The perceived information availability of the firm has a

positive relationship with the interactive communication of

the firm.

H10. The international mindset of the firm has a direct

positive relationship with international market growth.

H11. The international mindset of the firm is mediated by the


H12. International mindset has a positive relationship with

the use of business relationships.

H13. Business relationships have a direct relationship with


H14. Business relationships are mediated by the Internet


H15. Psychic distance has a negative direct relationship with


H16. The Internet intensity of the firm mediates the psychic

distance of the firm.

H17. Psychic distance of the firm has a negative relationship

with the usage of business networks for the firm.

H18. Psychic distance of the firm has a negative relationship

with the international mindset of the firm.

RI 2 How has the

Internet altered

international market

penetration and

development of the

firm?

Part B

Part C: Q2,3

Part D : Q1,2

Part E : Q3,4

Part F: Q1, 3, 4, 6

Part G: Q1

International growth


growth (f8)

H19. Internet intensity has a positive relationship with

international market growth of the firm.


Information

Identifying information in the internationalisation process is a well-established

concept (Johanson & Vahlne, 1977). A lack of information is assumed to be

responsible for perceived risk in internationalisation (Cavusgil, 1980). Thus, the more

a firm commits to internationalisation, the greater the international information search

behaviour of the firm (Ogbuehi & Longfellow, 1994). These findings were

corroborated in this research. As such ‘information availability has a direct

relationship with international market growth’, Hypothesis 1 (H1) can be

postulated, as presented in Figure 4.4.

111

In previous literature, the Internet‘s effects on international information has been

established, but is referred to in general terms (for example, Hamill 1997, Gibbs &

Kraemer 2004, Aspelund & Moen 2004, Berry & Brock 2004, Brock & Yu 2005).

The Internet has diluted the former asymmetry of information traditionally

experienced by firms in the internationalisation process (Samiee, 1998a) by creating a

range of information sources for the firms. Thus, Hypothesis 2 (H2) can also be

postulated. That is, ‘the information availability of the firm is mediated by the

Internet intensity of the firm’.

Information usage

The concept of usage of international information in the literature supports

information usage as a concept of knowledge theory of internationalisation, as firms

accumulated information through learning by doing (Ethiraj, Kale, Krishnan & Singh,

2005). Therefore, Hypothesis 3 can be postulated: ‘International information

availability has a positive relationship with perceived information usage of the

firm’ (H3).

Acquiring foreign market knowledge or using international information to expand

into foreign markets is well-established (Andersen, 1993; Inkpen & Beamish, 1997;

Luo, 1997; Barkema & Vermeulen, 1998; Lord & Ranft, 2000; Zahra & Ireland,

2000), and was evident in this study. That is, firms need to not only have the capacity

to access information, but also, more importantly, to analyse, evaluate and transfer

information internally. Therefore, ‘the usage of information has a direct

relationship with international market growth’, Hypothesis 4 (H4), can be

postulated.

The Internet has made information retrieval, storage and analysis much easier for the

firm, as discussed in RI1: information usage and knowledge transference within the

firm (Section 4.3). Thus, the level of Internet intensity mediates information usage in

the international market growth of the firm. Therefore, ‘International information

usage is mediated by the Internet intensity of the firm’ (H5), Hypothesis 5 can be

postulated.

112

Further, the perception of information usage has a correlating effect on the interaction

of the firm. That is, firms that have a propensity to use information, also have a

propensity to use interactive communication. Thus, Hypothesis 6 (H6) can be

postulate: ‘the information usage of the firm has a positive relationship with the

interactive communication of the firm’.

Interaction

Beyond information usage, the interactive communication with stakeholders is

pivotal in the process of internationalisation. This was evident in the importance of

usage of interactive communications with key stakeholders highlighted in Section

4.3, Chapter 4. On this foundation, Hypothesis 7 (H7) ‘interactive communication

has a direct relationship with international market growth’ can be postulated.

This study re-affirms the argument that the Internet influences the firm‘s ability to

enhance the interactions between company and customer, and company and

stakeholders. The interactive capabilities of the Internet have been established in the

literature as affecting business and marketing (for example, Rayport & Sviokla, 1994;

Hoffman & Novak, 1996; Sparkes & Thomas, 2001; Arnott & Bridgewater, 2002;

Jaworski & Jocz, 2002). That is, interactive communication is mediated by the firm‘s

Internet intensity in the internationalisation process. Therefore, Hypothesis 8 can be

postulated, ‘interactive communication is mediated by the Internet Intensity of the

firm’ (H8).

Further, the propensity of the firm to perceive information availability is positively

correlated to the propensity to use interactive communication Thus, Hypothesis 9 can

also be postulated: ‘the perceived information availability of the firm has a positive

relationship with the communication interaction of the firm.’(H9), as illustrated in

Figure 4.4.

113

Figure 4.4 Proposed model: information, knowledge and interaction components


Components

H3 H1

Information H9

Knowledge H2 H4

H6 H5

H7

H8



A well-established area of research in internationalisation, international mindset can

either have a positive or negative impact on the firm‘s internationalisation process

(Nummela, Saarenketo & Puumalainen, 2004) a fact confirmed in Stage 1 of this

research (refer Section 4.3). Thus, Hypothesis 10 can also be postulated: ‘the

international mindset of the firm has a direct positive relationship with

international market growth’ (H10).

In an Internet context, the firm‘s international commitment, vision and overall

attitude towards international customers has a bearing on the firm‘s propensity to

expand or not expand into international markets and the speed at which a firm will

internationalise (Aspelund & Moen, 2004). It was evident in this study that firms that

were positively orientated towards internationalisation were driven toward

international expansion or growth. Further, Hamill & Gregory (1997) proposed that

Internet orientation has a positive effect on the international orientation of the firm.

Researchers have found that the Internet orientation of the international decision

maker has a positive relationship with the number of international markets in which a

firm operates (Moen, 2002b). The greater the Internet intensity the higher the

international mindset of the firm (Moen, 2002b; Aspelund & Moen, 2004).

International mindset is positively correlated with Internet intensity (Moen, 2002b,

p.36). Therefore, the greater the Internet intensity, the greater the international

mindset. Thus, Hypothesis 11 (H11), ‘the international mindset of the firm is

mediated by the Internet intensity of the firm’ can be postulated.

F1 Information

availability

F2 Information

usage

F8 International

market growth F7 Internet

intensity

F3 Communication

interactivity

114

Networks

An international network perspective highlights the role of cooperative activities in

internationalisation (Young, et al., 2003). As previously discussed the international

mindset of the firm affects international market growth positively. Therefore, as the

international mindset of the firm is a positive influence on the internationalisation

process, Hypothesis 12 (H12), ‘international mindset has a positive relationship

with the use of business relationships’, can be postulated.

It is evident that firms use multiple paths to achieve international market growth, as

illustrated in Table 4.11. However, in Stage I of this study 11 of the 12 firms

acknowledged the use of traditional networks or business relationships to foster

international market growth, as outlined in Section 4.3. That is, all firms saw the

importance of networks through business relationships as an important element in

driving international market growth. Further, the study also showed that the Internet

was seen to assist in the development of these networks. Thus, Hypothesis 13 (H13),

‘business relationships have a direct relationship with international market

growth’, can be postulated.

All firms saw the Internet as a direct or indirect way to develop international growth,

as relationships with networks in international markets were perceived to be the vital

element in the path towards internationalisation. More specifically, elements such as

business relationship maintenance, strength and longevity were identified as key

items (Wu, Mahajin & Balasubramania, 2003). That is, the greater the Internet

intensity, the greater the effects on international business relationships usage in the

internationalisation process. Thus, Hypothesis 14 (H14) ‗business relationships are

mediated by the Internet intensity of the firm’, can also be postulated.

Psychic distance

Psychological barriers in the form of psychic distance or aversion to foreignness can

impede international growth. There was evidence in this study as psychic distance

was mediating internationalisation. More specifically, language, culture, economic

and education differences are well established components of psychic distance

(Johanson & Vahlne, 1977; O'Grady & Lane, 1996; Torre & Moxon, 2001; Hallen &

Wiedersheim-Paul, 2004). The decision maker (respondent) within the firm acquires

115

knowledge and confidence in countries psychically close to the home country, the

firm moves to countries, which have greater psychic distance (Johanson &

Weidersheim-Paul, 1975). For simplicity, in this PhD research, the decision-maker is

referred to as the firm (as explained in Section 5.2; unit of analysis and key

informant). Thus, Hypothesis 15 (H15) ‘psychic distance has a negative direct

relationship with international market growth’, can be postulated.

Petersen et al. (2002) postulate that psychic distance remains evident even in an

Internet context. This conceptualisation confirms research investigating the

impediment of psychic distance on exporting firms in the UK (Bennett, 1997).

Further, as highlighted in Stage I of this study and presented in Chapter 4 (Section

4.3-Table 4.8) psychic distance was evident for many firms. That is, even though

firms had customers in psychically distance countries the firm did not have multi-

lingual websites. Thus, Hypothesis 16 (H16), ‘the Internet intensity of the firm is

mediated by the psychic distance of the firm’, can be postulated.

Moreover, there is a negative relationship between psychic distance and the

internationalisation process (O'Grady & Lane, 1996). Further, the psychic distance of

the firm leads to a negative impact on the usage of networks in the endeavours of

international market growth. Therefore, Hypotheses 17 (17) ‘psychic distance of the

firm has a negative relationship with the usage of business networks for the firm’,

can be postulated.

Further, psychic distance also has a negative impact on the mindset of the firm toward

international market growth. As demonstrated in Chapter 4 (Section 4.3-Table 4.8)

out of the eleven firms that transact in non-English country markets, only two alter

their marketing online to include a multi-lingual website. Further, firms also

commented that English was only language needed for business. Thus, Hypothesis 18

(H18) ‗psychic distance of the firm has a negative relationship with the

international mindset of the firm’, can be postulated, as illustrated in Figure 4.5.

116

Figure 4.5 Proposed model: international entrepreneurship


Components

International H11 H10

Entrepreneurship H12

H14 H13

H18

H16

H17 H15


International market growth

Because of the Internet, firms can increase the yield from existing customers in

international markets. Therefore, the creation of value-adding to retain existing

clientele was seen to be both efficient and prudent. Further, international market

development was perceived to be one of the greatest benefits of the Internet for these

firms. This finding confirms recent results by researchers that the firms perceived the

Internet‘s greatest perceived benefit as business and market growth (Gibbs &

Kraemer, 2004). Thus, as the Internet intensity of the firm mediates the international

market growth of the firm, Hypothesis 19 (H19), ‘Internet intensity has a positive

relationship with international market growth of the firm’, can be postulated, as

seen in Figure 4.6.

F4 International

mindset

F7 Internet

intensity

F5 International

networks

F6 Psychic

distance

F8 International

market growth

117

Figure 4.6 Proposed model: Internetalisation


components

H3 H1

Information H9

Knowledge H2 H4 Mediating Performance outcome

H6 H5

H7

H8

H19

H11 H10

International H12

entrepreneurship H14 H13

H18

H16

H17 H15


Conclusion

The analysis process was conducted systematically, in order to manage and present

the large amount of data in an easily understandable manner (Chetty 1996; Perry

1998). The process of within-case analysis was performed, so that each individual

case could be viewed as a stand-alone independent entity prior to the cross-case

analysis, seen in Section 4.2 (Perry 1998; Amaratunga & Baldry 2001; Amaratunga,

Baldry, Sarshar & Newton 2002). Furthermore, the cross-case analysis identified

subsequent issues, themes and patterns that were pertinent and frequent across the

multiple cases discussed in 4.3.3 (Stake 1995; Perry 1998; Amaratunga & Baldry

2001; Amaratunga, Baldry, Sarshar & Newton 2002).

There was clear evidence from the research that internationalisation was accelerated

for firms due to the Internet, clarifying the conceptual prediction by Petersen, Welch

and Liesch (2002) that this may be the case. However, it was also evident that the

Internet-intensity capabilities of the firm enhance internationalisation and hence

international market growth, with psychic distance negatively affecting international

market growth—as illustrated in Figure 4.6.

F1 Information

availability

F2 Information

usage

F8 International

market growth

F4 International

mindset

F7 Internet

intensity

F3 Communication

interactivity

F5 International

networks

F6 Psychic

distance

118

Further, to evaluate the model, 19 hypotheses that test the interrelationships between

factors were developed, as seen in Table 4.14. That is, a set of hypotheses was

developed to assess linear relationships between main constructs pertinent to the

components of internationalisation identified: Internet intensity and international

market growth. Now that the data has been presented, analysed and evaluated; the

proposed model developed; and hypotheses and measures established, an assessment

of the quantitative approach was presented in Chapter 5.

119

5.0 CHAPTER 5: QUANTITATIVE METHOD: STAGE II

5.1 Introduction

Chapter 5 justifies the quantitative methodology used to test the proposed model of

‗Internetalisation‘ established in Chapter 4. The research design and analytical

techniques are outlined and justified. That is, the quantitative design (section 5.2), an

exploratory factor analysis (Section 5.4), the structural equation modeling

justification and evaluation (Section 5.4) and conclusion (Section 5.5), as outlined in

Figure 5.1.



Quantitative research design

(5.2)

Data collection procedure & response

rate (5.2.5)

Addressing non-response bias (5.2.6)

Introduction (5.1)

Conclusion (5.5)

Population & sample of study (5.2.1)

Unit of analysis (5.2.2)

Selection of key informants (5.2.3)

Pre-testing instrument (5.2.4)

Analysis of data (5.2.7)

Structural Equation

Modelling (SEM) (5.4) Analysis of data (5.3.1)

Exploratory factor analysis (5.3)

120

5.2 Quantitative research design

As previously discussed in Chapter 3 Section 3.2, this research falls within the

realism paradigm. In Stage II of the data collection, a quantitative evaluation was

used to test the initial interrelations identified and developed in Stage I of this

research. The conceptual framework developed sought to quantify the data (Malhotra,

Hall, Shaw & Oppenheim, 2002) to explain the interrelationships. For this

exploratory investigation, quantitative tools and techniques were used for

confirmation (Burns & Bush, 2003; Zikmund, 2003). From the model established at

the end of Chapter 4, interrelations were shown to represent a holistic perspective of

the Internet‘s mediation role in the international market growth of the firm. A

quantitative approach confirms these interrelationships identified. This deductive

approach sought to quantify specific relationships through statistical analysis, where

hypotheses are supported or not supported (Aaker, Kumar, Day & Lawley, 2005).

The body of knowledge in this area is still limited and research is primarily concerned

with exploration theory building and the confirmation of subsequent theories rather

than the identification of causal relationships which would be expected in the more

narrowly focused perspective of a positivist paradigm (Perry, Riege & Brown, 1998).

Thus, it is argued that use of a dual inductive (Stage I) and deductive (Stage II)

approach to theory development and the confirmation of the proposed theoretical

model, falls into a post-positivist paradigm, the realism paradigm (Perry, et al., 1998).

Further, the use of a methodology that also assumes measurement error and latent

unobserved variables for a complex phenomenon lends weight to the argument of a

realism paradigm perspective, as it assumes fallibility (Perry, et al., 1998). Moreover,

the realist believes that the unobservable can assist in the researcher building

knowledge, contrary to the strict logical positivist ideology (Godfrey & Hill, 1995). A

structural equation model confirmation process scrutinised the interactions and

covariance. This process illuminates the most accurate items and constructs in the

research and results in a more reliable holistic theoretical perspective of the Internet‘s

mediating effects on the internationalisation process of international market growth of

the firm.

Further, a deductive approach was chosen for Stage II of this research, as it provides

an effective means of testing hypotheses. Quantitative techniques can measure firm

121

respondent characteristics through data collection procedures (Malhotra, et al., 2002).

The tested findings from this study can be generalised to similar context and/or

settings (Saunders, Lewis & Thornhill, 2003; Liamputtong & Ezzy, 2005; Maylor &

Blackmon, 2005). In addition, the research design underpins the deductive model

‗Internetalisation‘ that confirms hypothesised interrelationships. The proposed model

‗Internetalisation‘ is tested in Chapter 6 and will be discussed in Chapter 7. The

following section outlines; the research design, including population and sample of

this study, unit of analysis, selection of key informants, measurement of constructs,

pre-testing procedure, data collection procedure and response rate, addressing non-

response bias, exploratory factor analysis results and SEM analytical techniques.

5.2.1 Population and sample of study

This research is focused on a single country study of Australian firms that have

engaged in international market expansion. Thus, the population parameters of the

study were limited to Australian firms that are outwardly international. Therefore, the

most comprehensive and current database available in Australia – the Austrade

database was used to identify the sample for this study. The Austrade website

database www.austrade.com.au is maintained by the Australian Government for the

Australian Trade and Investment development agency. Austrade is the Australian

Trade Commission. The Austrade database is creditable, comprehensive and current,

and its use is therefore justified for this study, as seen in Table 5.1.

Table 5.1 Sample selection pool: Austrade database


The study includes respondents from agribusiness, business and finance services,

consumer goods, and information communication technology (ICT) industries. These

industries were chosen as they represent four out of the top five industries of

Australian exporters, accounting for A$93.2 billion in export for 2006-2007 (ABS,

Selected industry Contacted Eligible Responses

Agribusiness (879) Business & Finance services (2045) Consumer Goods (1572) Information Communication Technology (ICT) (1390) 5, 886

244 660 426 488 1,828 Called (1:3 approx.)

68 133 85 144 430 ‘yes’ 12 ‘no’

Eligible: 442 Not accepted: 12 Accepted: 430 Responses: 234 Data cleaning left 224 cases 52.9 % response rate with a 50.6 % usable response rate

122

2008). Further, these industries account for 20,393 of a possible 44,310 Australian

export firms, in 2006-2007 (ABS, 2008). That is, apart from the mining industry the

four industries of; agribusiness, business and finance services, consumer goods, and

information communication technology (ICT) are the next four largest industries of

Australian exporters (ABS, 2008). For example, the agriculture industry generates

A$30 billion in value for the Australian economy and employs 385,000 people. In

2005-2006 the industry accounted for a quarter of the merchandise exports with A$26

billion (Austrade, 2008), as 60% of what is produced on Australian farms is exported

(Austrade, 2008). The value placed on the export of services is estimated to be A$46

billion (ABS, 2008), with business services A$9 billion and financial/insurance

accounting for A$3.8 billion in 2006-2007 (ABS, 2008). Exports of information

communications technology in 2005 accounted for A$5.2 billion (Australian Bureau

of Statistics, 2006). Finally, the manufacturing industry with exports worth A$51

billion and a retail trade of almost A$2 billion (ABS, 2008), form the majority of

what would be considered consumer goods exported.

An extensive manual data retrieval processes for international firms within the

database was conducted. The total number of firms in the sample frame was 5,886.

Duplication in firm contact was avoided by a manual crosscheck of the 5,886 firms

through hardcopy printouts of company profiles. The Austrade database gave the

researcher; company name, international manager‘s name, role of individual, contact

details (address, phone number and email address) as well as product details and the

international history of the firm. Every third firm was phoned. That is, approximately

1,800 firms from the database were phoned to encourage participation and screened

for eligibility, as the objective of the researcher was to obtain as many rich-data

sources as possible. 1,358 firms were either not contactable, sources were not

available or the firm had no international customers, as seen in appendix D.

A total of 234 responses were received with a response rate of 52.9%. That is, out of

the 442 firms eligible (contactable firms with international customers), 234 firms

responded. Twelve firms declined to participate, leaving a final usable response rate

of 50.6%, which is an adequate response, considering international marketing

researchers consider 30% to be a reasonable rate (Llieva, Baron & Healey, 2002) and

123

given that business surveys normally have poor response rates (Frazer & Lawley,

2000).

5.2.2 Unit of analysis

The research explores the Internet intensity, internationalisation and international

market growth of the firm; therefore the unit of analysis for this study is the firm. This

is consistent with the literature surrounding Internet and internationalisation theory

where the firm is used as unit of analysis, as outlined in sections 2.4, 2.5 and

illustrated in table 2.10. (Melewar & Stead, 2002; Moen, 2002b; Moen, et al., 2003;

Aspelund & Moen, 2004; Morgan-Thomas & Bridgewater, 2004). For this research,

given the focus is predominantly SMEs the decision-maker(s) and the firm can be

used (interchangeably) as the unit of analysis.

5.2.3 Selection of key informants

It is necessary to select key informants that can bring appropriate knowledge to the

study (Malhotra, 1996), therefore, international marketers and international decision

makers were chosen (the key informant) either to fill out personally or directed to the

person most responsible for the firm‘s internationalisation decisions. Further,

informants were generally interested in the study, as there was a shared interest.

Selection of informants was vital. Only those with knowledge of the

internationalisation of the firm were eligible, as obtaining data-rich sources was

imperative. That is, individuals within the firm were targeted that had the capacity to

communicate/articulate the firm‘s perspective through a questionnaire, as high

ranking informants enable reliable standardised information concerning the firm

(Mitchell, 1994). Although some may argue for multiple respondents from the firm

(Podsakoff, MacKenzie, Lee & Podsakoff, 2003), this is not appropriate because the

majority of firm‘s in this study are SME‘s. Thus, for this PhD research, the

assumption is that a single informant is appropriate considering the role and

knowledge of the respondent.

5.2.4 Pre-testing instrument

Prior to administering the questionnaire, it was essential to pre-test the instrument in

order to ensure reliability (Hair, Bush & Ortinau, 2000). Using a pre-test minimises

124

problems associated with instruction and design, such as response fatigue and

misunderstanding (Zikmund, 2003). Zikmund advocates two main avenues of pre-

testing:

a. a review of the questionnaire by a panel of experts

b. a trial run with representatives from the population pool.

This research adopted both procedures.

Firstly, a panel of experts consisting of seven academics reviewed the questionnaire.

Four were experts in the area of international marketing, with the remainder experts

in research design, as illustrated in Appendix H. Secondly, twelve firms with

international operations were used to pre-test the questionnaire, resulting in minor

modifications.

5.2.5 Data collection procedure and response rate

The survey instrument was a structured questionnaire. Both web-based and mail-out

questionnaires were used in the collection process, enabling efficient distribution of

large numbers of surveys over a broad geographical area (Malhotra, 1996; Sekeran,

2000). This was considered important due to the large sample size needed for SEM

(Hulland, Chow & Lam, 1996). Researchers using SEM recommend at least 100

responses, although 200 responses are recommended for complex models (Hulland, et

al., 1996). However, in this PhD study the researcher attempted to obtain as many

responses as possible, as outlined in Section 5.2.1. Web-based and mail out surveys

are relatively inexpensive, with the advantages of easy administration of coding and

analysis (Sekeran, 2000). However, both web-based and mail-out surveys have the

potential disadvantage of low response rates, compared to methods such as personally

administered surveys (Sekeran, 2000).

Steps to questionnaire design

Figure 5.2 outlines the four steps that were followed to establish appropriate

questionnaire design and administration:

Step1—Pertinent information and content was established to develop

questions within the survey instrument.

Step 2—The method of delivering the questionnaire was evaluated.

Step 3—A draft questionnaire was developed.

125

Step 4—Issues relating to the reliability and validity of the questionnaire were

analysed (Frazer & Lawley, 2000).

Figure 5.2 Four-step processes in questionnaire development and administration

Step 1 Step 2 Step 3 Step 4

Source: adapted from Frazer and Lawley (2000)

Step 1: Determining pertinent information and source of data

The construct specification was drawn from the literature review and data

convergence from Stage I of the case study analysis (Chapter 4), in order to develop

the measures shown in Table 5.2 and Table 5.3. Primarily, Likert-type scales were

compiled from the literature, as these types of scales are generally considered more

reliable (Churchill & Peter, 1984).

Table 5.2 Questionnaire draft/scale

Questionnaire Construct Description Scale Comment

Part A Q1. Internet technology usage Descriptive data sought. Opening question to start respondents‘

cognition pertinent to the survey

Interval Usage of specific Internet technologies. Descriptive data

1 no usage – 7 extensive usage

Part A Q.2 Internet intensity Applied usage of the Internet in business processes of the firm

Interval

Application of the technology into the business processes of the firm. (Mediating factor 7).

Extensively discussed in Chapter 4. 1 no usage –

7-extensive usage

Part B Q.3 Product specificity Product specificity evaluates the

complexity of the product which might indicate a limitation for the

digitalisation of complex products in

the internationalisation process

Interval Not part of SEM, but might indicate some

interesting limitations and advantages for product types

1 strongly agree – 7 strongly disagree

Part B Q.4 Information available The perceived ability of the firm to source internationalisation information

such as markets, customer,

competitors, resources and suppliers

Interval Perceived importance of information pertaining to the internationalisation of the firm

(Independent variable: Factor 1) 1 no

information – 7 extensive information

Part B Q.5 Interaction Perceived interactive communication such as speed, frequency, efficiency

and distribution of communication

Interval Perceived level of interaction capability of the firm 1 strongly agree – 7 strongly disagree

(Independent variable: Factor 2)

Part B Q.6 Information usage The perceived ability of the firm to

source internationalisation information such as markets, customers,

competitors, resources and suppliers

Interval Usage of information pertaining to the

internationalisation of the firm (Independent variable: Factor 3)

1 no information – 7 extensive information

Part B Q.7a International market

growth

Performance measure for market

growth over the last 10 years. English-speaking market

Interval New customers in new countries, new customers

in existing countries, usage by existing customers. 1 significant decrease –7 significant

increase (dependent variable: Factor 7)

Part B Q.7b International market

growth

Performance measure for market

growth over the last 10 years. Non- English-speaking markets

Interval New customers in new countries, new customers

in existing countries, usage by existing customers. 1 significant decrease – 7 significant

increase (dependent variable: Factor 7)

Part B Q.8 Internet international

customer service usage

Perception sole/complimentary usage

of the Internet in servicing international customers

Interval No part of the SEM. However, this measure will

indicate on a 7-point scale where the firm views the dependence on the Internet for international

customers. Used as a descriptive measure. 1

complementary – 7 sole mechanism

Determine required

information

Determine delivery

method

Prepare draft Assess reliability

and validity

126

Part B Q.9 International mindset

The international orientation of the

firm. The mindset of the firm on

internationalisation. Viewing internationalisation as achievable.

Interval Emphasise, commitment managerial expertise

and positive or negative perspective on the

internationalisation. (Independent variable factor 4) 1strongly disagree 7 strongly agree

Part B Q.10 Business networks The usage of networks. A well-established internationalisation path.

Interval The acquisition, performance, development and maintenance of business networks. (Independent

variable factor 5) 1 no usage 7 extensive usage.

Part B Q.11 Psychic distance Psychological barrier of the firm. The negative viewpoint of foreign markets

that impedes internationalisation

Interval Elements of psychic distance include perceptions of education level, economics,

culture, language both business and national.

(Independent variable factor 6) 1 strongly disagree 7 strongly agree

Part C Q.12 Type of product

Number of employees

Classification descriptive

Number of full time/part time employees

Nominal

Nominal

Product classification descriptive

No. of employees will assist in indicating whether firm size might be an important variable

Part C Q.13 Year firm established

Post code Ind. Classification

First country

No. of countries Physical office

% of international

Annual turnover

When did the firm start to trade

Location of firm Industry classification

Initial internationalisation

The amount of countries listed Firms that have an office

Revenue from international

Total turnover last year

Nominal

Nominal Nominal

Nominal

Nominal Nominal

Nominal

Nominal

Descriptive. Indication if age of firm is

important. Shows response bias or not If know (not many knew this)

Starting point for internationalisation

Countries firm has customers/listed Physical offices Vs no office in country

% of international for total revenue

Australian dollars

Part C Q.14 Title

Experience

Years with firm Age

Position within the firm

Experience in industry

Employment with this firm Age of respondent

Nominal

Nominal

Nominal Nominal

These questions will show the average time with

the same co. years of experience and age. The

items will give descriptive analysis that will assist in understanding other data analysis

performed

Part C Q.15 Comments

Request for honest comments Open- ended

Open-ended question requesting feedback


Independent variables

Six independent variables were identified in the ‗Internetalisation‘ model. The first

two variables concerned the information capabilities of the firm in the

internationalisation process. For example, questions were asked concerning

information availability and information usage. Explicit questions about the

availability and usage of information regarding markets, customers, competitors,

resources and suppliers were posed in questions 4 and 6, Part B. Measures for these

questions were derived from an informational internationalisation perspective using

seven-point Likert-type scales. Interval scale anchors were (1) ‗no information‘ and

(7) ‗extensive information‘ for information available, and (1) ‗no use‘ and (7)

‗extensive usage‘ for information usage (Hamill & Gregory, 1997; Torre & Moxon,

2001; Petersen, et al., 2002). The third independent variable related to firm capability

in relation to interactive communication (Question 5, Part B). For example, questions

were asked relating to speed, efficiency and frequency of communication. The

measures used for these questions were derived from website interaction research

with scales on a seven-point Likert interval scale anchored at (1) ‗strongly disagree‘

and (7) ‗strongly agree‘ (Yuping, 2003; Brock & Yu, 2005).

127

The three remaining independent variables related to the firm‘s entrepreneurial

capabilities and influences on Internet intensity. The fourth variable was international

mindset (Question 9, Part B)—the international entrepreneurship perception of

international country markets. This included whether international markets were

viewed as achievable, and the commitment and importance the firm placed on

international markets. Measures used for these questions were derived from an

internationalisation entrepreneurship perspective using a seven-point Likert interval

scale anchored at (1) ‗strongly disagree‘ and (7) ‗strongly agree‘ (Aspelund & Moen,

2004; Nummela, et al., 2004).

The fifth variable was network usage—the firm‘s usage of networks that have been

shown to facilitate international growth performance and efficiencies through

building relationships, establishing new relationships and maintaining existing

relationships (Question 10, Part B). Measures used for these questions were derived

from an internationalisation theory perspective using a seven-point Likert scale

anchored at (1) ‗no use‘ and (7) ‗extensive usage‘ (Wu, Mahajin & Balasubramanian,

2003).

The sixth and last independent variable was psychic distance. Psychic distance

(Question 11, Part B) is a well-established psychological barrier within the

internationalisation process and relates to the psychological impediments and

psychological accelerants of internationalisation due to understanding and acceptance

of language, cultural, knowledge, economic, educational and understanding issues

pertaining to international markets (O'Grady & Lane, 1996; Torre & Moxon, 2001;

Hallen & Wiedersheim-Paul, 2004). Measures used for these questions were drawn

from an internationalisation perspective using a seven-point Likert scale anchored at

(1) ‗strongly disagree‘ and (7) ‗strongly agree‘

The presence of a mediating variable in this study implies that the Internet intensity of

the firm is not the only reason for information, knowledge, interactive

communication, international mindset, networks and psychic distance relationships—

the independent variables discussed above. A model can have both a mediating and

moderating effect, as seen in Figure 5.3 (Baron & Kenny, 1986; Muller, Judd &

Yzerbyt, 2005). That is, a moderating effect implies the construct determines the level

128

of variance, whereas, a moderating effect partially explains the variance of the

construct.

Figure 5.3 Internet intensity: mediation model that is moderated

(Internet intensity)

Mediator (moderator effect) a b (moderator effect)

Independent Outcome variable Variable c

(Information, communication, networks, (International market growth)

international mindset, psychic distance)

Source adapted from (Baron & Kenny, 1986; Muller, et al., 2005)

Measures used for these questions were derived from Internet intensity literature

using a seven-point Likert scale anchored at (1) ‗no usage‘ and (7) ‗extensive usage‘

(Question 2, Part A). Internet intensity can best be measured through a seven-point

scale of application of the Internet. That is, Internet intensity is the application of

activities due to the Internet, such as marketing and advertising, sales to customers,

after-sales service and support, market research, management of international market

information, purchasing/procurement, exchange of operational data with suppliers

and exchange of operational data with business customers (Hamill, 1997; Aspelund &

Moen, 2004; Gibbs & Kraemer, 2004).

Dependent outcome variable

The last variable considered was a dependent variable, international market growth.

The international market growth variable is pivotal to the model, as it was the

construct used to measure output performance. That is, growth was measured by

performance in new country markets, new customers in existing country markets and

penetration of existing customers. A seven-point Likert scale was used, anchored at

(1) significantly decreased to (7) significantly increased. Although, these measures

were adapted from the traditional theoretical framework in corporate growth (Ansoff,

1965, 1968, 1969) many other researchers in internationalisation and the Internet

have also viewed growth as a pivotal variable in measurement (Hamill & Gregory,

1997; Prasad, et al., 2001; Torre & Moxon, 2001; Gibbs & Kraemer, 2004; Morgan-

Thomas & Bridgewater, 2004; Ryssell, Ritter & Gemunden, 2004).

129

Measurement of constructs

Common method variance can have a negative effect on observed relationships in

organisational research (Podsakoff, et al., 2003). To overcome common method

variance, a variety of scale anchors were used so that respondents did not simply

‗gloss over‘ questions. For example, different anchors such as ‗no use‘ (1) and

‗extensive use (7), and ‗strongly disagree‘ (1) and ‗strongly agree‘ (7) were used to

limit the potential for bias from common method variance. Further, dependent and

independent variables were separated and different types of questions asked for each

to stimulate a specific response for a particular item (Podsakoff, et al., 2003), as

outlined in Table 5.2.

The measures for the constructs identified in Chapter 4; information availability,

information usage, interaction communication, international mindset, business

relationship use, psychic distance, Internet intensity and international market growth

are evaluated next.

Information availability (Factor 1)

The measurement scales were drawn from research investigating information, the

Internet and internationalisation. More specially, the scales for information

availability were adapted from research by Hamill and Gregory‘s (1997) descriptive

analysis pertaining to information about the market, customers, competitors (Hamill

& Gregory, 1997) and information pertaining to resources and suppliers (Petersen et.

al. 2002 and Torre & Moxon 2002). Thus, beyond the general concept of

‗information‘ (Berry & Brock, 2004; Gibbs & Kraemer, 2004; Brock & Yu, 2005), a

single descriptive frequencies (Hamill & Gregory, 1997) or conceptual research

(Torre & Moxon, 2001; Petersen, et al., 2002) this study investigates a more accurate

multi item construct. Thus, items for the construct information relating to market,

competitors, customers, resources and suppliers were used to evaluate ‗information

availability‘.

Information usage (Factor 2)

The factor of information usage was underpinned by the concept of knowledge theory

of internationalisation, as firms accumulated information through learning by doing.

That is, information usage was evident in the knowledge transference act by firms

130

(Ethiraj, et al., 2005) and was influenced by the Internet (Petersen, et al., 2002). More

precisely, the Internet has made information retrieval, storage and analysis more

efficient. The Internet has given SME‘s information capabilities that traditionally

only multi-national companies have had. Information usage items were derived from

the theory relating to information and knowledge transactional efficiency including

information pertaining to market, customers, competitors (Hamill & Gregory, 1997)

and suppliers and resources knowledge, based on conceptualisations by Petersen et.

al. (2002) and Torre & Moxon (2001).

Interactive communication (Factor 3)

The interactive capabilities of the Internet have been highlighted in the literature as

affecting business and marketing in a profound way, as seen in the work of Rayport

and Sviokla (1994), Hoffman and Novak (1996), Sparkes and Thomas (2001), Arnott

and Bridgewater (2002) and Jaworski and Jocz (2002). It has been suggested that

measures for interactivity are currently inadequately articulated in the literature

(Yadav & Varadarajan Rajan, 2005, p. 585). Thus, measures in this PhD were

adapted from control, communication, and synchronicity elements of interaction

(Yuping, 2003). That is, interaction can be measured through communication; items

such as speed, frequency, efficiency, availability and the multiple functionality of the

Internet (Yuping, 2003; Brock & Yu, 2005).

International mindset (Factor 4)

A well-established area of research in internationalisation is international mindset

also known as international orientation (Nummela, et al., 2004). International mindset

is the firm‘s attitude toward internationalisation. Aspelund and Moen (2004) suggest

the Internet intensity of the firm positively effects the speed and propensity to expand

into international markets, by enhancing international commitment, vision and

international customer orientation. Further, international experiences and the

perceived achievability of rapid internationalisation (Nummela, et al., 2004) were

also used to measure international mindset of the firm.

Business Networks (Factor 5)

To date, the network concepts of business relationships in the Internet

internationalisation process have not been reported. That is, the present body of

131

knowledge does not identify business relationship networks as in the Internet

internationalisation literature. However, as identified in Chapter 4, Section 4.2,

respondents in this study perceived networks to be vital in the internationalisation of

the firm. Traditionally, an international network perspective highlights the role of

cooperative activities in internationalisation (Young, et al., 2003). Thus, elements

such as business relationship maintenance, strength and longevity were identified as

key items for measurement in this study (Wu, Mahajin & Balasubramania, 2003).

Psychic Distance (Factor 6)

Currently, conceptualisations within the body of knowledge suggest that psychic

distance affects Internet internationalisation (Petersen, et al., 2002). Traditionally,

psychic distance has been measured through language, culture, economic and

education differences (O'Grady & Lane, 1996; Torre & Moxon, 2001; Hallen &

Wiedersheim-Paul, 2004). In this study, these items are evaluated in the context of

Internet internationalisation.

Internet intensity (Factor 7)

Researchers have yet to reach a consensus concerning a consistent measurement for

Internet usage (Berry & Brock, 2004). As Berry and Brock (2004) conclude,

measuring Internet usage by the dichotomy of use/non-use limits the statistical

analysis potential of relationships between variables. These measures of Internet

usage were used to capture the digitalisation concept identified in Chapter 4.

Additionally, dimensions of Internet usage were measured in this study on an

intensity scale, which has been substantiated through factor analysis (Hamill, 1997;

Aspelund & Moen, 2004; Gibbs & Kraemer, 2004). That is, Internet intensity can

best be measured by evaluating applications such as marketing and advertising, online

sales to customers, after-sales service and support, market research, management of

international market information, online purchasing/procurement, exchange of

operational data with suppliers and exchange of operational data with business

customers (Hamill, 1997; Aspelund & Moen, 2004; Gibbs & Kraemer, 2004). Thus,

both Internet usage and Internet intensity are measured in this study.

132

International growth (Factor 8)

The Internet enables firms to solicit new business from existing clientele (market

penetration). This finding from Chapter 4, Section 4.2 confirms previous research in

which a factor analysis identified perceived benefits as being ‗to expand the market

for existing product/service‘ (Gibbs & Kraemer, 2004, p. 133). That is, Gibbs and

Kraemer (2004) found that perceived benefits to the firm of market penetration from

e-commerce were highly significant (.84). Thus, when measuring international market

growth, it is prudent to measure international market penetration as part of the growth

variable (Gibbs & Kraemer, 2004).

Further, firms perceived international market development as one of the greatest

benefits of the Internet (Chapter 4, Section 4.2). Further, Gibbs and Kraemer (2004)

also found that the perceived benefit of new business/market was highly significant

(.84). However, the current measurement of international market growth in the

literature fails to define international growth accurately. That is, Gibbs and Kraemer

(2004) refer to growth in domestic generic terms. Thus, a more accurate account of

international market growth items can be measured through:

1. international market penetration, capitalising on existing international

customers

2. international market development, which includes

a. new customers in existing countries

b. new customers in new countries.

These refinements to the measure of international market growth helped the research

to identify the construct more accurately. Thus, the scales used were adapted from

Ansoff (1957, 1965, 1968) and Gibbs and Kraemer (2004). That is, this measure

adapts perceived market penetration and new business/market from Gibbs and

Kraemer (2004) and Ansoff‘s (1957, 1965, 1968) market matrix vectors of market

penetration and market development.

133

Table 5.3 Measures

Factor-variable (label) and scale for

measurement Expected relationships Measures Adopted, adapted

or new item

Internationalisation process

Information availability (F1)

(Hamill & Gregory, 1997) (HG) (Petersen, et al., 2002) (PWL)

(Torre & Moxon, 2001) (TMX)

INFAVL MKTINF INFAVL COMINF

INFAVL CUSINF INFAVL RESINF

INFAVL SUPINF

1. Information about the market (HG)

2. Information about competitors (HG)

3. Information about international customers (HG) 4. Information about resources (TMX & PWL)

5. Information about international suppliers (TMX & PWL)

Adapted

Adapted

Adapted Adapted

Adapted

Information usage (F2) (Hamill & Gregory, 1997) (HG)

(Torre & Moxon, 2001) (TMX)

(Petersen, et al., 2002) (PWL) Based on generic knowledge concept-

of information items

INFUSE MKTINF INFUSE COMINF

INFUSE CUSINF INFUSE RESINF INFUSE SUPINF

1. Use of information about the market (HG) 2. Use of information about competitors (HG)

3. Use of information about international customers (HG)

4. Use of information about resources (TMX & PWL) 5. Use of information about international suppliers (TMX & PWL)

Adapted Adapted

Adapted

Adapted Adapted

Interaction (F3)

(Yuping, 2003) (YP) and (Brock &

Yu, 2005) (BY)

Adapted from principles of Yuping –website interaction

INTACT EFFINT

INTACT FREQCY

INTACT SPEED

INTACT FUNCTN INTACT TIMLESS

1. efficiency of communication assists with interaction (BY)

2. greater frequency of communication (YP)

3. enhanced speed of communication (YP)

4. multiple interactive functions (BY) 5. greater availability for communication (YP)

Adapted

Adapted

Adapted

Adapted Adapted

International mindset (F4) (Aspelund & Moen, 2004) (AM)

(Moen, 2002b) (MO)

(Nummela, et al., 2004) (NSP)

NTMND CUSTOM INTMND COMMIT

INTMND IMPEMP

INTMND EXPERC INTMND VISION

INTMND RAPID

1. Committed to servicing their International customers (MO) 2. Commits both financial and human resources (AM)

3. Emphasises importance growth to employees (AM)

4. Intern. experience is viewed as important (NSP) 5. Regards the world as the market (AM)

6. Views rapid internationalisation as achievable (NSP)

Adapted Adapted

Adopted

Adapted Adopted

Adapted

Traditional network usage (F5)

Use of traditional business

relationships (BR)

(Wu, Mahajin & Balasubramanian,

2003) (WMB)

BUSREL CUSREL

BUSREL STEREL

BUSREL LLAREL

BUSREL AQNCUS

BUSREL NEWMKT

BUSREL INTPRF

1. Maintaining international customer relationship (WMB)

2. Strengthening the existing relationships (WMB)

3. Developing longer lasting relationships (WMB)

4. Acquiring new international customers

5. Entering new international markets

6. Enhancing our international performance

Adapted

Adopted

Adopted

Adapted

Adapted

Adapted

Psychic Distance (F6)

Based on

(O'Grady & Lane, 1996) (OG) and (Torre & Moxon, 2001; Hallen &

Wiedersheim-Paul, 2004) (TM) (HW)

PSYDIS LMTFRN

PSYDIS NONATL

PSYDIS NOBUSL PSYDIS DIFCUL

PSYDIS CONEDU

PSYDIS ECODEV PSYDIS UNDERST

PSYDIS FRNKNO

1. in non English markets (OG)

2. national language (OG)

3. non-English business language (OG) 4. in countries with different culture (OG)

5. low education level (OG)

6. low economic development (OG) 7. no staff read, speak and understand languages of markets (TM) (HW)

8. Lack of knowledge of markets (TM) (HW)

Adapted

Adapted

Adapted Adapted

Adapted

Adapted Adapted

Adapted

INTINS (F7)

Internet intensity

(Gibbs & Kraemer, 2004) (GK) How

is the Internet used: for…

(Aspelund & Moen, 2004) (AM)

INTINS ADVMKT

INTINS ONLSAL INTINS AFTSAL

INTINS ONLPUR

INTINS MKTRES INTINS MKTMAN

INTINS EXCSUP

INTINS EXCBUS

1. Advertising and Marketing (GK)

2. Online sales (GK) 3. After sales service and support (GK)

4. Online purchasing (transactions –e-mail or website) (GK)

5. Market research (AM) 6. International market management (AM)

7. Exchange of operational data with suppliers (GK)

8. Exchange of operational data with business customers (GK)

Adopted

Adopted Adopted

Adopted

Adapted Adapted

Adopted

Adopted

International growth International

market growth (F8) Primary

(Ansoff, 1965) (AN) and (Hamill &

Gregory, 1997; Murphy & Bruce, 2003; Gibbs & Kraemer, 2004;

Morgan-Thomas & Bridgewater,

2004)

INTGRO DEVMKT INTGRO NEWCEX

INTGRO PENMKT

INTGRO DEVMKT

INTGRO NEWCEX

INTGRO PENMKT

English markets (increasing/decreasing)

1. New customers in new international markets (AN) 2. Acquiring new customers in existing international markets (AN)

3. Increases product usage of existing international customers (AN)

Non-English markets (increasing/decreasing) 1. New customers in new international markets (AN)

2. Acquiring new customers in existing international markets (AN)

3. Increases product usage of existing international customers (AN)

Adapted Adapted

Adapted

Adapted

Adapted

Adapted

Source: developed this research. Note: Adopted = adopted without change, adapted = changed, but core concept in tact and new

= developed from evaluation of case study analysis

134

Step 2: Delivery method and length of questionnaire

Internet delivery method was used as the primary method to collect data. A myriad of

data collection methods exist, including mail, telephone, face-to-face and Internet

survey (Frazer & Lawley, 2000; Burns & Bush, 2003; Zikmund, 2003). Internet

questionnaires are designed similarly to those mailed out, but are delivered

electronically (Llieva, et al., 2002; Burns & Bush, 2003). Internet questionnaires do

assume the existence of an e-mail database and population that can access the Internet

(Frazer & Lawley, 2000).

A telephone screening process identified those firms eligible for the study. Once

eligibility was established, participants selected either an Internet web-based or mail

survey. With the exception of 12 firms who preferred a mail survey 418 participants

accepted an e-mail questionnaire, as seen in appendix E, which corroborates findings

from recent research that highlights that top managers prefer electronic surveys

(Griffis, Goldsby & Cooper, 2003). A single reminder e-mail was also sent to

participants.

Step 3: Draft questionnaire

When designing a questionnaire, several issues need to be considered: question

content, question wording, response format, structure and layout of questionnaire

(Frazer & Lawley, 2000). In this study, questions were kept brief and legitimate with

double-barrelled and sensitive questions avoided to ensure minimal effort was

required to complete the questionnaire (Hair, et al., 2000). Questions were worded

precisely so as to only have one meaning: key words were emphasised with italics;

and no double negatives, leading or biased words or phrases, abbreviations or

incomplete sentences were used (Frazer & Lawley, 2000; Hair, et al., 2000).

An initial screening question was used. That is, questions about firm

internationalisation and the respondent‘s role within the firm were asked at the end of

Part C of the questionnaire and were also used as a double-check screening process.

Consequently, seven respondents were excluded as their firms had no international

customers and one respondent was excluded he/she did not hold an appropriate

position within the firm.

135

The technical issues of developing a HTML survey, auto submission system that

integrated with a statistical package and the inconsistent visual presentation of the

questionnaire depending on the computer system installed were important ones that

needed to be addressed (Burns & Bush, 2003). The Internet questionnaire was kept as

simple as possible to diminish technical issues. Further, presentation inconsistency

was reduced through a comprehensive testing process (Dommeyer & Moriarty, 2000;

Frazer & Lawley, 2000). For example, testing was conducted viewing the e-mail link

in different e-mail systems such as Outlook, Yahoo and Hotmail. Further, the Internet

questionnaire was viewed using different computer systems and screens. Minor

modifications were made to ensure optimal presentation in divergent computer

systems. Participants were also encouraged to contact the researcher if they had any

difficulty with the Internet survey. Only three participants contacted the researcher

about minor technical issues.

Using a web-based survey system allowed the data to be auto-coded and converted to

an Excel spreadsheet. Auto submission systems allow the researcher to integrate

results with a statistical package—in this case, Excel and SPSS 16 (Frazer & Lawley,

2000; Llieva, et al., 2002; Burns & Bush, 2003). This integration of technology

generated a full data spreadsheet along with a coded spreadsheet that auto-updated

every time a respondent completed the questionnaire (Hair, et al., 2000; Burns &

Bush, 2003). This automation reduced the data entry time as well as possible human

error associated with researcher data entry (Hair, et al., 2000; Llieva, et al., 2002;

Griffis, et al., 2003) and provided ongoing summaries of data (Dommeyer &

Moriarty, 2000). The main disadvantage of Internet-web based surveys is that they

are open to the general public (Hair, et al., 2000). This disadvantage of openness was

overcome by identifying a unique IP address from the respondent‘s computer. The

auto submission system also gave the computer name or IP address identity,

highlighting if any respondent had completed the survey more than once (Griffis, et

al., 2003). There was no evidence of multiple responses.

Step 4: Evaluation of reliability and validity

Reliability

Reliability indicates the extent to which a measure is without bias (error) and offers

consistent stable measures across time and within questionnaire items—the

136

‗goodness‘ of a measure (Churchill, 1979; Sekeran, 2000). To increase the reliability

of the questionnaire, interval scales were used predominantly, with limited use of

ratio and nominal scales. Further, clear guidelines were given to respondents.

Constructs were operationalised with multiple indicators, as opposed to a single-

measure item, to limit system error (Churchill, 1979). The instrument was pre-tested

extensively and modified accordingly, as discussed earlier.

Content validity ensures measures represent adequately the set of item indicators that

reflects the intended concept (Sekeran, 2000). In this research, a synthesis of the

literature was conducted (Chapter 2), an exploratory case-study analysis process

helped to confirm and refine constructs (Chapter 4), the questionnaire was pre-tested

with both academics and industry (Step 4) and an exploratory factor analysis (EFA)

and confirmatory factor analysis (CFA) were conducted (Chapter 5 and 6). These

evaluations helped to ensure content validity.

Construct validity addresses the question of what construct the scale is measuring

(Malhotra, 1996). The researcher needs to answer the theoretical question about why

the scale works and what deductions can be made in relation to the theory (Malhotra,

1996). Initial qualitative evaluation helped to refine scales. When possible,

established scales or adapted scales were used, as seen in table 5.2. Thus, construct

validity requires sound theories of the constructs being measured and the

interrelationships with other variables (Malhotra, 1996). This can be assessed through

convergent and discriminant validity. Convergent validity is assessed using the scores

obtained from two different instruments measuring the same concept and whether

they are positively correlated (Churchill, 1979; Malhotra, 1996; Sekeran, 2000). That

is, convergent validity is the degree of correlation between two different measurement

scales that are supposed to measure the same concept. Data analysis was used to help

differentiate similar scale measures, which were addressed in evaluations shown in

Chapter 5 and 6 (EFA and CFA). Conversely, discriminant validity is the degree to

which a measure is different from other scales that are supposed to measure distinct,

or novel constructs (Churchill, 1979). That is, discriminant validity is theory-based:

two variables are predicted to be distinct or uncorrelated and the scores obtained by

the measures are empirically found to be so (Sekeran, 2000). This demonstrates a lack

of correlation between different constructs (Malhotra, 1996). Data analysis was used

137

to distinguish accurate measures for specific constructs, which was addressed in

evaluations found in Chapter 5 and 6 (EFA and CFA).

5.2.6 Addressing potential non-response bias

Non-response bias has been criticised in self-administered surveys. That is, late

submission from respondents who required prompting (in this case, through a single

reminder e-mail) may be representative of non-respondents (Armstrong & Overton,

1977). There were a number of ways in which to address non-response bias. Firstly, a

high response rate created a more representative set of respondents and limits non-

response, due to high participation. Further, an independent creditable data source—

in this case, the Australian Bureau of Statistics— was used to assess the respondent

characteristic, establishing the respondent as representative of the population of firms

in Australia. For example, geographical locations such as postcodes may be used

(Wickramasekera & Oczkowski, 2006). Thirdly, the characteristics of eligible

respondents matched those who actually submitted or participated. And lastly, a more

rigorous process of using an extrapolation method such as a two tail T test ensured

that the data set was similar with respect to those respondents who submitted early

and those who submitted late with prompting (Armstrong & Overton, 1977).

The respondent characteristic of geographical location was measured by postcode,

showing that the respondent was representative of the broader business population.

The representativeness of these respondents, outlined in Table 5.4, indicated non-bias

in the data set.

Table 5.4 Postcode characteristics of the respondents

Postcode 2005 (June) 2006 (June) 2007 (June) Respondents

NSW 34.48 % 34.19 % 33.79 % 35.0 %

VIC 25.01 % 25.01 % 25.02 % 23.7 %

QLD 19.60 % 19.86 % 20.09 % 20.7 %

SA 07.21 % 07.17 % 07.13 % 08.0 %

WA 09.86 % 09.95 % 10.17 % 10.4 %

TAS 01.88 % 01.89 % 01.87 % 02.2 %

Source: adapted from ABS 2007 and analysis from data set

Further, of those respondents contacted and those responding were similar, so cases

were consistent. That is, those who accepted to participate and those that actually

participated were similar from an industry characteristic standpoint. For example,

138

agricultural business accounted for 15.81% of all firms accepted and 16.7% of all

firms responded. Information communications technologies firms accounted for

30.93% of firms that accepted and 31.5% that responded. Consumer goods accounted

for 19.76 % of firms that accepted and 19.8% responded. Lastly, business and finance

accounted for 30.93% firms that accepted and 32% responded, as seen in Table 5.5.

These findings indicate responding firms were representative accepted, therefore

reducing non-response bias.

Table 5.5 Industry representative proportions

Industry Accepted % responded %

Ag business 68 15.81 37 16.7

ICT 133 30.93 70 31.5

Consumer

goods

85 19.76 44 19.8

Business and

finance

133 30.93 71 32

Total 430 100 222 100


Lastly, non-response bias was evaluated using the extrapolation method of a two-tail

T test (Armstrong & Overton, 1977). The test identified no significant differences at

the P<.05 level. Subsequently, eight items from the eight key factors were presented,

as illustrated in Table 5.6. Thus, these respondents were treated as a single data set, as

non-response bias was not evident.

Table 5.6 Significance two-tail test for non-response bias

Factor Factor name Factor code Item code Question Sig two

tail

Analysis

Factor 1 Information availability INFAVL COMINF 4 (2) .86 not sig.

Factor 2 Information usage INFUSE COMINF 6 (2) .20 not sig.

Factor 3 Interactive

communication

INTACT FUNCTN 5 (2) .64 not sig.

Factor 4 International mindset INTMND COMMIT 9 (2) .46 not sig.

Factor 5 Business network usage BUSNET STEREL 10 (2) .38 not sig.

Factor 6 Psychic distance PSYDIS NONATL 11 (2) .20 not sig. Factor 7 Internet intensity INTINS ONLSAL 2 (2) .55 not sig. Factor 8 International market

growth

INTGRO NEWCEX 7a (2) .76 not sig.


5.3 Exploratory factor analysis

The test for internal consistency and reliability of the scale items was carried out

using Chronbach‘s alpha (Chronbach, 1951) in keeping with Churchill‘s (1979)

139

recommendation that test of alpha be the first measure one calculates to assess the

quality of the instrument. In the ‗traditional‘ approach to scale

development/adaptation the next step is to subject the items to exploratory factor

analysis (EFA) prior to SEM to examine each of the proposed model‘s dimensions

(Konecnik & Gartner, 2007). EFA is a statistical procedure aimed to produce a set of

items that identify a single underlying construct - a test of dimensionality and is

appropriate where theory is not substantive (Schumacker & Lomax, 2004). This study

used principle components EFA with a Varimax rotation to assess variables, as this is

the most common process for evaluating factors (Kline, 1994). All major variables

had a Chronbach‘s Alpha coefficient output of >.7, as illustrated in Table 5.7,

indicating the factors had a good level of internal reliability (Pallant, 2001). KMO is

an index that, indicates sample adequacy. KMO values are preferably above .8, but

values of .74 and .72, which are regarded as very good, were achieved and are

illustrated in Table 5.7 (Kline, 1994; Malhotra, 1996).

Table 5.7 Reliability and internal consistency tests

Factor Factor name Factor code Question.

no. items

Chronbach‘s

Alpha

KMO

Factor 1 Information availability INFAVL 4 (5) .89 .86

Factor 2 Information usage INFUSE 6 (5) .89 .81

Factor 3 Interactive communication INTACT 5 (5) .87 .83

Factor 4 International mindset INTMND 9 (6) .90 .88

Factor 5 Business network usage BUSNET 10 (6) .94 .86

Factor 6 Psychic distance PSYDIS 11 (8) .90 .85

Factor 7 Internet intensity INTINS 2 (8) .82 .74

Factor 8 International market growth INTGRO 7 (6) .88 .72


Further, Bartlett‘s test of sphericity was used to examine the correlation matrix,

providing an assessment of statistical correlation between factors (Malhotra, 1996;

Hair, Black, Babin, Anderson & Tatham, 2006). Bartlett‘s test of sphericity should be

significant (p<.05) for the factors to be considered appropriate (Pallant, 2001). This

study all factors were found to be significant (p<.05).

The items within Factor 1: perceived information availability loaded together as a

factor. That is, the multi-item factoring of these items represents the construct

information availability. The KMO was .86 and all items were above .7, as seen in

Table 5.8. The items within Factor 2: information usage also factored, with the KMO

.81 and all items above the critical level of .7. Factor 3: interactive communication

140

had a KMO of .83. However, item 5 was moderate at .69. Some would argue that

above .4 or .6 is a strong factor-loading value (Kline, 1994): therefore, this item was

retained at this point.

The items in Factor 4: international mindset factored well together, with all items

above the level of .7, and a KMO of .88. Factor 5: the use of business networks also

factored, with all items loading above .7 and a KMO of .86. Factor 6: psychic

distance had a two-factor extraction; however, the factor with three items; 1, 2 & 3

(.90, .96 & .89), which all involve language issues and to a lesser extent, cultural

issues in item 4 & 7 (.63 & .66) was theoretically the most plausible. Thus, the factor

was formed with five items; 1, 2 and 3 (.90, .96 & .89), which all involved language

issues and, to a lesser extent, cultural issues in items 4 and 7 (.63 & .66) were adopted

for further analysis in Chapter 6.

Factor 7: Internet intensity factor loaded with two main items, 4 and 5 (.92 & .92).

Items 1–6 had a KMO .76. However, items 7 and 8 were extracted by evaluating the

factor using a Varimax rotation (Kline, 1994). Aspelund & Moen‘s (2004) focus on

international market management and market research was confirmed over the

general activities as advocated by Gibbs & Kraemer (2004). The two items for the

factor of Internet intensity identified were two of the three items found by Aspelund

& Moen‘s research (2004). This finding corroborated items for Internet intensity in;

a. market research and

b. international market management.

In Factor 8: International market growth, the dependent variable had a distinct two-

factor solution. That is, non-English speaking market growth and English-speaking

market growth factored separately. This distinction between perceptions of non-

English and English speaking based international markets was highly evident from

the Stage I case study evaluations, as illustrated in Chapter 4. Thus, the factor is split

into two distinct factors: English speaking market growth and non–English speaking.

141

Table 5.8 EFA measurement model

Expected

relationships Measures Factor

loading

Confirm

disconfirm

Comment

Factor 1 INFAVL Information availability

MKTINF COMINF

CUSINF RESINF SUPINF

Information about the market Information about competitors

Information about international customers

Information about resources Information about international suppliers

.73

.83

.79

.78

.76

Confirmed Items loaded well on factor for perceived information availability. KMO

.86

Factor 2 INFUSE Information usage

MKTINF COMINF

CUSINF RESINF

SUPINF

Use of information about the market

Use of information about competitors

Use of information about international customers Use of information about resources

Use of information about international suppliers

.79

.73

.78

.81

.89

Confirmed Items loaded well on factor for usage of

information. KMO .81

Factor 3 INTACT Interactive communication

EFFINT FREQCY

SPEED

FUNCTN

TIMLESS

An efficient mechanism of communication Greater frequency of communication

Enhanced speed of communication

Multiple interactive functions

Greater distribution communication

.72

.83

.83

.74*

.69*

Confirmed, & modified

Items 4 and 5 were excluded to form a stronger factor. That is, items 1, 2 & 3

KMO .73 with item loadings of .79

(item 1), .80 (item 2), .85 (item 3) would

be preferred

Factor 4 INTMND International mindset

CUSTOM

COMMIT IMPEMP

EXPERC

VISION RAPID

Committed to servicing international customers

Commits both financial and human resources Emphasises importance growth to employees

Views international experience as important

Regards the world as the market Views rapid internationalisation as achievable

.81

.72

.87

.76

.77

.78

Confirmed Items loaded well on factor for

international mindset with a KMO of .88

Factor 5 BUSREL Business networks

CUSREL

STEREL LLAREL

AQNCUS

NEWMKT INTPRF

Maintaining international customer relationship

Strengthening the existing relationships Developing longer lasting relationships

Acquiring new customers

Entering new international markets Enhancing our international performance

.90

.90

.86

.81

.77

.87

Confirmed Items loaded well on factor for business

networks with a KMO of .86

Factor 6 PSYDIS Psychic distance Modified

LMTFRN

NONATL

NOBUSL

DIFCUL

CONEDU

ECODEV UNDERST

FRNKNO

In non English markets

National language

Non-English business language

In countries with different culture

Low education level

Low economic development No staff read, speak and understand languages

Lack of knowledge of markets

.888

.89

.81

.42

.19*

.24*

.46

.21*

.89

.96

.89

.63

.66

There was a two-factor solution.

However, only one factor was

statistically evident. A number of weak

items were identified (items 5, 6 & 8)

with items 1, 2 & 3 loading well

together (.90, .96 & .89.) with loading of .63 & .66 (items 4 & 7) on the same

factor

Factor 7 INTINS Internet intensity Modified

ADVMKT ONLSAL

AFTSAL

MKTRES MKTMAN

ONLPUR

EXCSUP EXCBUS

Advertising and Marketing Online sales

After-sales service and support

Market research International market management

Online purchasing

Exchange of operational data with suppliers Exchange of data with business customers

.58*

.56*

.69*

.58

.66

.55*

.72*

.64*

Confirmed, modified

.91

.85

Two-factor extraction. Items 4 and 5 factored together well, corroborating

findings from Aspelund & Moen 2004.

Items 1, 2 & 3 factored together with items 4 & 5 but were very weak. KMO

.76. Further, items 7 & 8 were identified

as a different factor and excluded at this point.

Factor 8 DV INTGRO international market growth 2 factors

DEVMKT

NEWCEX

PENMKT

DEVMKT

NEWCEX PENMKT

English markets (increasing/decreasing) New customers in new international markets

Acquiring new customers in existing int. markets

Increases product usage of existing int. customers Non-English markets (increasing/decreasing)

New customers in new international markets

Acquiring new customers in existing int. markets Increases product usage of existing int. customers

.76

.75

.74

.81

.86

.83

Modified

.73

.98

.81

.84

.97

.92

Two factors were extracted. There was a clear two-factor solution. Both factors

hung together very well. In hindsight,

this was evident in the case study analysis of firms, as international

strategic growth was perceived as

distinct in non English markets compared to English based markets.

Note: * excluded due to weakness of measure


5.4 Structural equation modelling

Using a confirmatory quantitative analysis helps the convergence of theory post-case

study analysis, as advocated by international marketing researchers Simpson Poon

142

and Paula Swatman (1997) as a means of overcoming the limitations of case study

methodology. Structural equation modeling is not isolated to a single form of

analysis, as the analytical process is made up of confirmatory factor analysis,

covariant analysis and latent variable analysis (Haenlein & Kaplan, 2004; Kline,

2005), with covariance analysis being at the core (Kline, 2005). A theoretical

‗Internetalisation‘ proposed model was developed from the evaluation of the literature

and the analysis and evaluation of Stage I qualitative multiple cases, as seen in Figure

4.11. By verifying constructs and modelling the initial qualitative study (Stage I), a

quantitative process gives statistical generalisability to the research through a

confirmatory process (Eisenhardt, 1989; Dyer, et al., 1991), as outlined in Table 5.9.

Table 5.9 Research design

Research pathway

Time frame/data collection

Stage I Qualitative: Exploration

of case studies 2005–2006

Stage II Quantitative:

Confirmation and testing 2007

Protocol development

Pilot case

Multiple in-depth case interviews

Findings (Stage I)/ literature

Questionnaire development

Pilot and survey


Structural equation modelling (SEM) is used in complex studies that have multiple

variables, such as the interrelationships between internationalisation, Internet

intensity and international market growth in this project. This multivariate approach is

a vehicle in which the researcher can confirm construct theory through direct and

indirect relationships in a holistic manner (Bagozzi, 1994), in this research, from an

outward internationalisation process perspective. That is, SEM provides a higher level

of complexity than more traditional means of multiple variate analysis, as SEM goes

beyond linear relationships (Chin, 1998; Steenkamp & Baumgartner, 2000).

5.4.1 Analytical technique

Structural equation modelling (SEM) integrates traditional econometrics perspectives

with predictions and psychometric theory that model concepts as latent unobserved

variables, which are indirectly inferred from multiple observed measures, also known

as indicators or manifest variables (Chin, 1998). Thus, SEM has allowed social

scientists to not only perform path analytical modelling with manifested variables, but

also with latent variables (Kline, 2005). This has led to structural equation modelling

being recognised as the second generation of multivariate analysis in contemporary

literature (Chin, 1998). SEM goes beyond other statistical techniques—such as

143

multiple regression, multivariate analysis of variance and discriminant analysis—

which share the common limitation of only being able to examine a single construct

relationship at a time (Hair, Anderson, Tatham & Black, 1992). As a consequence,

contemporary social science research has adopted the powerful multivariate-

modelling tool for research in marketing (Baumgartner & Homburg, 1996; Hulland,

et al., 1996; Steenkamp & Baumgartner, 2000), international marketing (Mullen,

Milne & Doney, 1995; Alashban, Hayes, Zinkhan & Balazs, 2002),

internationalisation (Yip, et al., 2000), Internet-related research (Shim, Eastlick, Lotz

& Warrington, 2001; Hoffman, Novak & Schlosser, 2003; Taylor & Hunter, 2003)

and, more recently, Internet internationalisation (Aspelund & Moen, 2004). Further,

using structural equation modelling is recognised as a prudent approach when

evaluating and predicting complex marketing decisions (Steenkamp & Baumgartner,

2000), such as the strategic decisions concerning Internet technology and

international market growth in this research.

A key benefit of using a structural equation model in research compared to traditional

techniques such as component, factor and discriminant analysis or multiple regression

analysis was the ability to give greater flexibility to the relationship between data and

theory (Chin, 1998). That is, SEM provided researchers with the flexibility to model

relationships between multiple prediction and criterion variables, construct

unobservable latent variables (LVs), model errors in measurements for observed

variables (Steenkamp & Baumgartner, 2000), and statistically confirm theoretical and

measurement assumptions against empirical data (confirmatory analysis) (Chin, 1998,

p.7). Another advantage is that SEM can evaluate interrelationships within a set of

variables (Hu, 1997). Thirdly, latent variables (those implied variables) can also be

represented in the model (Hu, 1997). Thus, SEM analysis gives a more precise

prediction of the theoretical construct and an overall accurate holistic perspective

through modelling interrelations. SEM is a theory-orientated method that attempts to

emphasise the transition from exploratory to confirmatory analysis (Hulland, et al.,

1996). That is, SEM provided a method of dealing with multiple relationships

simultaneously while providing statistical efficiency (Hair, et al., 1992). Apart from

these multivariate SEM techniques, other quantitative techniques were used. These

included multivariate construct scale validity and reliability, along with respondent

profile descriptive data, as presented and evaluated in Chapter 6.

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5.5 Summary

In this chapter, the research philosophy of realism in a structural equation modelling

methodology was justified, the benefits and challenges of using Internet surveys

shown, and the prudent use of mixed-mode surveys, phone screening and Internet and

mail surveys, established mixed survey modes have been shown to give better

population representation (Llieva, et al., 2002). Further, both questionnaire design

and administration were scrutinised to establish reliability and validity within the

research. Lastly, the sample frame, selection and processes were highlighted,

indicating proper sampling technique.

145

6.0 CHAPTER 6: QUANTITATIVE ANALYSIS AND EVALUATION

6.1 Introduction

In this chapter, the data set is examined (Section 6.2). Further, both the measurement

model (Section 6.3) and structural models (Section 6.4) are evaluated. The reliability

and validity of the measurement model are assessed, along with relevant model-fit

indices for the proposed and final competing models. As the research is primarily of

an exploratory nature, alternative competing modified models are assessed (Joreskog,

1993; Byrne, 2001). Finally, evaluations and conclusions are drawn from the data

analysed within SEM analysis pertaining to model measurement and structural model

fit (Section 6.5), as outlined in Figure 6.1.

Figure 6.1 Chapter overview


Data preparation (6.2)

Respondent profile (6.2.1)

Missing data (6.2.2)

Measurement model (6.3)

Structural model (6.4)

Conclusion (6.6)

Introduction (6.1)

Normality of data (6.2.3)

Outliers (6.2.4)

Non-response bias (6.2.5)

Confirmatory Factor Analysis (6.3.1)

Hypotheses evaluation (6.5)

146

6.2 Examining and preparation of data

6.2.1 Respondent profile

The respondent firms had an average of 85 employees, with 96% of the firms falling

within the classification of small and medium-sized enterprises (SME) with 1–200

employees (Australian Bureau of Statistics, 2002). Small and medium-sized firms

account for 97% of the business population (Australian Bureau of Statistics, 2004).

Thus, the respondents adequately represented the broader business population in

Australia. Further, the geographical location of the firms was also representative of

the broader Australian business community (Australian Bureau of Statistics, 2007b).

Respondents were drawn from:

New South Wales (35% of respondents) (33.79% ABS, 2007)

Victoria (23.7% of respondents) (25.02 % ABS, 2007)

Queensland (20.7% of respondents) (20.09 % ABS, 2007)

Western Australia (10.4% of respondents) (10.17% ABS, 2007)

South Australia (8% of respondents) (7.13% ABS, 2007)

Tasmania (2.2% of respondents) (1.87% ABS, 2007).

The bulk of respondents were managing directors (30.6%), international and

marketing/sales managers (20%), general managers and other managers responsible

for international decisions (29.7%), as seen in Table 6.1. Respondents also consisted

of owners (8.4%) and chief executive officers, vice presidents, chief organisational

officers and chief marketing officers (10.2%).

Table 6.1 Respondent profile characteristic size, position and location summary

Profile Mean Parameters No. of

respondents

Percentage (%)

Size 85 staff 1–5

6–19

20–200

200+

Missing

Total

66

76

71 9

2

224

29.5

28.2

38.2 4

1

29.5

57.8

96.0 100

Respondent

Owner

CEO/CFO/COO/VP

Int./ marketing manager

Manager (GM & other)

Managing directors

Missing

Total

19 23

45

67 69

1

224

8.4 10.2

20

29.7 30.6

.5

Location State/Territory Respondents ABS (2007)

147

NSW

VIC

QLD

WA

SA

TAS

Missing

Total

78

53

46 23

18

5 1

224

35.0

23.7

20.7 10.4

08.0

02.2 .5

33.79

25.02

20.09 10.17

07.13

01.87

Note: N=224


The annual mean revenue was $28 million. The majority of firms made less than $5

million per annum (68.5%), with 87.6% making less than $20 million. Further, the

mean number of international markets was 15. That is, the average firm had

customers in 15 country markets, with the vast majority of firms (82.3%) having less

than 20 markets. The predominant country markets were the United States of

America, New Zealand, the United Kingdom, Singapore, Hong Kong, Papua New

Guinea and Japan. Further, Asian countries formed the bulk of the main country

markets, accounting for 39%, as seen in Appendix M. The proportion of annual

turnover from international markets was 38%, with the vast majority recording an

international turnover accounting for more than 49% of their turnover (65.6%), as

seen in Table 6.2.

Table 6.2 Respondents’ profile international market characteristic summary

Profile Mean Parameters No. Percentage% Cumulative %

Annual turnover $28m $1m

$1–5m

$5–20m

$20–100m

$100m+

Missing

Total

61

60 34

14

8 47

224

34.3

34.2 19.1

07.9

04.5 21

34.3

68.5 87.6

95.5

100.0

International

percentage of

annual revenue

(%)

38 1–5%

6–15%

16–49%

50–100%

Missing

Total

36 41

62

72 13

224

17.2 19.6

28.8

34.4 7

17.2 36.8

65.6

100.0

International

markets

15 markets 1–2 markets

3–5 markets

6–10 markets

10–20 markets

20 + markets

Missing

Total

21

75 47

35

38 8

224

9.3

34.9 21.8

16.3

17.7 4

9.3

44.2 66.0

82.3

100.0

Main country

markets

Top 7 main countries

United States

New Zealand

United Kingdom

Singapore

Hong Kong

Papua New Guinea

Japan

Missing

43 37

25

16 13

12

9 2

19.54 16.81

11.36

7.27 5.90

5.45

4.09 1

Note: N=224


148

The year in which firms had been established age ranged from 1833 to 2006. The

average age of firms was 22 years, with the majority (90%) established after 1981.

Respondents had a mean of 10 years experience with the firm and 16.6 years within

their industry, highlighting that they were data-rich respondents. The mean age of

respondents was 45 years of age, with the range from 22 to 83 years of age, as seen in

Table 6.3.

Table 6.3 Respondents profile age and experience characteristic summary

Profile Mean Parameters No. Percentage% Cumulative %

Experience

Year firm

established

1986 Pre–1950

1951–1980

1981–2000

2001–2006

Missing

Total

13 31

131

43 6

224

6.0 14.4

59.7

19.9 2

6.0 20.4

80.1

100.0

Industry

experience

16.6 years 1–3 years

4–6 years

7–15 years

16+ years

Missing

Total

17

26 76

105

0 224

7.7

11.4 34.1

46.8

0

7.7

19.1 53.2

100.0

Firm experience 9.97 years 1–3 years

4–6 years

7–5 years

16+ years

Missing

Total

52

41 86

45

0 224

23.3

18.3 38.3

20.1

0

23.3

41.6 79.9

100.0

Age of

respondent

45.3 years 18–25 years

26–35 years

36–45 years

46–60 years

60+ years

Missing

Total

6

35 68

99

14 2

224

2.8

15.8 30.7

44.2

6.5 .5

2.8

18.6 49.3

93.5

100.0

Note: N=224


Internet use profile

All firms used the Internet for e-mail, with 89.2% of firms using e-mail extensively in

their business and zero firms recording no use, as seen in Table 6.4. In contrast,

personal consumer web-space was not used by 42.7% of firms, and only 12.3% of

firms used the technology extensively. Intranet use was polarised: 32.7% of firms

used intranets extensively and 33% of firms did not use them at all. These findings

indicated a complex Internet usage profile beyond simple e-mail and website usage.

More specifically, firms used e-mail and websites extensively. However, firms used

consumer personal web-space (57.3%); online support systems, such as auto-response

and tracking systems (68%); intranet systems (66.4%); online transactional facilities

(56.1%); Internet directories (88.7%) and Internet marketplaces (63.5%), showing

149

diversity in usage and types of Internet technology. The high use of Internet

directories and Internet marketplaces showed a level of sophistication not captured

previously in the literature. These third-party websites created access to a broad

customer base that was not possible without the Internet, highlighting the extensive

use of virtual intermediaries.

Table 6.4 Respondent profiles Internet usage characteristic summary

Internet activity No use

(%) 2

(%)

3

(%)

4

(%)

5

(%)

6

(%)

Extensive

use (%)

Mean

(#)

e-mail

0.0 0.0 0.9 1.8 2.8 5.2 89.2 6.80

Website

4.1 4.6 5.5 11.4 10.5 15.1 48.9 5.61

Personal web-space

42.7 13.6 10.0 7.3 7.7 6.4 12.3 2.93

Online support systems, e.g.

auto response

32.0 16.2 11.3 9.9 7.2 6.8 16.7 3.33

Intranet system

33.6 6.8 1.8 9.5 6.8 8.6 32.7 4.06

Transaction facilities, e.g.

shopping cart

43.9 9.4 5.4 9.9 11.2 6.3 13.9 3.09

Internet directories, e.g.

yellowpages.com.au

11.3 9.0 11.3 16.7 12.6 15.8 23.4 4.52

Internet marketplaces, e.g.

ebay.com

36.5 12.6 10.8 12.6 7.7 7.2 12.6 3.15

Note: N=224


6.2.2 Missing data

It was imperative to reduce and appropriately manage missing data, as missing data

can bias conclusions drawn (Byrne, 2001). Kline (1998) argues that missing data

should constitute less than 10% of the total valid responses. Of the 224 valid

responses received, missing data constituted less than 1% of the data items (cells).

While this was a positive outcome, strategies were needed to manage the missing

data. Mean replacement listwise or pairwise missing data replacement was

inappropriate for this study given the use of SEM, as within SEM a covariance matrix

is used for output (Byrne, 2001).

A maximum likelihood (ML) estimate is a well-established estimate imputation

method (Kline, 2005). It has been argued that ML is the best method for replacing

missing values, as it produces the least amount of bias in missing value replacement

(Byrne, 1994; Arbuckle, 1996; McDonald & Ho, 2002; Enders, 2006). For this study,

150

an ML technique implemented in SPSS (Version 16) was used to replace missing

data.

6.2.3 Normality of data

No extreme values were present in the data. Violating the assumption of normally

distributed data in multivariate analysis has adverse effects on goodness-of-fit indices

and standard error estimates (Hulland, et al., 1996). Two descriptive measures can

assess non-normal data: skewness and kurtosis (Hair, et al., 2006). Skewness is the

non-symmetrical shape of the data from the mean, whereas kurtosis is the measure of

relative peakness or flatness of the curve (Malhotra, 1996). Extreme skewness for

variables is usually considered to have an absolute value skew index of > 3.0 (Kline,

2005). This study did not exhibit extreme skewness or kurtosis, as presented in

Appendix I.

6.2.4 Outliers

As factor analysis and therefore SEM are susceptible to outliers, it was prudent to

exclude outliers from the data set. One record (Response 13) was identified as an

outlier due to insufficient data (44% missing). Further, univariate and multivariate

outlier analyses were conducted.

Within a univariate outlier analysis, there is no single definition of what constitutes

an outlier. However, the common rule is that more than three standard deviations

away from the mean may indicate an outlier (Kline, 2005). In a multivariate outlier

evaluation, extreme scores are identified on two or more variables (Kline, 2005). One

method of multivariate outlier evaluation is the Mahalanobis distance (D) statistic D²

(Tabachnick & Fidell, 1996), which highlights individual cases that deviate from the

centroid (Kline, 2005), or extreme cases distinct from the population (Hair, et al.,

2006). The Mahalanobis process is a discriminate analysis that assesses the distance

between the closest groups (Malhotra, 1996). Several outliers were identified in a

Mahalanobis analysis. Under closer inspection of these supposed outliers, no truly

aberrant observations were evident (Hair, et al., 2006). Thus, apart from respondent

13, no outliers were excluded, as presented in appendix I.

151

6.3 Measurement model

A two-stage SEM approach was adopted as the theoretical framework is not

extensively developed (Schumacker & Lomax, 2004). That is, considering the

theoretical goal of this research was to identify interrelationships, a two-stage

approach was appropriate. In the two-stage SEM approach, a measurement model

evaluation (Stage I) and then a full structural model evaluation (Stage II) were used to

assess the interactions of constructs. Stage I used a congeneric model for maximum

reliability. The re-specification of a structural equation model is common in practice;

however, this should not be done using statistical informational alone, as theory is at

the centre of any re-specification (Anderson & Gerbing, 1988). Any re-specification

was done with careful consideration of the theory. Due to this re-specification of the

SEM model, the output becomes primarily an exploratory with confirmatory elements

(Anderson & Gerbing, 1988).

6.3.1 Confirmatory factor analysis (CFA)

A confirmatory factor analysis tests the uni-dimensionality of each factor, so as to

establish a valid measurement model (Byrne, 2001; Kline, 2005). Further, construct

validity was assessed within the CFA (Yang & Yoo, 2004). That is, convergent

validity was deemed to be adequate, as factor loading scores were at the acceptable

levels of .7 (Yang & Yoo, 2004). Secondly, where a four item solution was evident, a

composite construct reliability was also performed to test for internal validity, with

the rule of thumb being that a score above .7 highlighted a good level of internal

consistency, which was adopted in this study (Hair, et al., 2006). Thirdly, where a

four item solution was evident an extracted variance test was also performed to assess

convergence. That is, a score of .5 or above indicated adequate construct convergence

or internal consistency (Hair, et al., 2006). Lastly, a chi-squared comparison

discriminant validity test was performed to assess differentiation of factors of the

final modified model (Bagozzi, Yi & Phillips, 1991).

Model fit indices supplied an average fit of the model that helped to formulate a

theoretical confirmation of the model interrelations. A single-model index may be

limited, as part of the model may be a bad fit; therefore, multiple indicators were used

to establish a good model. That is, a combination of measures, including, Chi-squared

Normed (CMIN), P value (P), Goodness of fit index (GFI), Tucker-Lewis index

152

(TLI), Comparative fit index (CFI), Root Mean-squared Residual (RMR),

Standardised Mean-squared Residual (SRMR) and Root Mean-Square Error of

Approximation (RMSEA) were used to establish the model, as using a single

indicator would not assure model fit (Kline, 2005). This is illustrated in Table 6.5.

Researchers use different fit indices depending on publication preferences and may

mask indices that are unfavourable (Kline, 2005). However, this research was

predominantly exploratory in nature and even unfavourable findings were of interest

to the researcher. Thus, all major indices were presented and evaluated in this

research.

Table 6.5 Model fit indicators Indicator Definition Acceptable level

CMIN Chi-squared normed (CMIN)

Model fit based on chi square

Ratio between chi square and degrees of

freedom

0 to 2.0

P-value Accept: support context

P-value should be non-significant

P-value>. 01 not significant

GFI Goodness-of-fit index Greater than .95, although greater than .90 indicates

a reasonable fit

TLI Tucker-Lewis Index: Greater than 1

indicates a lack of parsimony or over-

specification

Greater than .95, although greater than .92 indicates

a reasonable fit.

CFI Comparative fit index Greater than .95, although greater than .92 indicates

a reasonable fit.

RMR

SRMR

Root Mean-squared Residual

Standardised Mean-squared Residual

RMR and SRMR <.10 Large values may indicate

outliers in raw data.

RSMEA Root Mean Square Error of

Approximation

RMSEA<.10, although values between .05 & .08

indicate better fit

Source: adapted from Byrne (1994); Hu & Bentler (1999); Kline (2005) and Hair et

al. (2006)

Normed Chi-squared (CMIN). The statistic was based on a chi-squared model, also

known as the chi-squared likelihood ratio or generalised likelihood ratio to evaluate

the model fit (Kline, 2005). The chi-squared measure-of-fit was based on the chi-

squared that quantified the estimated covariance matrix with the observed covariance

matrix (Hair, et al., 2006). The chi-squared norm or CMIN is the ratio between the

chi- squared and the degrees of freedom (Byrne, 2001; Kline, 2005). Although CMIN

is affected by very large sample sizes (Kline, 2005; Hair, et al., 2006), the sample size

in this research was not large enough to adversely affect this test. There are no clear

guidelines to minimal acceptance of CMIN: however, the general rule is that below

2.0 and even up to 5.0 is acceptable. However, below 2.0 is preferable and was

adopted in this study (Kline, 2005).

153

P value. Normally, researchers require p-values to be significant. Conversely, within

SEM the smaller the p-value, the greater the chance the observable sample and

estimated covariance matrices are not equal (Hair, et al., 2006). This is an accept-

support context hypothesis for theory testing, as opposed to the usual reject-support

context for statistical testing (Kline, 2005). Thus, the p-value should not be

significant at the level of .05.

Goodness of Fit Index (GFI). A goodness-of-fit index was developed because of

potential unreliability of the chi-squared method (Byrne, 2001). The GFI measures

the relative amounts of variance and covariance. It is an absolute index that compares

the hypothesised model with no model at all (Hu & Bentler, 1999). The GFI is a fit

statistic that is less sensitive to sample size, which has a range between 0 and 1

(Bentler, 1990). GFI values greater than .90 typically indicate good fit (Byrne, 2001;

Hair, et al., 2006); however, .95 is preferable (Hair, et al., 2006) and was adopted in

this study.

Tucker-Lewis Index (TLI). The TLI is also known as the non-normed fit index

(Kline, 2005). It is similar to the CFI in that it involves a mathematical comparison

between a measurement model and a baseline model (Hair, et al., 2006). The TLI can

fall outside 0 and 1, as it is not normed. Models approaching 1.0 are considered better

models than those with lower values (Byrne, 2001; Hair, et al., 2006). More

specifically, Hair et al. (2006) advocate that the TLI and CFI should be larger than .92

if the sample size is less than 250 and the number of variables greater than 30. An

index of above .95 is preferable (Hair, et al., 2006) and was adopted for this study.

Comparative fit index (CFI). CFI is an incremental fit index that is an improvement

on the normed fit index (NFI), which has limitations of over-estimations in small

sample sizes. Thus, the CFI was used in this research rather than the NFI, as CFI does

not assume zero error (Byrne, 2001; Kline, 2005; Hair, et al., 2006). The CFI is

among the most widely used indices, with a range from 0 to 1. CFI, like all

incremental-fit indices, assesses relative improvement in fit of the researcher‘s model

compared to a baseline model (Kline, 2005). Values of less than .90 do not usually

indicate model fit (Hu & Bentler, 1999; Kline, 2005; Hair, et al., 2006). An index of

.95 is preferable (Kline, 2005) and was adopted in this study.

154

Root Mean Residual and Standardised Root Mean Residual (RMR and SRMR).

The RMR and SRMR are based on covariance residuals that evaluate the difference

between observed and predicted covariance (Kline, 2005). RMR is a measure of the

mean absolute value of covariance residuals, whereby values less than .10 are

generally considered favourable (Kline, 2005). One problem with RMR is that

interpreting RMR may be difficult if different scales are used. In this case a

standardised RMR was used, an SRMR (Kline, 2005). An SRMR represents the

average value across all standardised residuals ranging from 0 to 1 (Byrne, 2001).

Kline advocated a value of less than .10 for a good fit indicator (Kline, 2005). Thus,

SRMR was used as a model-fit tool rather than RMR, as SRMR is more interpretable.

Root Mean Square Error of Approximations (RMSEA). The RMSEA is a

‗badness-of-fit index‘ (Kline, 2005 p. 138), which represents how well a model fits

the population, not just the sample used for estimation (Byrne, 2001; Kline, 2005;

Hair, et al., 2006). The approximation attempts to correct for both model complexity

and sample size by including each in the computation (Hair, et al., 2006). Lower

values of RMSEA indicate a better fit. Typically, values under .10 are considered

acceptable, with >.05 indicating close fit. RMSEA values between 0.03 and 0.08,

giving a 95% confidence interval, are preferable (Hair, et al., 2006) and was adopted

in this study.

After the model indicators had been established (CMIN, P-value, GFI, CFI, TLI,

SRMR and RMSEA), those indicators were used to interpret the confirmatory factor

analysis for each factor, which will be assessed next.

Information availability (Factor 1)

Items drawn from Hamill and Gregory (1997) (items 1–3) were confirmed. That is,

information pertaining to markets, competitors, customers as well as information

pertaining to suppliers (Item 5) drawn from Torre and Moxon (2002) for the construct

‗information availability‘. A correlation between items 4 and 5—information

pertaining to resources and suppliers—was evident when evaluating the indicators.

Information pertaining to resources was more complex than simple information

availability. Therefore, item 4, ‗information pertaining to resources‘ was excluded.

155

The model CMIN normed chi-squared ratio with degrees of freedom was .942, p-

value .390, GFI .996, TLI .1.001, CFI 1.000, SRMR .0115 and RMSEA .000, as

presented in Table 6.6. Thus, the theoretical re-specification of the model improved

Factor 1 to fall within acceptable parameters. Item factor loadings ranged from .71 to

.87, with construct reliability for the factor of .79—above the acceptable score of

greater than .70 (Hair et al. 2007). Convergent validity was also within the acceptable

level of greater than .50 (Hair et al. 2007), as the variance-extracted score was .61.

Table 6.6 Summary of initial findings (CFA): information availability (F1)

Question

Item

Item wording

Initial

standardised

loadings

Final

Standardised

loadings

INFAVL 1 Information about international market/s is

available .74 .75

INFAVL 2 Information about competitors is available

.84 .87

INFAVL 3 Information about international customers

is available .80 .79

INFAVL 5 Information about international suppliers

is available .76 .71

Excluded INFAVL 4 Information about international resources

needed to produce goods or services is

available

.78

Achieved fit indices

CMIN/DF

(χ ²/DF)

RMSEA GFI CFI TLI SRMR P p-

value Initial 19.806/ 5

3.961 .115 .964 .975 .949 .0306 .001

Final 1.883/ 2

.942

.000 .996 1.000 1.000 .0115 .390

Composite Construct Reliability .79: Variance extracted (convergent validity) .61


Information usage (Factor 2)

The three items measuring ‗information usage‘, the usage of; market, resources and

suppliers‘ information captured the concept of information usage. Thus, these three

items captured a more complex version of information, confirming items

predominantly drawn from Torre and Moxon (2002) as opposed to Hamill and

Gregory (1997). This is, items relating to processed and analysed information

pertaining to the market, resources and suppliers were captured as the concept of

information usage, with factor loadings of .61, .85 and .96 respectfully. Item factor

loading weights ranged from .61 to .96, as presented in Table 6.7. Although

156

information usage pertaining to market information .61 falls outside of the accepted

.70, it is prudent to take this item forward to the full structural model for a more

precise analysis.

Table 6.7 Summary of initial findings (CFA): information usage (F2)

Question

item

Item wording Initial

standardised

loadings

Final

Standardised

loadings

INFUSE 1 In my firm, we use information about international market/s.

.74 .61

INFUSE 4 In my firm, we use information about

international resources needed to produce

products or services.

.86 .85


international suppliers. .88 .96

Excluded INFUSE 2 In my firm, we use information about

competitors. .69


international customers. .74


CMIN/DF

(χ ²/DF)


value

Final 77.875/ 5

15.575

.256 .864 .893 .787 .256 .000


Interaction communication (Factor 3)

Items 1-3 were found to factor for the concept of interactive communication. That is,

efficiency of communication .79, frequency of communication .78 and speed of

communication .85 were found to be representative of the factor interactive

communication, as presented in Table 6.8. The item, multiple functions of

communication (item 4) was correlated with items 1, 3 and 5. Thus, multiple

functions as a component of interactive communication was excluded. The

efficiencies, frequency and speed of interactive communication are core items of

interaction based on communication drawn from the literature, as opposed to specific

Internet interaction espoused by Yuping (2003) and Brock and Yu (2005).

157

Table 6.8 Summary of initial findings (CFA): Interactive communication (F3)

Question

item


standardised

loadings

Final

Standardised

loadings

INTACT 1 In my firm, we have an efficient mechanism(s)

of communication .74 .79

INTACT 2 In my firm, we have a high frequency of

communication. .83 .78

INTACT 3 In my firm, we have fast speed of communication.

.83 .85

Excluded INTACT 4 In my firm, we have multiple functions for

interactive communication. .73

INTACT 5 In my firm, we have the ability to distribute

communication (e.g. website—24/7) .67


CMIN/DF

(χ ²/DF)


value Final 36.191/5

7.238

.167 .939 .943 .887 .0480 .000


International mindset (Factor 4)

Items 1, 3, 4, and 6 were confirmed to factor for the construct international mindset.

Items were drawn studies from Moen (item 1), Asplelund and Moen (2004) (item 3)

and a traditional internationalisation study by Numella et al (2004). However, items 2

and 5 by Aspelund and Moen (2004) correlated with similar questions. The item for

finance and human resources (item 2) correlated with other measures, such as items 1

(commits to service), 3 (emphasises importance of growth) and 5 (regards the world

as a market). Thus, item 2 was excluded. Further, Item 5, ‗regards the world as a

market‘, correlated with views that rapid internationalisation was achievable (Item 6).

Item 6, ‗perceptions of rapid internationalisation‘ captured the essence of

international vision more precisely than the global mindset item (Item 5). Thus, Item

5 was excluded.

Because of the model re-specification, the model CMIN normed chi-squared ratio

with degrees of freedom was 1.961, p-value .141, GFI .991, TLI coefficient .988, CFI

.996, SRMR .0160 and RMSEA .066, as presented in Table 6.9. Thus, the theoretical

re-specification of the model improved Factor 4 ‗international mindset‘ to fall within

acceptable model fit parameters.

158

Table 6.9 Summary of initial findings (CFA): International mindset (F4)

Question

Item


standardised

loadings

Final

Standardised

loadings

INTMND 1 The firm is committed to servicing

international customers. .82 .80

INTMND 3 The firm emphasises the importance of

international growth to employees. .88 .89

INTMND 4 The firm views managerial international

experiences as important for entering overseas

markets.

.75 .76

INTMND 6 The firm views fast international market growth as achievable.

.78 .78

Excluded INTMND 2 The firm commits sufficient financial and

human resources to international market(s.) .76

INTMND 5 The firm regards the world as the market.

.77


CMIN/DF

(χ ²/DF)



5.388

.140 .930 .954 .954 .0391 .000

Final 3.923/ 2

1.961

.066 .991 .996 .988 .0160 .141



Business networks (Factor 5)

The items captured were drawn from a single study by Wu et al (2003), which had a

primary focus on relationships. Item 5, ‗due to business networks, the firm enters new

international markets‘, correlated with item 6 (enhances international performance),

item 2 (strength of relationship), item 3 (longer-lasting relationships) and item 4

(acquisition of new customers). Thus, items 5 and 6 were excluded.

Because of the model re-specification, the model CMIN normed chi-squared ratio

with degrees of freedom was .640, p-value .527, GFI .997, TLI coefficient 1.003, CFI

1.000, SRMR .0053 RMSEA .000, as presented in Table 6.16. Thus, the theoretical

re-specification of the model provided acceptable model-fit parameters.

Table 6.10 Summary of initial findings (CFA): business relationship usage (F5)

Question

item


standardised

loadings

Final

Standardised

loadings

BUSREL 1 We use business networks to maintain

international customer relationships. .90 .87

159

BUSREL 2 We use business networks to strengthen

existing relationships. .93 .97

BUSREL 3 We use business networks to develop longer-

lasting relationships. .90 .92

BUSREL 4 We use business networks to acquire new

customers. .80 .78

Excluded BUSREL 5 We use business networks to enter new

international country market/s. .74

BUSREL 6 We use business networks to enhance our

international performance. .85


CMIN/DF

(χ ²/DF)

RMSEA GFI CFI TLI SRMR P- p-


21.159

.301 .772 .867 .779 .608 .000

Final 1.280/ 2

.640

.000 .997 1.000 1.003 .0053 .527



Psychic distance (Factor 6)

The concepts of language and cultural elements of psychic distance were captured in

the construct. Items 5 (low education), 6 (low economic), 7 (understanding) and 8

(lack of knowledge) were not captured in the factor psychic distance. That is,

language and culture elements captured the concept of psychic distance as opposed to

those elements of economics and education (O'Grady & Lane, 1996). Thus, these

items were excluded from the model.

After the model re-specification, the model CMIN normed chi-squared ratio with

degrees of freedom was 1.841. p-value 159, GFI .992, TLI coefficient .993, CFI .998,

SRMR .0133 and RMSEA .061. Thus, the theoretical re-specification of the

improved model provided acceptable model fit parameters, as presented in Table

6.11.

Table 6.11 Summary of initial findings (CFA): psychic distance (F6)

Question

item


standardised

loadings

Final

Standardised

loadings

PSYDIS 1 Customer acquisition is limited in non-English

language speaking country markets. .89 .89

PSYDIS 2 Customer acquisition is limited … when

English is not the national language. .95 .97

PSYDIS 3 Customer acquisition is limited … when

English is not the business language. .89 .88

160

PSYDIS 4 Customer acquisition is limited … when the

country has a different culture. .65 .62

Excluded PSYDIS 5 Customer acquisition is limited … when there

is a low level of education in that country. .52

PSYDIS 6 Customer acquisition is limited … when there

is a low level of economic development in that

country.

.52

PSYDIS 7 Customer acquisition is limited … when no

staff in the firm read, speak or understand the

language from the customer’s country.

.67

PSYDIS 8 Customer acquisition is limited … when there

is a lack of knowledge about international

market consumers.

.46


CMIN/DF

(χ ²/DF)

RMSEA GFI CFI TLI SRMR P-

value Initial 275.237/20

12.242

.239 .729 .791 .708 .1261 .000

Final 3.682/ 2

1.841

.061 .992 .998 .993 .0133 .159



Internet intensity (Factor 7)

As identified earlier in the EFA, Factor 7 has a two-factor solution, whereby

Aspelund & Moen‘s (2004) measures were statistically more relevant for this

research than those of Gibbs and Kraemer (2004). That is, the factor identified is the

core of Aspelund and Moen (2004)—market research (.71) and marketing

management (.96), as presented in Table 6.12. Thus, a two-item solution was the best

representation of the concept Internet intensity. That is, the concept of digitalisation

was not captured through Internet usage items.

Table 6.12 Summary of initial findings (CFA): Internet intensity (F7)

Question

item


standardised

loadings

Final

Standardised

loadings

INTINS 4 The firm uses the Internet for market research.

.63 .71

INTINS 5 The firm uses the Internet for management of

international market. .70 .96


International growth (Factor 8)

Items 1–3 were found to factor. That is, item factor loadings for new customers in

new country market/s (.73 in English model: .84 in non-English model), new

161

customers in existing country market/s (.98 in English model: .98 in non-English

model) and usage by existing customers in country market/s (.81 in English model:

.92 in non-English model) were found to capture the construct of international market

growth, as presented in Table 6.13.

Table 6.13 International market growth: English speaking markets (F8)

Question

item


standardised

loadings

Final

Standardised

loadings

INTGROE 1 Over the last 10 years, our sales to

predominantly English-speaking country

markets increase/decrease in new customers

in new country market/s.

.73 .73

INTGROE 2 Over the last 10 years, our sales to



in existing country market/s.

.98 .98

INTGROE 3 Over the last 10 years our sales to


markets increase/decrease in usage by existing

customers in country market/s.

.81 .81

Question

item


standardised

loadings

Final

Standardised

loadings

INTGRONE 1 Over the last 10 years, our sales to

predominantly non-English-speaking country


in new country market/s

.84

.84

INTGRONE 2 Over the last 10 years our sales to



in existing country market/s.

.98

.98

INTGRONE 3 Over the last 10 years, our sales to


markets increase/decrease in usage by existing

customers in country market/s.

.92

.92


Measurement model discussion

Along with adequate factor loading weights, indicators highlighted the reliability and

convergent validity of the measures in the model. That is, where it was possible to

test (more than a three item solution) reliability composite scores all fell within the

acceptable parameter of above .7, as argued for by Hair et al. (2006)

[(SUM(sli))2]/[(SUM(sli))

2 + SUM(ei))], because composite reliability scores ranged

from .74 to .89. Further, all variance-extracted scores also fell within the parameters

of above .5 as argued for by Hair et al. variance extracted = [(SUM(sli2)]/[(SUM(sli

2)

162

+ SUM(ei))] and based on latent model-convergent validity evaluations with

measurement error (Fornell & Larcker, 1981). That is, all variables had variance-

extracted scores ranging from .61 to .83, falling within acceptable levels and

highlighting convergent validity, as outlined in Table 6.14.

Table 6.14 Summary of measurement model fit statistics

Fit measures

Measurement

model

Overall model fit Composite

reliability Model fit Model comparison

CMIN/DF RMSEA GFI CFI TLI SRMR

Information

availability

.942 .000 .996 1.000 1.000 .0115 .79

Information usage Only a three-item solution

Interactive

communication

Only a three-item solution

International

mindset

1.961 .066 .991 .996 .988 .0160 .80

Business

relationships

.640 .000 .997 1.000 1.003 .0053 .80

Psychic distance 1.841 .061 .992 .998 .993 .0133 .79

Internet intensity Only two-item solution

International

(English) market

growth


International (non-

English) market

growth


Note * only two or three items—statistics should be considered with caution


Now the full structural model will be assessed.

6.4 Full structural model evaluation

The full structural model process evaluated internetalisation from both an English-

speaking market model and non-English speaking market model through; a saturated

model analysis, the proposed model from section 6.3, and a competing model. Within

a saturated model with all factors interconnecting, researchers can assess the

contribution and/or level of contribution of a particular factor (Hox, 2002). As such,

there was an argument for performing a saturated model assessment (Byrne, 2001).

Firstly, a fully saturated mediated model was evaluated primarily to explore and

understand the interrelationships in the model (Byrne, 2001). Multiple mediation

effects were explored to assess interrelationships in a larger theoretical context

163

(Mathieu, DeShon & Bergh, 2008). In this study, it has been proposed that the

‗Internet intensity‘ of the firm mediates multiple factors. Thus, a fully saturated

model is presented next.

Saturated model

English market model (Model 1): The fully saturated English speaking market

model fit indicators highlighted model-fit normed chi-squared (2.133), SRMR .071

and a RSMEA that indicates reasonable fit (.0644). However, other indicators of

model fit highlighted deficiencies in the model. For example, p-value 0.00

(significant), GFI .824, TLI .902, and CFI .914 indicating poor model fit overall, as

outlined in Table 6.15 and Appendix J. These findings highlighted that the model had

significant covariance. However, findings also highlighted non-significant

interrelationships.

Non-English market model (Model 2): The fully saturated model highlighted the

CMIN normed chi-squared ratio with degrees of freedom was 2.198, GFI .826, TLI

coefficient .905, CFI .918, SRMR .1350 and RMSEA .073, as presented in Table

6.21. These findings indicate covariance, but not good model fit.

Table 6.15 Summary of full-saturated model fit statistics

Model

Overall fit

P value<.01 Model fit indices

χ ² /DF

CMIN < 3

RMSEA

>.10

GFI

>.92

CFI

>.92

TLI

>.92

SRMR

<.10

Saturated model

Saturated English

Model 1

631.253/ 296

2.133

.071 .832 .920 .906 .0644 .000

Saturated non

English Model 2

602.796/ 296

2.036

.068 .840 .931 .918 .0609 .000

Note: Indicators of model fit as outlined in Table 6.9: CMIN/DF <3; GFI>.90; TLI>.92; CFI>

.92; SRMR<1.0; RMSEA<1.0; P>.01


Proposed model

English speaking market model (Model 1):

The proposed model that was postulated at the conclusion of Chapter 4 yielded a

CMIN normed chi-squared ratio with degrees of freedom of 2.292, GFI .818, TLI

coefficient .892, CFI .906, SRMR .1348 (SRMR) and RMSEA .076 (RMSEA), as

164

seen in Figure 6.2. The proposed model demonstrated covariance between factors

with some good model fit indicators; however, P-value, GFI, CFI, TLI and SRMR did

not indicate good model fit, as is presented in Table 6.16.

Figure 6.2 Proposed model (English speaking-Model 1)

.00

INFAVL

.53

4 [5]e1

.73

.64

4 [3]e2

.80

.72

4 [2]e3.85

.57

4 [1]e4.76

.24

INTGRO E

.67

7a [3]

e5

.82.89

7a [2]

e6

.94.55

7a [1]

e7

.74

.28

INTINS

.46

RES e8.68

.97

MNG e9

.99

e10

.33

INFUSE

.86

6 [5]

e12

.77

6 [4]

e13

.46

6 [1]

e14

.93.88.68

.11

INTACT

.71

5 [3]

e16

.66

5 [2]

e17

.63

5 [1]

e18

.84.81.79

.01

INTMND

.63

9 [6]

e19

.59

9 [4]

e20

.77

9 [3]

e21

.62

9 [1]

e22

.79.77.88.79

.22

BUSREL

.60

10 [4]

e23

.85

10 [3]

e24

.93

10 [2]

e25

.76

10 [1]

e26

.78.92.97.87

PYSDIS

.79

11 [1] e27.94

11 [2] e28.77

11 [3] e29.39

11 [4] e30

.89

.97

.88

.62

.03

.26.29 -.06

.14 .15.03

e31

chi-square=699.147

df305

p=.000

gfi.818

tli=.892

cfi=.906

rmsea=.076

caic=1167.197

.06-.08 .25 .34 .11

.08

.05-.08

.47

.57 .25

.11

e32

e33 e34 e35 e36


Table 6.16 Summary of proposed structural model fit statistics

Model

Overall fit

P value<.01 Model fit indices

χ ² /DF

CMIN < 3

RMSEA

>.10

GFI

>.92

CFI

>.92

TLI

>.92

SRMR

<.10

Proposed model analysis

Proposed English

Model 1

699.147/ 305

2.292

.076 .818 .906 .892 .1348 .000

Proposed non

English Model 2

670.507/ 305

2.198

.073 .826 .918 .905 .1350 .000


.92; SRMR<1.0; RMSEA<1.0; P>.01


165

Non-English speaking market model (Model 2):

The proposed non-English market model (Model 2) yielded CMIN normed chi-

squared ratio with degrees of freedom of 2.198. GFI .826, TLI .905, CFI .918, SRMR

.1350 and RMSEA .073, as seen in Figure 6.3. The proposed model demonstrated

interrelationships or covariance between factors with some good model fit indicators;

however, P-value, GFI, CFI, TLI and SRMR indicated poor model fit.

Figure 6.3 Proposed model (non English-Model 2)

.00

INFAVL

.53

4 [5]e1

.73

.64

4 [3]e2

.80

.71

4 [2]e3.84

.58

4 [1]e4.76

.32

INTGRO NE

.86

PEN

e5

.93.93

NEW

e6

.97.70

DEV

e7

.84

.29

INTINS

.46

RES e8.68

.97

MNG e9

.98

e10

.33

INFUSE

.87

6 [5]

e12

.77

6 [4]

e13

.46

6 [1]

e14

.93.88.68

.11

INTACT

.72

5 [3]

e16

.64

5 [2]

e17

.62

5 [1]

e18

.85.80.79

.01

INTMND

.62

9 [6]

e19

.59

9 [4]

e20

.77

9 [3]

e21

.62

9 [1]

e22

.79.77.88.79

.22

BUSREL

.60

10 [4]

e23

.85

10 [3]

e24

.93

10 [2]

e25

.76

10 [1]

e26

.78.92.97.87

PYSDIS

.79

11 [1] e27.94

11 [2] e28.78

11 [3] e29.39

11 [4] e30

.89

.97

.88

.62

-.01

.26.29 -.05

.14 .15.03

e31

chi-square=670.507

df305

p=.000

gfi.826

tli=.905

cfi=.918

rmsea=.073

caic=1138.557

-.07.09 .03 .46 .13

-.17

.05-.08

.47

.57 .25

.11

e32

e33 e34 e35 e36


Competing model: ‘Internetalisation’

When working with SEM, it is important to know when to stop fitting the model.

Although there is no set rule as to when a researcher should stop modifying the

model, Byrne (2001) advocates the researcher should consider some key issues.

Firstly, the researcher should consider the knowledge of the theory. Secondly,

statistical criteria should be adequately assessed using information pooled from

various indices or fit. Thirdly, the researcher should keep a watchful eye on the

parsimony of the model. Hence, there should be a ‗balance between adequate

representation of the data and falling prey to the temptation of incorporating too

166

many parameters in attempting to model fit, statistically’ (Byrne, 2001 p, 7). Thus,

the researcher approached model modification from a theoretical perspective

(Anderson & Gerbing, 1988; McDonald & Ho, 2002), as the study is primarily

exploratory, which evaluated competing models for conclusions (Boomsma, 2000;

Byrne, 2001). This was especially the case because the research was in a

contemporary evolving body of knowledge. Thus, the researcher put theory before

statistics. For example, pathways between F2 to F5 and F1 to F6 yielded better

statistical model fit, but did not make sound theoretical sense. Thus, these pathways

were not included.

The competing model highlighted a more complex interrelationship between

variables than was initially postulated in Figure 6.2. Re-specifying a structural

equation model is common in practice; however, this should not be done on statistical

informational alone, as theory is at the centre of any re-specification (Anderson &

Gerbing, 1988). Any set of multivariate data has more than one plausible structural

model (McDonald & Ho, 2002). It is necessary to pay attention to alternative and

equivalent sustainable models (McDonald & Ho, 2002). In this research, only two

new pathways were added to the model, as illustrated in Figure 6.6. That is,

information availability was also correlated with both the international mindset of the

firm and the use of business relationships, which was not initially proposed. Now the

competing models are presented.

Internetalisation: English speaking markets (Model 1)

The final competing model yielded a CMIN normed chi-squared ratio with degrees of

freedom of 1.140. p-value .173, GFI .951, TLI coefficient .992, CFI .994, SRMR

.0442 and RMSEA .025 as presented in Table 6.17. Thus, all indicators highlighted

good model fit, as the partially mediated model was a good representation of how the

Internet of the firm covaried with more traditional elements of internationalisation

such as information, interactive communication, international mindset, business

relationships, but not psychic distance for English markets, as illustrated in Figure

6.4.

167

Table 6.17 Summary of competing model structural model fit statistics

Model

Overall fit

P- value<.01 Model fit indices

χ ² /DF

CMIN < 3

RMSEA

>.10

GFI

>.92

CFI

>.92

TLI

>.92

SRMR

<.10

Modified model analysis: Final models (21 items)

Modified English

Model 1

96.912/ 72

1.259

.034 .946 .989 .985 .0614 P>.01

Modified non

English Model 2

162.722/ 122

1.333

.039 .931 .979 .984 .0748 P>.01

Modified model analysis additional paths (3 paths): Final models (21 items)

Modified English

Model 1

85.501/ 75

1.140

.025 .951 .994 .992 .0442 P>.01

Modified non

English Model 2

147.593/ 120

1.240

.033 .936 .988 .985 .0532 P>.01


.92; SRMR<1.0; RMSEA<1.0; P>.01


Figure 6.4 Competing model (English speaking markets-Model 1)

INFAVL

.61

COM

e3

.78

.72

MKT

e4

.85

.24

INTGRO E

.68

PEN

e5

.83.90

NEW

e6

.95.56

DEV

e7

.75

.31

INTINS

.47

RES e8.68

.99

MNG e9

1.00

e10

.24

INFUSE

.85

RESe13

.79

SUPe14

.92

.89

.14

INTACT

.67

SPE

e16

.68

EFF

e18

.82.82

.19

INTMND

.97

GRO

e21

.54

CUS

e22

.98.73

.16

BUSREL

.71

LLR e241.13

STR e25

.84

1.06

.04

e31

chi-square=87.496

df76

p=.173

gfi.950

tli=.991

cfi=.994

rmsea=.026

caic=369.608

.49 .18

.28

.23

.29e32

e33

.18

.14.26

.23 .23

.37

.31

e34e35

.08


168

Internetalisation: Non-English speaking markets (Model 2)

The final competing model for non-English-speaking markets had a CMIN normed

chi-squared ratio with degrees of freedom of 1.240, GFI .936, TLI coefficient .985,

CFI .988, SRMR .0532 (SRMR) and RMSEA .033, as seen in Figure 6.5. All

indicators highlighted good model fit, with the partially mediated model representing

how the Internet of the firm covaried with more traditional elements of

internationalisation such as information, interactive communication, international

mindset, business relationships and psychic distance. These findings indicated good

model fit, as outlined in Table 6.17.

Figure 6.5 Competing model (non-English speaking markets-Model 2)

INFAVL

.61

COM

e3

.78

.72

MKT

e4

.85

.28

INTGRO NE

.86

PEN

e5

.93.94

NEW

e6

.97.71

DEV

e7

.84

.31

INTINS

.46

RES e8.68

1.00

MNG e9

1.00

e10

.24

INFUSE

.85

RESe13

.79

SUPe14

.92

.89

.14

INTACT

.72

SPE

e16

.64

EFF

e18

.85.80

.21

INTMND

.92

GRO

e21

.57

CUS

e22

.96.75

.18

BUSREL

.76

LLR e241.05

STR e25

.87

1.03

.03

e31

chi-square=147.593

df120

p=.044

gfi.936

tli=.986

cfi=.989

rmsea=.032

caic=474.587

.49 .18

.28

.23

.31e32

e33

.14

.16.26

.42

.37

.33

e34e35

.07

Psychic

1.02

NLG e371.01 .72

BLG e38.85

-.15

-.08

.37

cult e39

.61


169

Bootstrap

English market model (Model 1):

It was essential to use a bootstrapping technique to help assess the model stability

(Boomsma, 2000). More importantly, the significance test p-value was increased

from .173 to .537 when using a Bollen-Stine bootstrap test (1000 cases) of the null

hypothesis that the model was correct, highlighting the robustness of the competing

model. No difference exists between the analyses of the competing model with a

bootstrap test (1000 samples). The CMIN normed chi-squared ratio with degrees of

freedom found no difference, and all other model indices were the same.

Non-English market model (Model 2):

No difference exists between the analyses of the competing model non-English

market model with a bootstrap test (1000 samples). More importantly, the

significance test p-value was increased from .058 to .332 when using a Bollen-Stine

bootstrap test (1000 cases) of the null hypothesis that the model is correct,

highlighting the robustness of the competing model in question.

Through a model modification process, nine items were excluded. For example,

cross-loadings occurred when customer acquisition correlated with items within

international market growth (F8). Therefore, the item model modification went from

32 items to 21 items for parsimony where theoretically appropriate, as outlined in

Table 6.18. Further, only one factor was partially excluded. Psychic distance was only

excluded in the English-speaking Model 1 market growth. This finding was

theoretically intuitive as psychic distance from Australia should not be present in

English-speaking markets (Model 1), giving further validation to the theoretical

plausible. Moreover, pathways between F1–F8, F2–F8, F3–F7, F6–F5 and F6–F7

were not found to be significant. Conversely, pathways F1–F4 and F1–F5 were found

to be both statistically significant and theoretically plausible.

Table 6.18 Final model measurement table summary

Factor Item Accepted/excluded Comment

Information available (F1)

Information pertinent to….

Markets

Competition

International consumers

Resources

Suppliers

Confirmed

Confirmed

Excluded

Disconfirmed

Excluded

Information availability was drawn from Hamill

and Gregory (1997). Items were adapted to

highlight core perceived information benefits to

firms, i.e. market, customer and competitor

information. Further, items were also derived from

information and knowledge-based perspectives of

transactional efficiency. This included information

170

pertaining to customers, competitors and markets,

which also included resources and suppliers

(Petersen et. al. 2002 and Torre & Moxon 2002—

conceptual papers).

Information usage (F2)

Information usage pertinent

to…

Markets

Competition

International consumers

Resources

Suppliers

Excluded

Disconfirmed

Disconfirmed

Confirmed

Confirmed

Information usage was not statistically based.

However, items were derived from information and

knowledge-based perspectives of transactional

efficiency. This included information pertaining to

market, customers and competitors, which was

drawn from conceptualisations founded in Petersen

et. al. (2002) and Torre and Moxon (2001)

Interactive communication

(F3)

In the firm we have …

communication

Efficient

Frequent

Speedy

Multiple function

Distribute any time

Confirmed

Excluded

Confirmed

Disconfirmed

Disconfirmed

Efficiency of communication as a measure of

interaction was derived from Brock and Yu, 2005

who were evaluating website interaction. Speed of

communication was derived from work in website

interaction from Yuping (2005) (CFA). The other

items excluded were also from the research

(Yuping 2005). The disconfirmed item was a new

item, multiple function.

International mindset (f4)

The firm …

Commit to int. customers

Commit to resources

Emphasises growth

Values int. experience

World as a market

Rapid internationalisation

Confirmed

Disconfirmed

Confirmed

Excluded

Disconfirmed

Excluded

Item 1 was derived from the international customer

orientation in the international orientation factor

evaluation the Internet in international marketing,

by Moen (2002b) (EFA). However, items that

emphasised resource commitment, the world as a

single market and International experience as

important either were disconfirmed or excluded

(Nummela, et al. 2004). The second item

confirmed was the factor derived from both

Aspelund & Moen (2004) (SEM) and Nummela,

where growth is emphasised in the firm.

Business Networks (F5)

We use business networks

to…

Rel. = relationship

Maintain customer rel.

Strengthen existing rel.

Develop long-lasting rel.

Acquire new customers

Enter new country markets

Enhance int. performance

Excluded

Confirmed

Confirmed

Excluded

Disconfirmed

Disconfirmed

The two confirmed items and Item 1, which was

excluded in the business network factor, were

derived from a single research paper (Wu et al.

2003). E-commerce and relationship development

(EFA & CFA). The three other items (4, 5 6),

were adaptations, resulting in measurement error.

Psychic Distance (F6)

Customer acquisition is limited

in …countries

Eng. = English

Lang. = Language

Non Eng. speaking markets

Eng. not national language

Eng. not business language

Different culture

Low level education

Low level economic

No staff read or speak lang.

Lack of knowledge of

Excluded

Confirmed (Dis)

Confirmed (Dis)

Excluded

Disconfirmed

Disconfirmed

Disconfirmed

Disconfirmed

Primarily, psychic distance was based on

conceptual work within the body of knowledge.

That is, O‘Grady and Lane‘s 1996 qualitative study

of the literature extrapolated key elements of

psychic distance, which were used in combination

with work from Torre and Moxon (2001) and

Hallan and Wiedersheim-Paul (2004).

Note: Psychic distance was only confirmed for

non-English country markets. Dis. = disconfirmed

for English country markets.

Internet intensity (f7)

The firm uses the Internet

for…

Market research

Market management

Confirmed

Confirmed

The two items confirmed came from a sole

research paper. SEM Internet intensity and

internationalisation. Aspelund & Moen 2004.

International Growth (f8)

Over the last 10 years the firm

has Increased/ decreased sales

in international country

markets…

Cust. = customer

English markets (8a)

New cust. new market

New cust. existing market

Existing cust. exist. market

Non-English markets (8b)

New cust. new market

New cust. existing market

Existing cust. exist. market

Confirmed

Confirmed

Confirmed

Confirmed

Confirmed

Confirmed

An adaptation of Gibbs & Kraemer 2004 who

evaluated perceived benefit of the Internet (EFA).

One of four items was the perceived benefit on

entering new businesses and markets (.841).

Notes:

Confirmed= the measurement item withstood EFA, CFA and structural measure evaluation.

Disconfirmed = the measure did not withstand an EFA or CFA rigour.

Excluded = withstood an EFA and CFA rigour, but did not withstand the full structural model

evaluation. Initial item 49 items.

Final measurement model 32 items.


171

6.5 Model hypotheses interrelationship evaluation

Analysis of information availability (F1) pertaining to markets and competitors

positively co-correlated with information usage (F2) (estimation regression

coefficient .48), interactive communication (F3) (.37), international mindset (F4)

(.23), business relationships usage (F5) (.12) and Internet intensity of the firm (F7)

(.28), as presented in Table 6.19. That is, only information availability was found to

be an exogenous variable that had a significant influence on multiple endogenous

variables such as information usage, interactive communication, international

mindset, business relationships usage and the Internet intensity of the firm. In an

international market growth decision process, information is needed prior to

internationalisation (Petersen, et al., 2002). This finding was consistent with

theoretical viewpoints of information knowledge in the internationalisation process.

Firstly, informational availability of the firm was mediated by the Internet intensity of

the firm (.28 & .28). That is, information availability had a positive relationship with

information usage, interaction, international mindset and business relationship usage.

However, information availability did not have a direct relationship with international

market growth. Thus, hypotheses H2, H3 and H9 were accepted and hypothesis

H1 was not accepted. As previously discussed, information availability also had a

direct relationship with international mindset and business relationship usage. Thus,

hypotheses A1 and A2 were accepted as alternative pathways.

Table 6.19 Evaluated hypotheses table

Code Hypothesis Regression

weights

Accepted/rejected

INFAVL–INTGRO H1 Information availability has a direct relationship with

international market growth. -

-

Rejected (E)

Rejected (NE)

INFAVL–INTINS H2 The information availability of the firm is mediated by

the Internet intensity of the firm.

.28 (E)

.28 (NE)

Accepted

Accepted

INFAVL–INFUSE H3 Information availability has a correlating effect on

information usage of the firm.

.48 (E)

.48 (NE)

Accepted

Accepted

INFUSE–INTGRO H4 The usage of information has a direct relationship with


-

-

Rejected (E)

Rejected (NE)

INFUSE–INTINS H5 Information usage is mediated by the Internet intensity of

the firm.

.27 (E)

.26 (NE)

Accepted

Accepted

INFUSE–INTACT H6 Information usage is correlated with interactive

communication

-

-

Rejected (E)

Rejected (NE)

INTACT–INTGRO H7 Interactive communication has a direct relationship with


-

.23 (NE)

Rejected

Accepted

INTACT–INTINS H8 Interactive communication is mediated by the Internet

Intensity of the firm.

-

-

Rejected (E)

Rejected (NE)

INFAVL–INTACT H9 The perceived information availability of the firm has a

positive relationship with interactive communication

.37 (E)

.37(NE)

Accepted

Accepted

INTMND–INTGRO H10 The international mindset of the firm has a direct

positive relationship with international market growth. .22 (E)

.41 (NE)

Accepted

Accepted

INTMND–INTINS H11 The international mindset of the firm is mediated by the

Internet intensity of the firm. .08 (E)

.07 (NE)

Accepted

Accepted

172

INTMND–BUSREL H12 International mindset has a positive relationship with the

use of business relationships.

.30 (E)

.33 (NE)

Accepted

Accepted

BUSREL–INTGRO H13 Business relationships have a direct relationship with


.18 (E)

.14 (NE)

Accepted

Accepted

BUSREL–INTINS H14 Business relationships are mediated by the Internet


.14 (E)

.16 (NE)

Accepted

Accepted

PSYDIS–INTGRO H15 Psychic distance has a negative direct relationship with


-

.17 (-) (NE)

Rejected (E)

Accepted

PSYDIS–INTINS H16 The Internet intensity of the firm mediates the psychic

distance of the firm. -

-

Rejected (E)

Rejected (NE)

PSYDIS–INTMND H17 Psychic distance of the firm has a negative relationship

with the usage of business networks for the firm. -

-.10 (-) (NE)

Rejected (E)

Accepted (NE)

PSYDIS–BUSREL H18 Psychic distance of the firm has a negative relationship

with the international mindset of the firm. -

-

Rejected (E)

Rejected (NE)

INTINS–INTGRO H19 Internet intensity has a positive relationship with

international market growth of the firm. .04 (E)

.04 (NE)

Accepted

Accepted

Alternative

correlations

Re-specification correlations

INFAVL–INTMND A1 Information availability is positively correlated to the

international mindset of the firm .23 (E)

.23 (NE)

Accepted

Accepted

INFAVL–BUSREL A2 Information availability is positively correlated to the use

of business relationships. .12 (E)

.12 (NE)

Accepted

Accepted

INTACT–INTMND A3 Interactive communication is positively correlated with

the International mindset of the firm. .30 (E)

.31 (NE)

Accepted

Accepted

Notes: E=English-speaking model, NE= non-English-speaking model


Further, information usage was not found to be correlate with interactive

communication (.06 & .07). Thus, Hypothesis 6 was not accepted. Interactive

communication of the firm (F3) was found to positively correlate with international

mindset of the firm. That is, the greater the perception of interactive communication

of the firm, the greater the propensity of the firm to have an international mindset (.30

& .31). Thus, Hypothesis A3 was accepted. Conversely, the interaction

communication of the firm was not found to be mediated by the Internet intensity of

the firm, as had been postulated. Thus, Hypothesis 4 was not accepted. This finding

highlighted that interaction communication is capturing a more traditional perspective

of interactive communication, as opposed to a specific Internet interaction. Further,

there was a direct relationship between interactive communication and the

international growth of the firm, but only in English speaking markets (.23 English

markets). However, non-English speaking markets are mediated by the international

mindset of the firm. Thus, Hypothesis 7 was partially accepted (for English

speaking market growth).

The international mindset of the firm (F4) was found to correlate with the use of

business relationships (.30 & .32). Thus, Hypothesis 12 was accepted. Further, the

international mindset of the firm positively correlated with the Internet intensity of

the firm. That is, the greater the international mindset of the firm, the greater the

173

perceived Internet intensity of the firm. Thus, the International mindset of the firm

was mediated by the Internet intensity of the firm in the pursuit of international

market growth (.08 & .07). Thus, Hypothesis 11 was accepted. Further, there was a

direct path relationship between international mindset and international market

growth. Thus, Hypothesis 10 was accepted. Moreover, International mindset of the

firm had a greater effect on non-English market growth than English market growth,

with standardised regression coefficients of (NE) .41 and (E) .22 respectfully, as seen

in Table 6.19. That is, the international mindset of the firm had the propensity to

affect international growth, but this was more marked in non-English speaking

markets.

The use of business relationships (F5) was mediated by the Internet intensity of the

firm. Thus, Hypothesis 14 was accepted. Further, the use of business relationships

has a direct relationship with international market growth. That is, the Internet

intensity of the firm was not the only explanation for business relationship usage as a

path toward international market growth (.18 & .14). Thus, Hypothesis 13 was

accepted.

Psychic distance (F6) was predicted to influence the psychology of decision makers

in the international market growth process. However, Factor 8 (International market

growth) split into two factors: English-speaking market growth and non-English-

speaking market growth. Consequently, psychic distance only correlated with non-

English market. Thus, psychic distance of the firm was found not to have a

covariance in the English-speaking market model, which is theoretically sound as

English markets would not be perceived as distinct from Australia. Thus, Hypothesis

16 was not accepted. Psychic distance of the firm was not correlated with business

relationships of the firm. Thus, Hypothesis 18 was not accepted. The psychic

distance of the firm was negatively correlated to the international mindset of the firm.

That is, the greater the psychic distance, the greater the negative international mindset

of the firm (-.10 non English model). Thus, Hypothesis 17 was partially accepted.

Moreover, psychic distance was also negatively correlated with international market

growth (non-English-speaking markets). Thus, Hypothesis 15 was accepted.

174

Lastly, the Internet intensity (F7) of the firm had a direct relationship with the

international market growth. Thus, Hypothesis 19 was accepted. Thus, hypotheses 1,

4, 6, 8, 16, and 18 were not found to be statistically significant. However, the

majority of hypotheses—2, 3, 5, 7, 9, 10, 11, 12, 13, 14, 15, 17, and 19—were found

to be statistically significant, as presented in Table 6.19. Further, three additional

paths were found to be statistically significant and theoretically plausible. That is, A1,

A2 and A3 were also found to be theoretically valid, as illustrated in Figure 6.6.

Figure 6.6 Internetalisation model: significant and non-significant paths


components

H3 H1

H9

H2 H4 Mediating Performance outcome

H6 H5

H7

H8

H19

H11 H10

H12

H14 H13

H18

H16

H17 H15

Notes: ----- non significant pathway. Significant pathway. New pathways

F3 interactive communication significant for only English- speaking model. Psychic distance only

significant for non-English speaking model.


Most paths were found to be significant (.05>) within the full model, as outlined in

Table 6.20. However, when interrelationships were assessed simultaneously, some

predicted pathways were found not to be significant. These construct

interrelationships, although model-fit indicators highlight good model fit, had non-

significant regression weightings. These inconsistencies will be evaluated next.

F1 Information

availability

F2 Information

usage

F8 International

market growth

F4 International

mindset

F7 Internet

intensity

F3 Communication

interactivity

F5 International

networks

F6 Psychic

distance

175

Although the relationships of international mindset (F4) and international market

growth (F8) with the Internet intensity of the firm (F7) were not significant in the

regression weights, this can be explained by the heavily shared context of the Internet

intensity factor. That is, multiple mediation effects were found for Internet intensity,

which diluted the regression weights. For example, regression weights without any

other shared co-correlation between Internet intensity and international market

growth were significant in both models: English speaking market Model 1) was .183

and non-English speaking market Model 2 was .195. Similarly, the relationship

between Internet intensity and the international mindset of the firm was also found to

be significant without co-correlations, with a regression weight of .365.

Table 6.20 Model 1 and 2 correlation matrices estimates

English market growth: Model 1 Non English market growth: Model 2

Factor Factor Est. Sig. Factor---- Factor Est. Sig.

INFAVL INFUSE .488 sig. INFAVL INFUSE .488 sig.

INFAVL INTACT .371 sig. INFAVL INTACT .373 sig.

INFAVL INTMND .235 sig. INFAVL INTMND .236 sig.

INFAVL BUSREL .177 sig. INFAVL BUSREL .178 sig.

INFAVL INTINS .284 sig. INFAVL INTINS .280 sig.

INFUSE INTINS .265 sig. INFUSE INTINS .261 sig.

INTACT INTMND .295 ns INTACT INTMND .314 sig.

INTACT INTGRO .232 sig. INTACT INTGRO .005 ns

INTMND BUSREL .307 sig. INTMND BUSREL .331 sig.

INTMND INTINS .078 ns INTMND INTINS .068 ns

INTMND INTGRO .225 sig. INTMND INTGRO .413 sig.

BUSREL INTINS .142 sig. BUSREL INTINS .158 sig.

BUSREL INTGRO .180 sig. BUSREL INTGRO .136 sig.

PYSDIS INTMND PYSDIS INTMND -.104 sig.

PYSDIS INTGRO PYSDIS INTGRO -.171 sig.

INTINS INTGRO .039 ns INTINS INTGRO .035 ns

Notes:

Est. the regression weight standardised estimate between constructs

Sig. significant relationships between constructs

ns non-significant Relationships between constructs


176

Further, it was necessary to provide readers with a certain amount of information

pertaining to the model and interrelations discussed above. That is, a complete set of

data with parameters, standard errors, correlations, covariance matrixes, discrepancies

and goodness-of-fit indices has been discussed (Boomsma, 2000; McDonald & Ho,

2002). This information allows readers to employ independent critical judgment of

the model and is a benchmark for reporting in structural equation modelling

(McDonald & Ho, 2002). This enables readers to replicate the study (Boomsma,

2000). Thus, both sample matrices and implied matrices pertaining to covariance and

correlation are presented in appendixes K and L.

Validity

There should be a large change in the chi-squared score to indicate discrimination

between factors (Hair, et al., 2006). A series of confirmatory factor analysis tests

identifies whether a one-factor or two-factor solution fits better (Bagozzi, et al.,

1991). That is, through a CFA process, discriminant validity was assessed by un-

constraining and constraining a two-model solution, so as to identify whether the two

factors were indeed different or discriminated (Bagozzi, et al., 1991; Atuahene-Gima,

2005), as presented in Table 6.21. Analysis indicated a large change in the chi-

squared score, highlighting adequate discrimination between factors. Thus,

discriminant validity was established

Table 6.21 Discriminant validity chi-squared test (final modified model)

Factor Factor χ ² UC DF χ ² C DF

Information availability Information usage 83.6 13 292.2 14

Information availability Interactive communication 44.9 13 310.0 14

Information availability International mindset 55.1 19 400.5 20

Information availability Business relationships 26.8 19 399.2 20

Information availability Internet intensity 10.5 8 119.7 9

Information usage Internet intensity 27.0 4 134.0 5

Interactive communication Internet intensity 1.7 4 136.8 5

Interactive communication International mindset 27.6 13 261.8 14

Interactive

communication*

International market growth:

English model 16.1 8 260.2 9

International mindset Business relationships 53.9 19 447.4 20

177

International mindset Internet intensity 21.9 8 146.1 9

International mindset International market growth:


International mindset International market growth:

Non English model 12.9 13 345.1 14

Business relationships Internet intensity 8.5 8 142.9 9

Business relationships International market growth:


Business relationships International market growth:


Psychic distance* International mindset 33.6 19 498.7 20

Psychic distance* International market growth:

Non English mode 24.6 13 625.2 14

Internet intensity International market growth:


Internet intensity International market growth:


Notes:

* Psychic distance only in non-English market growth model. And Interactive communication direct

relationship with international market growth only in English market growth.

UC unconstrained

C constrained

DF degree of freedom.


Another measure of discriminant validity is the comparison between the correlation

coefficient and composite reliability scores (Gaski, 1984). That is, the correlation

coefficient should not exceed the construct reliability of the factors. In this study, the

composite reliability scores ranged from .61 to .83, and were larger than the highest

correlation score of .488. Thus, discriminant validity was supported as shown in

Table 6.21.

In conclusion, data was analysed for normality, missing data and addressing non-

response bias issues. A confirmatory factor analysis for individual factors and a

saturated CFA indicated reasonable factor interrelationships, without showing

definitive interactions and pathways. The proposed models were assessed as

illustrated in Figures 6.2 and 6.3. An oversimplification of the complex

interrelationships was evident within the competing model ‗internetalisation‘, as

illustrated in Figures 6.4 and 6.5 and summarised in a theoretical model in Figure 6.7.

178

Figure 6.7 Final model: theoretical interrelationships


The interrelationships within the internetalisation model will be assessed next. That is

the research issues and research question are resolved with the theoretical

implications and contributions highlighted.

Information

availability

Information

usage

Interactive

communication

International

mindset

Business

relationships

Internet

intensity

International

market growth

Psychic

distance

----- For non English markets (PSYDIS)

English model only (INTACT)

179

7.0 CHAPTER 7: DISCUSSION AND CONCLUSION

7.1 Introduction

This PhD research study was conducted to investigate the research problem of ‗How

and why does the Internet influence international market growth of the firm’. In

Chapter 1, the background to the study was outlined, providing the impetus for the

research problem to be explored, a problem which was justified by the dearth of

literature in the area of the Internet and internationalisation. Furthermore, a lack of

recognition of the unique characteristics of the Internet, international market growth

and the internationalisation of the firm left a gap in the literature.

The final two competing models, internetalisation English speaking market Model 1

and internetalisation non-English speaking market Model 2, were presented, analysed

and evaluated for model fit and rigour in Chapter 6. This, the final discussion

(Chapter 7), examines:

the framework of the two research issues (sections 7.2 and 7.3)

the overall research question (Section 7.4)

the broader theoretical context, given that the research was exploratory in

nature (Section 7.5).

To this end, the two main research issues are explored for a resolution. The

implications of these findings to theory and practice will be evaluated (Section 7.6),

contributions discussed with limitations (Section 7.7) and future research highlighted

(Section 7.8), as outlined in Figure 7.1. Research Issue 1 will be discussed next.

180



Research Issue 1 (7.2)

Research Issue 2 (7.3)

Information and knowledge (7.2.1)

International entrepreneurship (7.2.2)

Research question discussion

and conclusion (7.4)

Implications for theory and

practice (7.6)

Limitations (7.7)

Introduction (7.1)

Future direction for research

(7.8)

Conclusion (7.9)

English versus non-English market

growth (7.3.1)

Direct versus indirect international

market growth (7.3.2)

Internationalisation theory (7.5) Capabilities and perceived risk (7.5.3)

Theoretical contributions (7.6.1)

Contributions to practice and to policy

(7.6.2)

Born global (7.5.2)

Network theory (7.5.5)

Process stages theory (7.5.1)

International entrepreneurship (7.5.4)

181

7.2 Research Issue 1 discussion:

How and why has the Internet influenced the internationalisation process of the

firm?

The internationalisation components identified in Chapter 6 as being influenced by

the Internet included information availability, information usage, interactive

communication, international mindset and business relationship usage. These

internationalisation components relating to research Issue 1 will be assessed next.

7.2.1 Information availability, information usage and interaction

How and why has the Internet influenced information availability of the firm?

Previous research highlights the link between the Internet and information availability

in the firm‘s internetalisation process (Hamill & Gregory, 1997; Petersen, et al.,

2002). That is, research by Hamill and Gregory (1997) identified the Internet‘s

influence on the perceived benefit of information availability from a single item

descriptive frequencies analysis. Further, Petersen, Welch, and Liesch (2002)

conceptualised that the use of the Internet has influenced information availability in

the internationalisation process of the firm.

This PhD study reaffirms the concept of ‗information availability‘ in the context of

the Internet and internationalisation, as postulated by Hamill and Gregory (1997) and

Petersen, Welch, and Liesch (2002). However, the findings extend the literature by

firstly identifying a multi-item construct. That is, the construct of information

availability was found to consist of items pertaining to market, competitors and

customer information. The identification of a multi-item construct extends the current

literature by identifying a more accurate understanding of the concept, information

availability. Secondly, information availability was found to be the most influential

internationalisation component within the internetalisation model. That is,

information availability was the only independent variable and was the process

needed to precede all other internationalisation components. These findings highlight

the significant importance of information availability in the interrelationships

between the Internet and the internationalisation.

Thirdly, information availability was found to have multiple interrelationships with

the Internet intensity of the firm, which include; mediated relationships with

information usage, international mindset and business relationships, as illustrated in

182

Figure 7.2. That is, the construct of information usage, international mindset and

business relationships mediate information availability, which then influence the

Internet intensity of the firm. Further, information availability also has a direct

relationship with the firms Internet intensity.

To recapitulate, these findings extend the current literature by identifying a multi-item

construct for information availability. Secondly, these findings indicate that

information availability precedes all other internationalisation constructs. Lastly,

information availability plays a pivotal role in influencing information usage,

international mindset and business relationships, which in turn influence the Internet

intensity of the firm. Further, the information availability of the firm is also mediated

by the Internet intensity of the firm. That is, the Internet intensity mediates the

information availability of the firm in the internetalisation process.

Figure 7.2 RI 1: information availability, information usage and interaction


How and why has the Internet influenced information usage of the firm?

Information usage is the processing, analysing and evaluation of information, also

referred to in the literature as knowledge. The need to acquire foreign market

knowledge in the process of organisational learning for expansion into international

markets has been well established, for example, Andersen, (1993), Calof and

Beamish, (1995), Inkpen and Beamish, (1997), Luo, (1997), Barkema and

Vermeulen, (1998), Lord and Ranft, (2000) and Zahra and Ireland, (2000). Previous

research highlights the potential of the Internet to transfer knowledge within the firm

Information

availability

Information

usage

Interactive

communication

International

mindset

Business

relationships

Internet

intensity

183

through a learned knowledge process (Petersen, et al., 2002). The knowledge

intensity of the firm can be a catalyst for sustaining international new ventures

(Coviello & McAuley, 1999; Autio, Sapienza & Almeida, 2000; Bell, McNaughton,

Young & Crick, 2003) and can affect the decisions concerning the mode of foreign

market entry (Calof & Beamish, 1995). The access to relevant internationalisation

information due to the Internet has the potential to enhances the process of knowledge

learning for the firm (Petersen, et al., 2002).

The findings in this PhD study firstly identified the concept of information usage in

the context of the Internetalisation model, extending the current conceptualisations by

Petersen, Welch, and Liesch (2002). Further, a multi-item concept of ‗information

usage‘ was identified, giving a more precise understanding of the concept. That is, the

information usage concept had items relating to suppliers, resources and consumers.

Statistical validation of the multi-item concept extends the current understanding,

beyond general conceptualisations by Petersen, Welch, and Liesch (2002). Thus, the

Internet has influenced knowledge transference in the internationalisation process,

through information usage.

The information usage mediated information availability of the firm, which in turn

influence the Internet intensity. These findings highlight the importance of the

Internet in the processing and analysing of information in the internationalisation

process. Thus, these findings underscore the importance of information usage in the

internetalisation model. Thus, the second contribution identified the specific impact

of information usage as apposed to general conceptualisations of potential impact of

the Internet.

How and why has the Internet influenced the interaction communication of the

firm?

Previously research pertaining to interactive communication stems from the Internet

marketing literature (Yuping, 2003). That is, the concept of interaction in the context

of the Internet and internationalisation is currently lacking. The findings from this

PhD study identified the concept of interaction communication with items relating to

efficiency, speed and timelessness of interaction. Interactive communication did not

directly correlate with Internet intensity. However, interaction communication was

184

mediated by international mindset, which in turn influences the Internet intensity of

the firm. That is, the level of interaction in the firm is influenced by the international

mindset of the firm towards internationalisation, which in turn influences Internet

intensity, as illustrated in Figure 7.2. These findings firstly highlight the importance

of including interaction communication within the theoretical framework of

internetalisation. Secondly, the findings also confirm that an international mindset is a

key element in decisions in mediating interaction communication in the process of

internationalisation, which in turn influence the implementation of Internet intensity

of the firm, as presented in Table 7.1.

Table 7.1 Information availability, information usage and interaction

Previous research

Current study

Contributions made by current study

Research Issue 1

Information availability Single item descriptive

frequencies whereby firms

viewed the importance of the

Internet in information

related to; the market,

competitors and customers

(Hamill & Gregory, 1997).

Conceptualisations of

information related to

supplier and resources

(Torre & Moxon, 2001;

Petersen, et al., 2002).

Information usage

Information usage pertaining

to supplier and resources has

been conceptualised in the

context of the Internet,

knowledge transference and

internationalisation (Torre &

Moxon, 2001; Petersen, et

al., 2002). Further,

information pertaining to the

market, competitors and

customers was found to be

influenced by the Internet

(Hamill & Gregory, 1997).

Interaction

Internet marketing literature

pertaining to interaction

(Yuping, 2003). Speed,

frequency, efficiency,

availability and multiple

Identification of multi item

construct ‘information

availability’. Statistically

validation of items for the

construct identification of a

complex interrelationship

between information

availability,


components and Internet

intensity.

The concept of knowledge

learned and transference was

in part captured through the

factor information usage.

Specifically, information

usage pertaining to suppliers,

resources and customer.

Information usage was found

to be statistically significant.

Confirming suggestions by

Petersen et al. (2002) and

Torre & Moxon (2001), that

the Internet impacts the

internationalisation learned

knowledge process of the

firm.

The findings highlight the

concept of interaction

communication into a single

multi-item construct. These

items include speed,

Firstly, these findings evolve the literature

beyond descriptive statistics by identifying

a multi-item construct. Secondly, the

identification that information availability

precedes all other internationalisation

components Thirdly, the identification of

direct and indirect interrelationships

between information, internationalisation

and the Internet intensity of the firm.

These findings confirm the construct of

‗information usage‘, a core component of

processing and analysing information in the

knowledge transference process.

Identification of this construct contributes

new evidence of this concept to the body of

knowledge concerning Internet

internationalisation—knowledge that did

not exist previously. Secondly, the

identification of an interrelationship

between information availability and the

Internet intensity of the firm also

contributes empirically based evidence

concerning interrelationships with

information availability and Internet

intensity.

Firstly, the identification of the construct

interaction within the Internet

internationalisation context extends the

body of knowledge—specifically, regarding

speed, efficiency and timelessness of

185

functions of interaction

communications (Yuping,

2003; Brock & Yu, 2005).

efficiency and to a lesser

extent timelessness (Brock &

Yu, 2005). Further, there

was an identification of

relationships between, the

international mindset,

interaction communication

and Internet intensity.

interaction. Secondly, the identified

interrelationship provides evidence of the

importance of interaction in the framework

of Internet internationalisation. For

example, international mindset mediates the

interaction of the firm, which in turn

increases the propensity to Internet

intensity.


7.2.2 International mindset and business relationship use

Apart from information availability, information usage and interaction

communication, international mindset and business relationships were also influenced

by the Internet intensity in the process of internationalisation, as illustrated in Figure

7.3. International mindset and use of business relationships will be assessed next.

How and why has the Internet influenced the international mindset of the firm?

Previous research found that the Internet intensity is positively correlated with the

international vision of the firm (Aspelund & Moen, 2004). That is, the concept of

international vision in an Internet intensity context was founded on items pertaining

to an emphasis on international customers, growth and having a global firm

perspective (Moen, 2002b; Aspelund & Moen, 2004). These findings imply that firms

perceive the Internet‘s impact on internationalisation as giving unprecedented global

opportunity for access to customers outside domestic markets.

The findings of this PhD research confirm the construct of international mindset in

the context of internetalisation. However, the findings do not confirm the construct of

international vision as postulated by Aspelund & Moen (2004), but a more standard

international mindset was identified. That is, on this current study the international

mindset of the firm was shown to lead to a greater propensity to employ Internet

intensity as opposed to the global vision of the world postulated by Aspelund and

Moen (2004). Findings by Asplelund and Moen (2004) may be due to their focus on

technology intense software firms. That is, the industry of software manufacturing

has been highlighted as an industry in which rapid internationalisation is more

common than in other industries (Bell, 1995) and as such, international vision is also

more common. This PhD study used a broader range of traditional firms as opposed

to only high technology firms. Thus, the findings in this PhD study is more consistent

186

with a traditional perspective of international mindset leading to a great propensity to

implement tactics for international market growth (Nummela, et al., 2004). Further,

firms that were internationally minded used business relationships more often in their

internationalisation endeavours. That is, the greater the international mindset the

greater propensity to use business relationships in the process of internationalisation.

The contributions of this research are that firstly, these findings re-affirm the

construct of international mindset in the context of internetalisation. Secondly,

findings in this study are at variance with the current literature, as there is evidence

that the international mindset of the firm leads to a greater Internet intensity as

opposed to international vision. Thirdly, the identification of the multiple

interrelationships underscores the importance of the international mindset of the firm

in the use of business relationships and in the implementation of Internet intensity,

two important concepts which were not identified in the prior literature.

Figure 7.3 RI 1: International mindset and business relationship use


How and why has the Internet influenced the use of business relationships of the

firm?

Previously, the literature conceptually highlights the potential for the Internet to

enhance international networks (Hamill & Gregory, 1997). However, previous

research failed to identify the specific construct relating to networks.

This PhD research establishes the construct of business relationship with items

relating to the development of relationships, maintenance of relationships, and the

strengthening of relationships, in an internetalisation context. That is, firstly this

Information

availability

Information

usage

Interactive

communication

International

mindset

Business

relationships

Internet

intensity

187

study identifies the multi-item construct of business relationships in the

Internetalisation literature, an extension to the current understanding, and one that

confirms the qualitative findings, highlighted in Chapter 4.

The evidence indicates that the Internet intensity mediates the use of business

relationships in the internationalisation process. Further, business relationships are

also influenced by the availability of information and international mindset, as

previously discussed in this section. These findings highlight the importance of

business relationships in the Internet internationalisation literature. This second

contribution extends the current literature by identifying the construct business

relationships, in the interrelationships between information availability, international

mindset and the Internet intensity of the firm, as presented in Table 7.2.

Table 7.2 International mindset and business relationships

Previous research

Current study


Research Issue 1


The present understanding of

international mindset in

relation to the Internet and

internationalisation highlights

items pertaining to emphasise

on international customers,

resources and a global firm

perspective (Moen, 2002b;

Aspelund & Moen, 2004). .


Presently the literature fails to

identify the concept business

relationships within Internet

internationalisation. Thus, a

traditional perspective of

business relationships in the

internationalisation process

was used to measure business

relationships. Specifically,

maintaining relationships,

strengthening relationships

and developing relationships

(Wu, et al., 2003).

Findings corroborate the

concept of international

mindset (Moen, 2002b;

Aspelund & Moen, 2004).

However, findings indicate

the path of the

interrelationship between the

Internet intensity and

international mindset.

Further, international

mindset plays a pivotal role

in the interrelationships

between information,

interaction, business

relationships and Internet

intensity.

Identifying a multi-item

construct of business

relationships in the context

of internetalisation.

Corroborating earlier

evidence from Chapter 4.

Further, there was evidence

that the usage of business

relationships is positively

influenced by the

international mindset of the

firm and mediated by the


Firstly, these findings give more evidence

of items pertaining to the concept of

international mindset, extending the few

studies recently published (Moen, 2002b;

Aspelund & Moen, 2004). Secondly,

findings in this study give an alternative

view to the current literature, as there is

evidence that the international mindset as

opposed to international vision of the firm

leads to a greater Internet intensity. Thirdly,

the identification of the multiple

interrelationships underscores the

importance of the international mindset of

the firm in the use of business relationships

and implementation of Internet intensity,

currently not established in the literature.

Firstly, the identification of the construct

business relationships in the context of the

Internet internationalisation theoretical

framework. Further, testing of the

measurement business relationship usage

strengthens the contribution. Secondly, the

interrelationships between the international

mindset, business relationships and Internet

intensity of the firm highlight the

importance of this construct to the growing

body of knowledge.


188

In conclusion, the findings in research Issue 1 underscore the importance of the

Internet intensity in influencing; information availability, information usage,

interaction communication, international mindset and business relationship usage in

the internationalisation process. These findings highlight the specific

internationalisation components and interrelationships that the Internet has enhanced.

Now research Issue 2 will be assessed.

7.3 Research Issue 2 discussion:

How and why has the Internet influenced international a) market penetration

and b) market development of the firm?

Previous literature pays limited attention to the concept of market growth in the

context of the Internet and internationalisation. That is, it has been suggested that one

of the greatest benefits of the Internet is the potential for foreign expansion (Quelch &

Klein, 1996; Bennett, 1997; Hamill, 1997; Hamill & Gregory, 1997; Petersen, et al.,

2002; Aspelund & Moen, 2004; Morgan-Thomas & Bridgewater, 2004). However,

little to no attention has been given to the empirical confirmation of these aspersions.

Further, the term growth is used for the most part in generic terms, resulting in

ambiguity about the concept. Thus, the confirmation of international market growth

in the context of the Internet‘s impact on internationalisation assists in illuminating

the concept.

Research Issue 2 evaluates international market growth from both the market

penetration and market development perspectives. The construct of market growth is

assessed in the sub-components of penetration and development growth. Market

penetration will be assessed next.

How and why has the Internet influenced international market penetration?

Previous research has shown that the perceived benefit of the Internet is ‗to expand

the market for existing product/service‘, that is, market penetration (Gibbs &

Kraemer, 2004, p. 133). However, the Gibbs & Kraemer (2004) study focused on the

perceived benefit of Internet use on the perceived market penetration and in relation

to e-commerce scope, not on the actual market penetration and not in relation to


189

Findings in this PhD study indicate extensive use of the Internet for international

market penetration, which confirms the link between the Internet and actual

international market penetration. The Internet has given the firm the ability to solicit

new business from existing clientele (market penetration). This fact was supported in

the findings from Chapter 4, Section 4.3.2. For example, e-direct marketing, database

marketing and the use of the website were linked to increased usage or sales through

existing customers. Secondly, the results highlight the importance of the Internet for

market penetration in the context of the Internet and internationalisation. That is,

currently the literature does not identify market penetration in the context of the

Internet and internationalisation. Both of these findings assist in extending the

literature beyond the current understanding.

Table 7.3 The Internet and international market growth

Previous research

Current study


Research Issue 2

Market penetration

Presently the literature

founded on the concept

perceived benefit of market

penetration in relation to e-

commerce scope based on

factor analysis for perceived

benefit factor from Gibbs &

Kraemer (2004).

Market development

Presently the literature

founded on the concept

perceived benefit of new

business or market in

relation to e-commerce

scope based on factor

analysis for perceived

benefit factor from Gibbs &

Kraemer (2004) and

conceptualisation of foreign

market growth as a

consequence of the Internet

Petersen et al. (2002)

Results gave confirmation

of market penetration.

Further, findings validated

actual market penetration as

opposed to perceived market

penetration. Lastly, market

penetration was confirmed in

the context of international

market growth, as opposed

to a domestic context.

The concept of market

development was confirmed.

However, a market

development was identified

as a multi-item concept: new

customers existing country

markets and new customers

new country markets.

Firstly, the findings confirm the concept of

market penetration. The finding of actual

market penetration as opposed to perceived

benefit of the Internet extends the current

understanding. Secondly, results highlight

the importance of the Internet for market

penetration in the context of the Internet and


Firstly, the findings re-affirm the Internet‘s

influence on new market development.

Secondly, findings give a more accurate

account of market development extending

the current literature. Thirdly, the construct

of market development was validated in the

context of the Internet and

internationalisation. Lastly, beyond the

perception of market development this

study established actual market

development performance by the firm

influenced by the Internet.


190

How and why has the Internet influenced international market development?

Gibbs and Kraemer (2004) also found a perceived benefit of the Internet was market

development. However, previous research was based on general conceptualisations

(Petersen, et al., 2002) and the perceived benefit of new business or markets (Gibbs &

Kraemer, 2004) due to the Internet.

Firstly, the findings in this PhD study re-affirm the Internet‘s influence on market

development. Secondly, beyond the general concept of market growth this study

found that market development consisted of; new customers in existing country

markets and new customers in new country markets. Thus, this more accurate account

of market development extends the current literature. Thirdly, the construct of market

development was validated in the context of the Internet and internationalisation. That

is, beyond the current literature, this study verifies the Internet‘s impact on

international market development as opposed to generic market development. Lastly,

beyond the perception of market development this study established actual market

development performance by the firm influenced by the Internet.

In conclusion the findings from this PhD research give a more accurate understanding

of the concept market growth. That is, market growth the construct includes; market

penetration, and market development, which in turn includes; new customers in

existing country markets and new customers in new country markets. Further, the

construct was validated in an internationalisation context. Lastly, beyond perceived

benefit the study confirmed actual market growth performance. These findings assist

in the accurate identification of market growth the construct in the Internet

internationalisation context, as summarised in Table 7.4.

191

Table 7.4 Research Issue 1, 2 and research question conclusions summary

Research issues Question Resolution Conclusion and

construct

Theoretical

contribution type

Current literature

Research Issue 1 How and why has the

Internet influenced the


process of the firm?

The information availability, information

usage, interaction communication, international

mindset and the use of business relationships in

the internationalisation process were influenced

by the Internet intensity of the firm. Overall,

the Internet intensity of the firm plays a

mediating role in the internationalisation

process toward international market growth.

Conclusion 1.1

Information available

Conclusion 1.2

Information usage

Conclusion 1.3

Interaction

Conclusion 1.4


Conclusion 1.5


STAT TC

NEW TC

NEW TC

CONF TC

NEW TC

Descriptive statistics &

conceptual

Conceptual

Statistical in different

context

Statistical same context


context

Research Issue 2 How and why has the

Internet influenced

international

a) market penetration

b) market development

of the firm?

Findings indicate that the separation of the

concept of market growth. That is, factor

loadings were significant for existing customer

in existing countries, new customers in existing

country markets and new customers in new

country markets, giving a better understanding

of international market growth as a concept.

Further, the concept was validated in an

internationalisation context and actual growth

as opposed to perceived benefit.

Conclusion 2.1

Penetration of existing

customer

Conclusion 2.2

Market development:

New customers in

existing country markets

New customers in new

country markets

NEW TC

NEW TC


context

Currently no coverage

Research

question

How and why does the

Internet influence

international market

growth of the firm?

The internet has both an indirect and direct

pathway for firms in international market

growth. To a lesser extent, the Internet

influences the international entrepreneurship of

the firm. Internet intensity mediates

internationalisation information and knowledge

and enhances the use of business relationships

and the firm‘s international mindset, leading to

increased international market growth.

Conclusion 3.1

English versus non-

English

Conclusion 3.2

Direct and indirect


interrelationships

Conclusion 3.3

Internet mediation

NEW TC

NEW TC

NEW TC




Note: Contribution: Confirmed theoretical contribution (Conf TC) = Confirmation of theoretical relationship. New theoretical contribution (New TC) = not currently in the

Internet internationalisation body of knowledge, statistical confirmation (STAT TC) = previously not empirically confirmed

Source: developed from Chapter 6 findings and Chapter 7 conclusions

192

7.4 Research question discussion

How does the Internet influence international market growth of the firm?

The interrelationship between the Internet, internationalisation components and

international market growth, is predominantly a mediated relationship. That is, apart

from the direct path for internationalisation components to international market

growth, there is an indirect or mediated path of internetalisation through the construct

Internet intensity. Further, as predicted, psychic distance has a direct negative effect

on the firm‘s international market growth. These findings are consistent with

traditional perspectives of internationalisation theory. Further, these findings

highlight a complex set of interrelationships between constructs from information and

international entrepreneurship perspectives of the internationalisation process,

including direct and indirect relationships with mediation effects. That is, the findings

extend the current understanding of internationalisation and the Internet. For example,

this study establishes both direct and indirect interrelationships within the context of

the Internet, the internationalisation process and international market growth. This

finding contradicts the proposition that Internet technology does not have a positive

effect on international activities (Andersson, Gabrielsson & Wictor, 2004). That is,

evidence in this study shows that the firm‘s Internet intensity mediates the pathway of

internationalisation. More specifically, the Internet intensity of the firm positively

mediates the traditional internationalisation components, such as information

availability, information usage or knowledge, international mindset and business

relation use.

As discussed in the evaluation of psychic distance in Chapters 4 and 5, international

market growth was found to differ in English-speaking and non-English-speaking

country markets. This is a significant finding within the Internet internationalisation

literature, as it highlights language as a key concept that alters interrelationships

within the framework. This finding was first evident in stage I of the research,

‗English is the universal language for business‘ (Upsilon, 2005) – lingua franca, and

further explored in Chapter 4. That is, even with the introduction of the Internet,

language remains a barrier to internationalisation. Thus, this finding extends the

current understanding of Internet internationalisation by identifying a potential

impediment that currently has not been validated.

193

In this study, the Internet‘s role in international market growth was found to be

complex, with minor differences between English-speaking and non-English-

speaking market growth. For example, the relationships between international

mindset, business relationships and international market growth were found to be

greater in non-English-speaking markets compared to those constructs of information

and knowledge opportunities due to the Internet, as presented in Chapter 6. That is,

international entrepreneurship elements of internationalisation, such as international

mindset and business relationships, play a greater role in non-English-speaking

market internationalisation. The identification of a distinction between English-

speaking and non-English-speaking market growth in the Internet internationalisation

context was a significant finding, as was also highlighted in Section 7.2. For example,

outside of the major markets such as the United States, New Zealand and the United

Kingdom, predominantly Asian countries were the secondary market. That is, Asian-

country markets accounted for a large proportion of country markets for the

international market growth of Australian firms, as seen in Appendix M. Firms saw

great potential in Asian markets for growth, as illustrated in Chapter 4. However,

psychic distance remains a significant barrier to these firm aspirations. The Internet

has the potential to overcome these psychic distances with translation software such

as bablefish.com or Google translate. The Internet has diluted elements of psychic

distance, however language remains an impediment. This language impediment will

be further diluted with the adoption of Internet based translation technology.

7.5 Implications for internationalisation theory

The findings and subsequent implications have an impact on internationalisation

theory in the context of the Internet. That is, the use of multi internationalisation

frameworks to assess internationalisation patterns has been shown to be fruitful

(Calof & Beamish, 1995). Findings will be assessed firstly within the

internationalisation stages theory framework and then within a path and pace

perspective of internationalisation. Further, in the evaluation of the theoretical impact

the concept of a born global, international entrepreneurship, the network theory

perspective and the firm capabilities theory, will be explored, as these theories were

also identified earlier in Chapter 7. The rationale for the use of these theories is

provided in the relevant section. International processes and stages will be assessed

next.

194

7.5.1 Internationalisation process/ stages theory

The internationalisation process of the firm is a well established theory in the body of

knowledge (Johanson & Vahlne, 1977; Cavusgil, 1980; Cavusgil, 1984; Chetty &

Hamilton, 1993; Cavusgil & Zou, 1994; Styles & Ambler, 1996). However, new

paradigms within international marketing will have to take into account the

internationalisation process in a digital age (Hoffman & Novak, 1996). The findings

in this PhD study show an accelerated path by firms towards internationalisation, as

opposed to the traditional slow, cumbersome progression through the incremental

sequential movements or stage approach to internationalisation. These findings

confirm conceptualisations by Petersen, Welch, and Liesch (2002), that the Internet

has the potential to impact the pace of internationalisation. This finding further

reinforces the argument that the internationalisation stages perspective has limitations

(McDougall, Shane & Oviatt, 1994), because the stages model fails to explain new

international ventures (McDougall, et al., 1994) or rapidly international firms. For

example, the traditional Uppsala model of internationalisation focuses on more

traditional cross- border behaviour (Johanson & Weidersheim-Paul, 1975; Johanson

& Vahlne, 1977; Cavusgil, 1980; Johanson & Vahlne, 1990), as opposed to the rapid

internationalisation, evident in this PhD study.

The findings in this PhD study confirm the conceptualisations by Peterson, Welch

and Liesch (2002) of accelerated internationalisation due to the Internet. Evidence

was found that the extreme effects of the Internet have led to ‗rash foreign market

expansion‘, where proactive export activities were not present, but where the firm

generated a large amount of exports to many foreign markets (Petersen, et al., 2002 p,

215). Specifically, information, knowledge and international entrepreneurial

capabilities were enhanced by Internet marketing implementation. Thus, the Internet

has enabled the process of internationalisation to be compressed, due to the

availability of information, the enhanced information usage, international mindset and

use of business relationships. Further, in many cases in this research the Internet

enabled firms to internationalise when they would never have been able to do so

without the Internet, as stated by Gamma (2005)‘we wouldn’t be international if it

wasn’t for the Internet’. A more accurate understanding of rapid internationalisation

may be found in the born global concept of internationalisation; thus, this framework

will be assessed next.

195

7.5.2 Born global concept

A phenomenon identified in the 1990s, the born global concept describes the situation

where a firm creates a new venture that undertakes market expansion in multiple

markets rapidly (Knight & Cavusgil, 1996; Rasmussan, et al., 2001; Moen, 2002a;

Moen & Servais, 2002). Some have argued that the born global rapidly

internationalises within two years (Knight & Cavusgil, 1996), three years (Zhou, Wu

& Luo, 2007) or within a more broadly accepted time frame of six years (Oviatt &

McDougall, 1997; Shrader, 2001; Wickramasekera & Bamberry, 2003). Thus, there

remains some conjecture in the born global or rapidly international firm literature.

Firms that internationalise near inception are usually considered exceptional and/or

multi-nationals (Oviatt & McDougall, 1994). A born global, also known as an

international new venture, is a firm that internationalises close to inception and is

usually reported in advanced technology industries (Oviatt & McDougall, 1994) such

as small software firms (Bell, 1995). In this study there was evidence of rapid

internationalisation across a range of industries, not only in high-technology

industries as is the predominant focus in the literature (Bell, 1995; Moen, et al., 2003;

Aspelund & Moen, 2004). For example, the respondents were drawn from

agribusiness, business and finance services, consumer goods, and information

communication technology (ICT) industries

Evidence in this study identified multiple rapidly international firms. For example,

firms Delta, Epsilon and Eta rapidly internationalised within the first few months of

trade. Gamma internationalised for the first time within months of being online. This

finding is significant, as SMEs in their initial infant stages of business are able to

generate rapid growth in international markets because of the Internet. Further, nine

firms younger than three years had already internationalised, with customers in an

average of 17 countries. Further, the mean number of country markets for all firms

was 15 countries, with a scope of 78 countries, as seen in Appendix M. The mean

number of country markets for firms was:

under 10 years of age—12 country markets

under 5 years of age—11 country markets

under 3 years of age—17 country markets (illustrated in Appendix M).

196

These findings highlight that younger firms have a quicker and broader scope of


If six years is used to measure rapid internationalisation there were 60 firms or 27%

of the data set in the born global category. Further, the firms were not asked about

their first year of internationalisation, thus, it is reasonable to think that there was a

larger percentage of rapidly international firms in this data set. Nonetheless, these

results indicate a higher than average percentage of rapidly internationalising firms

compared to previous industry studies, which indicated that 2%-to-4% of firms

rapidly internationalise (UNCTAD, 1993; OECD, 1997).

To sum up, the findings in this PhD study corroborate predictions by Quelch and

Klein (1996), Hamill and Gregory (1997), Peterson, Welch and Liesch (2002) and

results from recent research showing that the Internet has dramatically accelerated

internationalisation for SMEs (Loane, et al., 2004). Further, the Internet allows a

broader scope of international markets and a faster pace of internationalisation

(McNaughton, 2001, 2003). However, this PhD study goes beyond general

conceptualisations, by identifying and tests specific internationalisation components

enhanced by the Internet that have facilitated and accelerated the interrelationships

that have given the impetus for the internationalisation of the firm.

7.5.3 Firm capabilities theory and perceived risk

The Internet has given firms the potential to capitalise on information capabilities

traditionally only held by multinational companies. Resources consist of a bundle of

services or impetus available to the firm, and the ‗capability‘ to deploy these for

productivity (Penrose, 1959). More precisely, in opposition to the emphasis some

authors have placed on group resources and capabilities (Barney, 1991) capabilities

theory refers to the firm‘s capacity to deploy resources (Amit & Shoemaker, 1993), in

this case for the purposes of internationalisation and international market growth. It

can be argued that tangible and intangible technology resources build distinctive

capabilities, which can enhance the speed and degree of sales in international markets

(Zahra, Matherne & Carleton, 2003). However, the relationship between capabilities

and performance is difficult to prove; for example, information capability responses

may suffer from self-bias, as managers may overestimate their capability (Powell,

197

Lovallo & Caringal, 2006). However, there is evidence that capabilities are the

platform for competitive advantage and that firm performance is reliant on where and

how the firm establishes and implements these capabilities (Ethiraj, et al., 2005). This

PhD study has highlighted the need to capitalise on the information, knowledge and

entrepreneurial capabilities, which have shown to accelerate internationalisation of

the firm through the mediation of the Internet.

One perspective of international capabilities theory, is the international dynamic

capabilities processes (Teece, Pisano & Shuen, 1997), which highlights the

importance of the entrepreneurial behaviour of the internationalising firm. This is an

important focus of internationalisation research, considering the gap relating to actual

firm behaviour in major theories of internationalisation (Young, et al., 2003). This

gap between firm behaviour and internationalisation theory can be filled with a better

understanding of international entrepreneurship frameworks (McDougall, et al., 1994;

Knight & Cavusgil, 1996; Moen & Servais, 2002; Styles & Seymour, 2006). That is,

the gap of firm behaviour and internationalisation theory can be filled with a better

understanding of international entrepreneurship frameworks (Styles & Seymour,

2006). In this PhD study, international entrepreneurship was identified, through the

increased use of business networks and an enhanced international mindset, which in

turn was mediated by Internet intensity in the international market growth of the firm.

Thus, international entrepreneurial capabilities affect the firm‘s international market

growth behaviour. Further, international entrepreneurship was found to be more

important for non-English-speaking market growth than it was for English speaking

markets.

Internationalisation information and knowledge have been enhanced by the Internet,

as was evident in this PhD study. International entrepreneurship shifted what would

normally be a risk judgment by the manager to an attractiveness judgment. These risk

judgment issues have either a positive or negative affect on constructs such as the

international mindset, use of business relationships and psychic distance perceptions

of the firm, as confirmed in this research and as illustrated in Figure 7.5. The Internet

has created a perceived low-risk decision for internationalisation by reducing the

asymmetry of information, which has led to an increased international mindset.

Further, firms using the Internet need not have a physical presence in the market to

198

internationalise. For example, only 32.6% of firms in this study had a physical

presence in international markets, as seen in Appendix M. These low risk

opportunities, as a consequence of the Internet, create an environment whereby firms

allocate capabilities toward internationalisation as opposed to not. That is, the Internet

has become a low risk mode of entry for internationalisation.

7.5.4 International entrepreneurship

Currently there is no model that depicts the forces on the speed of internationalisation

(Oviatt & McDougall, 2005). Oviatt and McDougall (2005) highlight the importance

of technology-enabled capacities of the firm. Apart from transportation,

communication and digital technology can enable rapid internationalisation (Knight

& Cavusgil, 1996; Oviatt & McDougall, 1999, 2005). The findings in this PhD study

provide a more precise understanding of how the Internet intensity of the firm

influences the pace of internationalisation. Oviatt and McDougall (2005) have

contributed the bulk of impetus for the speed of internationalisation to the

international entrepreneurship of the firm. However, as Oviatt recently conceded, ‗the

sole focus of this research (Oviatt and McDougall, 2005) was international

entrepreneurship and the potential impact on internationalisation’ (Oviatt, 2008,

pers. com. 02 July). Thus, the focus and findings of the Oviatt and McDougall (2005)

research had an international entrepreneurship scope.

An alternative view of accelerated internationalisation is international

entrepreneurship dynamics (Matthews & Zander, 2007). That is, the transactional

cost-based framework is limited as international entrepreneurship dynamics (IED)

which includes, discovery of international opportunity, deployment of resources to

that international opportunity and engagement with international competitors is

argued as the impetus for the accelerated internationalisation phenomenon (Matthews

& Zander, 2007). Matthews and Zander (2007, p. 390) proclaim that born global

firms or international new ventures are ‗a new species of MNEs‘. However, this

conceptual work neglects any suggestion of the Internet‘s influence in the

internationalisation process. Considering that there is consensus in the literature

concerning the Internet‘s positive influence on the speed of internationalisation, for

example, Peterson, Welch and Liesch (2002) and Oviatt and McDougall (2005),

conceptualisations by Matthews and Zander (2007) that neglect the Internet are

199

limited. Moreover, networks have also been shown to be powerful tools for

entrepreneurs (Dubini & Aldrich, 1991) and international entrepreneurship (Oviatt &

McDougall, 1994). Therefore, networks will be assessed next.

7.5.5 Network theory

Traditional theories including the stages and process models have been explored,

along with firm capabilities and international entrepreneurship frameworks. However,

network theory provides a rich explanation of Internet internationalisation. The range

of foreign markets can be linked to the network of firm relationships (Coviello &

Munro, 1995). Further, networks help firms to identify international opportunities and

can assist in explaining internationalisation and the speed of internationalisation

(Oviatt & McDougall, 2005). Both of these points have been confirmed in this PhD

research. In this study, business relationships have been shown to mediate the

international mindset of the firm in the performance of international market growth,

corroborating findings that social networks mediate international orientation in the

firm‘s internationalisation performance (Zhou, et al., 2007). As Bell (1995)

concludes, the network approach better explains the firm‘s internationalisation

process. Recently, the principal researchers of the Uppsala internationalisation theory,

Johanson and Vahlne (2003), advocated an integrated approach between stages and

network theories. That is, it would be fruitful to integrate the network theory of

internationalisation with traditional stages perspectives of internationalisation

(Johanson & Vahlne, 2003). The Internet facilitates these international networks by

strengthening current relationships and influencing the longevity of relationships, as

this PhD study has demonstrated. Some would argue that cooperation and

relationship factors such as networks are decisive for born global firms (Gabrielsson

& Manek Kirpalani, 2004). Moreover, researchers Gabrielsson and Manek Kirpalani

(2004) have argued that the Internet influences enhancing the collaboration within

and management of relationships in international business networks.

It has been suggested that the Internet reduces the dependency on more traditional

networks or intermediaries (Quelch & Klein, 1996; Hamill & Gregory, 1997).

Further, as found in Chapter 4 and as argued by Varadarajan and Yadav (2002)

network theory should highlight the importance of non-personal perspectives of

networks. For example, in this PhD study the virtual networks, such as virtual

200

intermediaries; tender.com and future platforms such as second life.com and

facebook.com are a significant change in the networks for internationalising firms.

Including virtual network intermediaries better explains how the Internet has altered

international market growth, as illustrated in Figure 7.4. That is, the incorporation of

the contemporary concepts of rapidly international, traditional networks and virtual

network intermediaries together, deepens the understanding of how the Internet

influences internationalisation theory from a network perspective. This finding

extends recent findings that traditional social networks mediate the rapid

internationalisation processes and international performance of the firm (Zhou, et al.,

2007). However, the contribution in this PhD study is the finding that not only

traditional social networks, but also technology-based networks such as virtual

network intermediaries and virtual social networks, play a role in outward

internationalisation performance. Thus, the findings in this research extend the

current literature by identifying not only the Internet‘s influence on virtual networks

but also that the Internet enhances traditional networks through business

relationships.

Figure 7.4 Internetalisation and networks

Business network intermediaries

= increased usage for international market growth


In conclusion, the Internet‘s influence is positive on networks within the

internationalisation process, both traditional and virtual. This new dynamic hybrid

network for firms has given rise to international market opportunities. The Internet

Internet Usage

Primary mechanism

Complimentary

mechanism

Trad

ition

al netw

ork

s

Virtu

al netw

ork

s


growth

Internet intensity of the firm

201

has enabled firms to develop new information, knowledge and international

entrepreneurial capabilities which in turn enables firms to exploit internationalisation

opportunities such as international market growth. Further, these enhanced

capabilities not only lead to a reduced perceived risk of internationalisation, but also

the decision making process becomes a judgement related decision as opposed to a

risk related decision. Lastly and most importantly the output as a consequence of

these influences has enabled firms to internationalise rapidly, with a greater breath of

international markets on a platform of virtual and traditional networks as a

consequence of the Internet, as illustrated in Figure 7.5. Now the contributions of

these findings will be presented.

Figure 7.5 Internetalisation framework


7.6 Contributions

Now that the broader theoretical impact has been evaluated, specific contributions

will be assessed. That is, contributions to theory, practice and policy will be

presented. Firstly, theoretical contributions are outlined in respect to construct

identification and effects on the broader range of internationalisation theory.

Secondly, the implications of these findings for industry practice are shown. Lastly,

policy contributions are presented.

Internet

opportunity

Internet enhancing

capabilities

Internet reducing

received risk

Internet enhanced


Dynamic networks:

traditional &

virtual networks

Increased

International

entrepreneurship

capabilities

Information/

knowledge capabilities

Decision making:

reducing perceived

risk of


Increased speed

and breadth of


202

7.6.1 Theoretical contributions

This PhD research gives a more precise account of specific internationalisation

components enhanced by the Internet, as seen in Table 7.5. That is, the identification

of the Internet‘s influence on the internationalisation components of; information

availability, information usage, interaction communication, international mindset and

business relationship usage, gives a better understanding of the phenomenon, as

illustrated in Figure 7.6. Findings highlight the Internet‘s enhancement of

information, knowledge and entrepreneurship components of internationalisation,

which inturn allows for a broader and accelerated international market growth for the

firm. Thus, the major theoretical contributions stem from the evidence of a holistic

perspective of the Internet‘s effects on internationalisation. Further, the integration of

information knowledge and international entrepreneurship internationalisation

components in a single framework illustrates the broad impact of the Internet on


Figure 7.6 Final Internetalisation model: theoretical interrelationships


The first contribution is the identification of a empirically supported holistic

perspective of the interrelationships pertaining to the Internet‘s influence on

Information

availability (F1)

Information

usage (F2)

Interactive

communication

(F3)

International

mindset (F4)

Business

relationships

(F5)

Internet

intensity (F7)

International

market growth

(F8)

Psychic

distance (F6)

Internet marketing

capabilities

---- For non English markets (PSYDIS)

English model only (INTACT)

International

entrepreneurship capabilities

Information and

knowledge capabilities

203

international market growth, deepening the understanding of the phenomenon, as

outlined in Table 7.5, Contribution 1. Further, the literature is dominated by studies of

high technology industries. This study gives empirical evidence from not only high

tech firms, as seen in Moen (2002 b), Moen et al (2003) and Aspelund and Moen

(2004), but also firms from agribusiness, business and finance services, consumer

goods, and information communication technology (ICT) industries, which gives

greater generalisability to the findings.

More specifically, contributions 1a–1f are the internationalisation constructs that have

been influenced by the Internet—for example, information availability, information

usage, international mindset and business relationships—in the firm‘s

internationalisation process in respect to international market growth. That is, there

was evidence indicating; the identification of internationalisation constructs, multi-

item constructs, internationalisation constructs in a new Internet context, and

interrelationships between these constructs, findings beyond what is currently

established in the literature, as outlined in Section 7.2 and 7.3, and Table 7.1 and 7.2.

Further, although causality is not argued, statistical confirmation progresses the

literature, which has been dominated by conceptual non-empirically based research

(Contribution 1), as seen in Chapter 3, Table 3.1. Whereas, this PhD study

substantiates interrelationships between multiple multi-item internationalisation

constructs pertaining to the Internet and international market growth. Hence, this

study brings a better understanding of the Internet‘s impact on internationalisation

and international market growth.

Table 7.5 Contribution summary Contribution Contribution explained Section

Contribution 1 Empirically based holistic perspective of the Internet‘s effects on the

outward internationalisation process. Not only in high tech industries

7.1

7.2

7.3

Contribution 1a Information, the Internet and internationalisation 7.1.1

Contribution 1b Knowledge transference, the Internet and internationalisation 7.1.1

Contribution 1c Interaction, the Internet and internationalisation 7.1.1

7.1.2

Contribution 1d International mindset, the Internet and internationalisation 7.1.2

Contribution 1e Business relationships, the Internet and internationalisation 7.1.2

Contribution 1f Psychic distance, the Internet and internationalisation 7.3.2

Contribution 2 An understanding of the Internet‘s effects on the path and pace of


7.1

7.2.2

Contribution 2a Identification of components of international market growth.

Measurement development

7.3.1

Contribution 2b Stages theory of internationalisation and the Internet 7.3.1

204

Contribution 2c Accelerated internationalisation, born global or rapidly international.

Digitalisation of the firm

7.2

Contribution 2d Network theory of internationalisation. Traditional business

relationships and the Internet. Virtual intermediary networks and

traditional networks

7.3.2

Contribution 3 Bringing information/ knowledge, international entrepreneurship,

network and firm capabilities theory together in relation to internet

intensity

7.1

7.2


The second contribution is the application of these findings to the broader theoretical

body of knowledge in internationalisation. That is, contributions 2a–2d describe how

these findings increase knowledge of the rapid internationalisation process

perspective, capabilities, international entrepreneurship and network theory of

internationalisation. The evidence indicates that the firm‘s international opportunities

have been enhanced due to the Internet‘s influence on information, knowledge and

international entrepreneurial capabilities. Further, these firm capabilities are

underpinned by international market opportunities due to the Internet‘s impact on

international networks, both traditional and virtual. This research goes some way

towards filling the current gap in the literature with respect to the Internet‘s impact on

internationalisation, specifically international market growth. This study addresses

this current deficiency and extends work from the mid-1990s (Bennett, 1997; Hamill,

1997; Hamill & Gregory, 1997; Samiee, 1998b, a) and more recent work by Petersen,

Welch, and Liesch (2002) and Aspelund and Moen (2004). That is, this research

evolves the body of knowledge to include precise measures and interrelationships

pertaining to Internet intensity and the outward internationalisation process. That is,

beyond the sole SEM model by Aspelund and Moen (2004), which identified the

Internet‘s influence on international vision, this PhD study identified a broader impact

of the Internet on the internationalisation components of the firm. This study also

identified the impact of the Internet on the path and pace of internationalisation, for

example, a broader range of international markets at an accelerated rate of

internationalisation for the firm.

The last, and most important, contribution is that the interrelationships which pertain

to the Internet and internationalisation process have been captured within a single-

framework. More specifically, the interrelationships between the Internet intensity of

the firm, internationalisation components and international market growth have been

shown to statistically model together. Beyond construct identification, variable/scale

205

development and testing, a holistic perspective of how the Internet has affected the

internationalisation process of the firm has been captured and shown in a statistically

significant manner. Further, the research integrates the information/knowledge and

international entrepreneurship components in a simultaneous modelling process that

has an outward internationalisation context (Contribution 3). That is, a traditional

information/knowledge internationalisation process has been combined with an

international entrepreneurial perspective of internationalisation to investigate the

effect of the Internet and international market growth in an integrated model. The

concept of international entrepreneurship has not previously been evaluated in an

Internet intensive context, where international entrepreneurship theory is advocated as

a theoretical platform for understanding a born global theory of internationalisation.

These findings relating to the Internet internationalisation body of knowledge

contribute significantly to the broader international marketing literature.

7.6.2 Contributions to practice and policy

The practical contributions are twofold. Firstly, the findings of the research illustrate

contemporary issues for international and e-marketers concerning international

market growth effectiveness. The findings in this study give creditability to how the

Internet can enhance internationalisation opportunities. For example, this includes

issues pertaining to the firm‘s ability to exploit information and knowledge

capabilities through the Internet intensity of the firm. Further, if internationalisation is

becoming a more easily attained growth outcome, then more firms will need to

develop these internationalisation and Internet capabilities. For example, firms will

need to focus solidly on information, knowledge, international mindset and use of

business relationships/networks to deal with the process of rapid internationalisation

more efficiently and effectively.

Marketing practitioners can use this evidence to formulate international marketing

frameworks and programs. This is the second practical contribution. Marketing

managers and international managers can incorporate their firm‘s current practice

with the findings from this study, which will not only help to achieve better practice,

but help them to formulate an Internet international marketing vision. That is,

frameworks for capitalising on internationalisation would also focus on e-marketing

capabilities to exploit the information/knowledge, international mindset and business

206

relationship opportunities due to the Internet. Training programs and education

systems need to be in place to handle these digital changes, as the Internet has

become a lower risk mode of entry to international markets.

From a policy perspective, appropriate educational institutions and government

bodies need programs for Internet international marketing. One might think that the

normal market and/or business practices can apply in a digital environment; however,

this is not necessarily the case. Thus, institutions developing policy need to

understand the dynamics of the Internet and create educational opportunities to

harness the growth potential for Australian firms. Moreover, institutions should be

aware of successful firms using the Internet in internationalisation so as to draw

benchmarks and to develop sets of exemplars to build knowledge for the broader

business population (Chaudhry & Crick, 2002). Now that the theoretical and practical

implications have been highlighted, the limitations of the research will be evaluated.

7.7 Limitations

The dearth of substantive theory within the discipline means that the measures

developed have limitations. That is, measurement error is an issue, as the body of

knowledge remains in its infancy and the scales are not well established. Thus,

limited scale development, or statistical reproduction for scale verification in

particular, remains a limitation. However, every endeavour was made to use

established scales.

As the research is predominantly an exploratory interpretation of the sample

estimates, ‗a fragile balance between dutiful theoretical considerations and statistical

interpretation‘ (Boomsma, 2000 p, 474) was established. That is, although minor

modifications were made to the proposed model, theoretical integrity was left intact.

Modifications were made to only two pathways and only when theoretical plausibility

was evident. As a consequence, replication or cross-validation would be needed for a

stronger statistical argument of causal predictions (Boomsma, 2000). As with most

studies modification and measurement error do limit this study‘s claim to be

confirmatory; however, the objective was exploratory with confirmatory elements, as

opposed to a strictly confirmatory model (Byrne, 2001).

207

The Australian perspective potentially limits the broader generalisability of the

research. Further, as the findings are drawn from predominantly SME‘s the results

may not be generalisable to multi-national firms. However, having a single country

perspective enables the environment to be held constant, giving the study some

experimental control. For the research to have a larger theoretical impact, a multi-

country study would have helped to give the findings greater generalisability. Further,

the focus of the research is predominantly from an outward internationalisation

perspective. Thus, the inward internationalisation elements may yield distinct

evidence. However, considering international market growth was the focus, an

outward internationalisation perspective was prudent. Notwithstanding these

limitations, the study makes a valuable contribution to international marketing theory

and practice.

7.8 Future directions for research

The research uses competing models that vary slightly from the proposed model, the

research findings should be considered exploratory with confirmatory elements. That

is, replication and/or cross-validation is needed for strict statistical confirmation

(Byrne, 2001). Future research will endeavour to address these issues.

A verification (test/re-test) study is necessary to ensure that these findings have

greater credibility. As this is a pioneering study in many respects and considering this

is a single study, it is essential to verify the interrelationships identified, multi-item

constructs and re-evaluated excluded items. Thus, once a verification study has been

conducted, the findings will become more generalisable. Further, measurement

development is needed, in combination with a verification study. For example,

Internet intensity, information availability, information usage and interactive

communication require scale development. Together with these contemporary

constructs, the research highlighted the need for scale development in more

traditional elements of internationalisation, such as business relationships and psychic

distance. Although the construct of international market growth was confirmed, it is

necessary to re-test items in different studies to establish credible scales for


208

Further, a re-test study would allow the research to investigate measures that were not

confirmed in this study. This process would allow a better understanding of the

dynamic concepts within the Internet international marketing body of knowledge. For

example, the concept of digitalisation was found to be important in the analysis of

case studies (Chapter 4), but not within the measurement of firm Internet usage.

Further research would assist in understanding this concept of digitalisation. The

digitalisation concept is not about the Internet‘s impact on goods versus services as

initially proposed (Chapter 3, Section 3.3.2), but to what extent the product offering

can be transformed into a digital format, which then has a greater capacity to enhance

internationalisation through the Internet. Thus, the focus for future research should

also attempt to clarify this issue.

Another finding from this study was the effect of the international entrepreneurship

elements of internationalisation. International entrepreneurship, although captured

here in a small way using international mindset, business relationships and psychic

distance, could be the primary focus of a study in which greater emphasis is placed on

the international entrepreneurship components of internationalisation. As identified in

a recent special edition of the Journal of International Entrepreneurship, ‗international

entrepreneurship and the Internet‘, there is ongoing debate about the interface

between the Internet and international entrepreneurship (Sinkovics & Bell, 2006). For

example, the Internet‘s interface between the international entrepreneurial dimensions

recently identified such as; e-entrepreneurship, motivation, innovation (Ramsey &

Ibbotson, 2006), commitment level (Mostafa, Wheeler & Jones, 2006), knowledge

building (Loane, 2006), liability of foreignness and resource scarcity (Arenius, Sasi &

Gabrielsson, 2006), along with those constructs already identified in this PhD study,

need further exploration.

7.9 Conclusion

In this chapter, the two research issues were resolved. The explicit influence of the

Internet was described, with constructs identified and statistically confirmed. The

interrelationships between constructs were established in an SEM process and the

implications for internationalisation processes were highlighted. The overall research

question was addressed with respect to the implications to a broader range of

internationalisation theories, such as stages of internationalisation, rapid accelerated

209

internationalisation, international capabilities, international entrepreneurship and

network theory of internationalisation. Further, the contribution and level of

contribution were established, limitations highlighted and future research possibilities

explored.

The Internet‘s influence on internationalisation extends beyond the

internationalisation process knowledge-management explanation proposed by

Peterson et al. (2002) and Overby and Min‘s (2001) suggestions that international

supply chain management (ISCM) explains the Internet‘s impact through the

implementation of international networks. However, Internetalisation can be

theorised through an enhanced international network model including both personal

and virtual networks. This conceptual reasoning must consider and report the

importance of the Internet to the process components of information, knowledge, and

entrepreneurship so as to give a richer picture of the theoretical landscape.

International network theory is the advocated theoretical framework that was found to

best explain the Internet phenomenon in international market growth. Further, this

research also confirms that international network theory underpins the conceptual

theorisation of post-Internet internationalisation, albeit in a new dynamic form with

information/knowledge and international entrepreneurship impetus. Firms need

information, knowledge and Internet capabilities, along with international

entrepreneurs, to capitalise fully on opportunities for ‗Internetalisation‘.

The study provides an initial framework or platform for the future research of the

Internet‘s influence on internationalisation and international market growth. Because

the study used a two-stage process of case studies and a structural equation modelling

evaluation, it can be considered creditable. With the Internet only established for little

more than a decade, this research area will continue to evolve, due to the dynamic

nature of Internet technology. This research shows some of the key areas where

further research is required.

210

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APPENDICES

The influence of the digital environment on the integration of International Marketing Strategy

Appendix A: Interview protocol

AUSTRALIAN RESEARCH

CONFIDENTIAL

Shane Mathews

Faculty of Business School of International Business Queensland University of Technology

Phone: (07) 3864 9433 Fax: (07) 3864 2550

E-mail: [email protected]

FACULTY OF BUSINESS QUEENSLAND UNIVERSITY OF TECHNOLOGY

234

INTERVIEW PROTOCOL

Case no………………..Interview no………….Date:………………………...……

Business name:……………………………………………………………………...

Interviewee‘s name:………………………………………………………………...

Interviewee‘s title:…………………………………………………………………..

Location:…………………………………………………………………………....

Business profile:……………………………………………………………….……

Time: Start…………….………………..….Finish.………………………………...

PART A: Introduction

Thank you for allowing me to talk with you. This university research would not be possible without

your valuable participation. The benefits of this research are the implications for how business people

like yourself can build and improve international marketing practices in a digital environment.

Purpose of this research

While the Internet has been growing at a rapid pace globally, scant attention has been paid to the

international marketing implications and those implications for marketing strategy. Therefore this

research aims to investigate this topic by exploring the elements currently being used by Australian

marketers for a better understanding of the Internet with respect strategies in international markets. By

exploring current practices by international firms utilising the Internet, results of this research will serve

as a reference for industry when making decisions about foreign market expansion.

Status of this research

This research is university research conducted by the Queensland University of Technology. If

confirmation is required you may contact my supervisor, Dr Marilyn Healy, Lecturer at the School of

International Business, on (07) 3864 2652, or e-mail, [email protected]. Complaints about ethical

conduct are instructed to contact the research ethics officer Wendy Heffernan on (07) 3864 2340 or

[email protected].

Ethical concerns of this research

All the data collected in the interview is confidential and anonymous. For the safety and benefit of

the firm and yourself, I will disguise your company‘s name in the final research report in order to

achieve anonymity, along with any other identifying details, unless prior permission in writing has

235

been obtained to reveal your identity. Even incidental identification of your firm will not be

possible, as steps will be taken to disguise all participants.

Undisguised information about participants in this research will not be made public nor given to a

third party outside of my direct supervisor Dr Marilyn Healy.

Note

Would you mind if I tape the interview as this will help with the data analysis? You can push the

‗pause‘ button at any point throughout the interview.

Are there any further questions either about the interview procedure or the purpose of the research?

If you wish I would be happy to provide you with a summary of the results.

236

Part B Opening questions

General business and background experience questions

1. Could you please tell me about the business? __________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

________________________________

2. Would you please tell me the story of your experiences about your marketing activities for your

firm?

__________________________________________________________________________________________________

__________________________________________________________________________________________________

_________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

_________________________________________________________________

3. Could you please indicate some internet specific critical events in terms of your business? Can you

please indicate the significance of any changes and the time period of any major impact?

Graph over time

Level of importance

High

Low

1995-96 97 98 99 / 2000 01 02 03 04 05 Years

237

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________

________________________________________________________________________________

________________________________________________________________

4. What market or market‘s is your firm currently operating in?

How would you describe the way in which your firm achieves international market development

presently?

Further, what entry modes does the firm currently use to access markets? ______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________

5. How would you describe your product in terms of being a physical product, a service, an

informational-based product or a combination? Please explain?

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________

________________________________________________________________________________

________________________________________________________________

238

Part C Issues relating to Internet use by the firm

1. How has the Internet affected the business? Specifically, the international business elements?

Please explain?

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________

2. On what level do your customers interact with your company through the firm‘s website.

Please indicate on the Table below?

Level of interaction

with customers

No

importance

Little

importance

Moderate

importance

Strong

importance

Very strong

importance

Comments

One way simple

information

Two way

interaction

Transacting

Collaboration

Other

a. Further, do you think this will change in the future? If so how and why? If not, why not?

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________

239

3. What Internet tools do you use to communicate or interact with your customers? Please indicate

on the Table below?

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________

Tool‘s used for

interaction with

customers

No

importance

Little

importance

Moderate

importance

Strong

importance

Very strong

importance

Comments

Simple

communication

e-mail

Chat rooms

Digital notice

board

240

Part D Market

1. Is there a difference between how the firm uses the Internet for domestic customers and

international customers? If so, why? If not, why not?

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________

2. Do you target any specific international markets online? If so why? If not why not?

Please specify these markets………..

________________________________________________________________________________

________________________________________________________________________________

___________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

___________________________________________________________

3. You described your product as……………….in an earlier question (Part B. Q.4.). Has

digitalisation affected your product offering? If so, why? If not, why not?

________________________________________________________________________________

________________________________________________________________________________

___________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

___________________________________________________________

241

Part E Marketing elements

1. How is the website used for marketing of the firm? Please explain?

________________________________________________________________________________

________________________________________________________________________________

___________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

___________________________________________________________

2. Research has shown that trust is a pivotal element for companies online in international and

Internet environments. What are your thoughts on this subject? Could you clarify what your

impression of trust is online?

________________________________________________________________________________

________________________________________________________________________________

___________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

___________________________________________________________

3. In terms of: (a) company brand name (b) brand image and (c) product brand, is the firm‘s brand

consistent in foreign markets. Please give examples.

(a)______________________________________________________________________________

________________________________________________________________

(b)______________________________________________________________________________

________________________________________________________________

(c)______________________________________________________________________________

________________________________________________________________

242

4. How do you think your firm‘s brand perceived by customers online?

a. Do you think the brand‘s perception is the same online as it is offline? Please explain?

________________________________________________________________________________

________________________________________________________________________________

___________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

___________________________________________________________

243

Part F Strategy/ International markets

1. What is your strategy online? How did it develop?

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________

2. What would you consider to be the advantages and disadvantages of the Internet in international

markets?

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________

3. A number of internationalisation categories have been identified in the literature listed below. If

you had to choose which category would best describe your web strategy and why?

(a) Not included for international customers

(b) Passively attracts international customers (if an order is placed then the company will

supply)

(c) Global (actively targets customers with a standard marketing strategy)

(d) Glocal (actively targets customers with a customised marketing strategy including local

content for different countries)

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________

244

4. Does the firm use the Internet to attract new customers in existing international markets? If so,

why? If not, why not?

a. If so how effective is the Internet at penetrating existing international markets?

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________

5. Does the firm use the Internet to attract new international markets? If so, why? If not, why not?

Do you think this will change in the future?

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________

6. How difficult is it to evaluate a potential market online? Why?

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________

245

Part G Internationalisation

1. Has the Internet affected the way you go about your process of internationalisation? Please

elaborate?

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________

2. From the list below please indicate which would best describe the firm‘s process of

internationalisation? (These do not have to be mutually exclusive)

Through stages or increments by gaining experience in one marketing before entering another

market

Through relationships with either domestic or foreign networks

As a consequence of cost efficiencies gained in international markets

Became instantly international

Further, has this process altered due to the Internet? If so, why? If not, why not

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________

a. Each of these elements below influence the firm‘s internationalisation. Please rank these in order of

importance in terms of your internationalisation generally? Why have you ranked this way?

Comments

Relationships and networks ( )………………………….

Relations with supply chains ( )………………………….

Experiences and knowledge ( )………………………….

Sourcing of resources ( )………………………….

Efficiencies from production or markets ( )………………………….

246

b. Would this ranking differ for your online internationalisation strategies? Why? (if older firm)

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________

3. From the Table below how has the Internet affected international marketing of your firm? Please

explain?

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

__________________________________________

4. Has the Internet influenced the transference of knowledge and information concerning markets

internally?

a. Do you have a special system for knowledge? Please explain?

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________

5. Where do you see your international marketing heading in the future?

a. Does the Internet play a role in this?

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

_____________________________________________________________________________________________________

Least important Most important

Level of importance 1 2 3 4 5 Comment

Gaining information

about the market

Information about

competitors

Information about

customers

Information about

resources

247

Part H General ending questions

1. Are there any other questions I could have asked?

__________________________________________________________________________________________________

__________________________________________________________________________________________________

_________________________________________________________________

2. Has answering these questions helped you think about how you do business? If so, how?

__________________________________________________________________________________________________

__________________________________________________________________________________________________

_________________________________________________________________

3. Who else can I talk to?

__________________________________________________________________________________________________

__________________________________________________________________________________________________

_________________________________________________________________

4. If I need to clarify any points, do you mind if I come back to you?

248

Part H – Background information

1. Industry____________________________

2. Range of services offered

__________________________________________________________________________________________________

____________________________________________________________________________

3. No. of offices/outlets______________________________

4. Age of firm______________

5. No. of fulltime employees___________parttime employees_______________

6. Age of owner/manager

< 20 years 21-30 years 31-40 years 41-50 years 51-60 years 61 and over

7. Education level

Primary school Secondary

school

Certificate or

diploma

Degree Post graduate

8.Years of experience in this industry __________Years with this firm________

9.Total turnover $AUD millions

<1 1 - <2.5 2.5 - <5 5m – <10 10 or >

10. What is your international portion of that total?____________________

Your contribution to this research is greatly appreciated.

Thank you.

_______________________________________________________________

249

Appendix B Interview information package

This is a preliminary request to participate in university research conducted by the Queensland

University of Technology that looks at the effects of the Internet on international marketing strategies.

This project is being investigated as part of my Doctorate at the Queensland University of Technology.

Participation in this study is of a voluntary nature. Respondents can choose to withdraw at any time

without any loss of benefit, nor will this affect any current of future involvement with QUT. If

confirmation is required you may contact me on contact details outlined at the end of this document or

my supervisor, Dr Marilyn Healy, Lecturer at the School of International Business, on (07) 3864 2652

or e-mail: [email protected].

While the Internet has been growing at a rapid pace globally scant attention has been paid to the

international marketing strategy and the implications for marketing managers. Therefore this research

aims to investigate this topic by exploring the elements currently being used by Australian marketers,

for a better understanding of the Internet with respect to international strategies. By exploring current

practices by firms utilising the Internet, results of this research will serve as a reference for industry

when making decisions about international marketing.

The process of in-depth interviews will be used to ascertain the pertinent information necessary for the

project. These in-depth interviews will take approximately 1-1½ hours to complete for respondents.

Information will be gathered by tape recorder in the interview and will go towards the completion of my

doctoral dissertation. Furthermore, a summary of the results gathered will be available to you on

completion of the project, if requested. Your contribution to the research will help to create a better

understanding academically and professionally of these contemporary issues pertaining to the Internet

and international marketing strategy.

A short list of businesses have been developed which conform to the selection criteria below for the

case study interviews.

Criteria:

Company must be international

Company must have an individual with marketing knowledge and/ or experience

Contact details were either obtained by University and professional networks or by publicly obtainable

data such as the telephone book.

The research is confidential. Therefore all of the data collected in the interview is confidential and

anonymous. For the safety and benefit of the firm and yourself, I will disguise your company‘s name in

250

the final research report in order to achieve anonymity, along with any other identifying details. Even

incidental identification of your firm will not be possible, as steps will be taken to disguise all

participants. Undisguised information about participants in this research will not be made public nor

given to a third party outside of my direct supervisor Dr Marilyn Healy unless written prior permission

is obtained from the firm involved. Any concerns or complaints about ethical conduct you can contact

the research ethics officer Wendy Heffernan on (07) 3864 2340 or email [email protected].

FACULTY OF BUSINESS QUEENSLAND UNIVERSITY OF TECHNOLOGY

Shane Mathews

Faculty of Business

Department of International Business


Phone: (07) 3864 9433

Fax: (07) 3864 2550

E-mail: [email protected]

251

Appendix C survey questionnaire Thank you for your participation in this important Australian research. Without your contribution

this research would not be possible.

The focus of the questionnaire is the ‗Internet & international customer growth‘

Part A. Perceived Internet importance Question 1. The following is about the general usage of Internet technology in your firm. How much does your

firm use the following Internet technology? Please indicate (by ticking the box) the extent of usage of the following

using a 7-point scale. 1= no usage, and 7 = extensive usage.

Question 2. The following questions are about the implementation of Internet in your business processes within the

firm. How much does your firm use the Internet for the following business processes or activities? Please indicate (by

ticking the appropriate box) the extent of usage of the following using a 7-point scale. 1= no usage, and 7= extensive usage.

No usage Extensive

usage The firm uses……. 1 2 3 4 5 6 7

e-mail

firm Website

personal website space for customers/clients or suppliers

(extranet or personal web-space)

online customer support systems (example, auto emailsystem,

online helpdesk or other)

an intranet system (internal firm computer system) consumer transaction technologies either through electronic

transfer or a form of website shopping cart

Internet directories: General and/or industry based websites that

support a directory so customers can find the firm/ website

(Examples, search engines, austrade.gov.au, yellowpages.com)

Internet marketplaces: Websites that support buyers and sellers

in any way. (For example, either industry specific or general

websites such as ebay.com, amazon.com, hoteldeals.com, tender

& job sites such as tendermatch.com). Not your own sales site

No use Extensive use

The firm uses the Internet for…. 1 2 3 4 5 6 7

marketing and advertising

online sales to customers

after sales service and support

market research

management of international market

online purchasing/procurement (emailor a third party website)

exchange of operational data with suppliers

exchange of operational data with business customers

252

Part B. Internationalisation process, path and growth

Question 3. The following questions concern the firms product characteristics. Please indicate (by

ticking the appropriate box) the extent of your agreement or disagreement with the following statements

using a 7-point scale. 1= strongly disagree, and 7= strongly agree

Question 4. The following questions are about information availability. Please indicate (by ticking the

appropriate box) the extent of information usage with the following statements using a 7-point scale. 1=

no information, and 7= extensive information

Question 5. The following questions are about communication. Please indicate (by ticking the

appropriate box) the extent of your agreement or disagreement with the following statements using a 7-

point scale. 1=strongly disagree, and 7= strongly agree

Strongly

disagree Strongly

agree

In my firm the company’s product/s……

1

2

3

4

5

6

7

is/ are classified as sophisticated

is/ are complex in nature

need(s) specialised know how to market

take(s) a long time to learn about

has/have a large proportion that is technological in nature

can be difficult to resolve customers problems

need (s) a high level of specialised service

No information extensive

information

Information …….………is available 1 2 3 4 5 6 7

about international market/s

about competitors

about international customers

about international resources needed to produce goods or

services

about international suppliers

Strongly

disagree

Strongly

agree

In my firm we have…….

1

2

3

4

5

6

7

an efficient mechanism(s) of communication

a high frequency of communication

fast speed of communication

multiple functions for interactive communication

the ability to distribute communication (eg- website (24/7))

253

Question 6. The following questions are about the usage of information. Please indicate (by ticking the

appropriate box) the extent of information usage with the following statements using a 7-point scale. 1=

no usage, and 7= extensive usage

Question 7. Over the last 10 years has the firm increased sales in international country markets?

Please indicate the extent to which your firm‘s sales increase or decrease in English and non-English

speaking country markets within the three growth factors. Please indicate (by ticking the appropriate box)

the extent of your agreement or disagreement with the following statements using a 7-point scale,

1=significant decrease, and 7= significant increase. 7a. Over the last 10 years our sales to predominantly English speaking country markets increase/decrease

…………..

Note: Existing country market is a country where the firm already has customer, whereas, a new country market is

where the firm has not had customers recently

7b. Over the last 10 years our sales to predominantly non-English speaking country markets

increase/decrease …………

Significant

decreases

Significant

increases

in new customers in new country

market/s

1 2 3 4

5 6 7

in new customers in existing

country market/s

1 2 3 4

5 6 7

in usage by existing customers in

country market/s

1 2 3 4

5 6 7

Note: Existing country market is a country where the firm already has customer, whereas, a new country market is

where the firm has not had customers recently

Question 8. Please indicate (by ticking the appropriate box) the extent the firm uses the Internet for servicing

international customers, as a sole or complementary mechanism. (1= complementary and 7= sole mechanism

for international customers.)

Complementary mechanism INTERNET Sole mechanism

1 2 3 4 5 6 7

No use Extensive

use

In my firm we use……… 1 2 3 4 5 6 7

information about international market/s

information about competitors

information about international customers

information about international resources needed to produce

products or services.

information about international suppliers

Significant

decreases

Significant

increases

in new customers in new country

market/s

1 2 3 4

5 6 7

in new customers in existing

country market/s

1 2 3 4

5 6 7

in usage by existing customers in

country market/s

1 2 3 4

5 6 7

254

Question 9. The following questions are about the firm’s view of international markets.

Please indicate (by ticking the appropriate box) the extent of your agreement or disagreement with the following

statements using a 7-point scale. 1=strongly disagree, and 7= strongly agree

Question 10. The following questions are about your business networks. Please indicate the extent of usage of the

following using a 7-point scale. 1= no usage, and 7= extensive usage

Question 11. The following question is about acquiring customers in international markets. Please indicate (by

ticking the appropriate box) the extent of your agreement or disagreement with the following statements using a 7-

point scale. 1=strongly disagree, and 7= strongly agree

Strongly

disagree

Strongly

agree

The firm …… 1 2 3 4 5 6 7

is committed to servicing international customers

commits sufficient financial and human resources to the

international market (s)

emphasises the importance of international growth to employees

views managerial international experiences as important for

entering overseas markets

regards the world as the market

views fast international market growth as achievable

no usage extensive

usage

We use business networks to………

1

2

3

4

5

6

7

maintain international customer relationships

strengthen existing relations

develop longer lasting relationships

acquire new customers

enter new international country market/s

enhance our international performance

Strongly

disagree

Strongly

agree

Customer acquisition is limited … 1 2 3 4 5 6 7

in non-English language speaking country markets

when English is not the national language

when English is not the business language

when the country has a different culture

when there is a low level of education in that country

when there is a low level of economic development in that

country

when no staff in the firm read, speak or understand the

language from the customers country

when there is a lack of knowledge about international market

consumers

255

Part C General Business background

Question 12.

(a) Types of product (s) or service (s) _____________

(b) Number of employees (FT and/or PT) __________

Question 13.

(a) Year firm was established in what year _________

(b) Firm postcode_________

(c) Industry or industry classification-ANZSIC code (if known) _________

(d) First international country market (1st international customer) ____________.

(e) Number of county market/s you have customers in _________

(f) Please list the country market/s you have customers in (all if possible, however, at least the largest 5

country market/s for the firm) ____________________________________________

______________________________________________________________________

(g) Does the firm have a physical office or place of business in their overseas market (s)

__________________________ type of premise______________________?

(h) What percentage of the firm‘s total gross sales were generated from international customers over the

last 12 months? ________%

(i) Firms total annual turnover $AUD_________ (approximately)

Question 14.

(a) Your position within the firm_______

(b) Years of experience in industry _______

(c) Years of employment with this firm ________

(d) Age of respondent________

Question 15.

Are there any other comments you would like to make?

___________________________________________________________________________________

___________________________________________________________________________________

__________________________________________________

Your contribution to this research is greatly appreciated.

Any information will be kept strictly confidential and anonymous

Thank you very much for your help.

256

Please indicate if you would like a summary of the findings from the research and/ or if you want

to enter the draw for the prize by entering your emailaddress below.

E-mail________________________________________________

257

INTERNATIONAL INTERNET MARKETING SURVEY QUESTIONNAIRE

Definition of terms:

The term international market is any market outside of the national borders of Australia. Firms to be studied:

Only Australian firms in international markets. Non-commercialisation and confidential:

Data collected from firms will be used to test hypotheses relating to the theoretical model as part of the doctoral thesis. It does not involve any commercial activities. All information will be treated in strictest of confidence. Questionnaire content:

The questionnaire consists of three parts. Part A Internet usage, Part B evaluates the Internets influence on internationalisation Part C is a set of background questions needed for descriptive analysis.

Who should answer the questions? Top managers or decision makers concerning international customers should answer the questionnaire. However, if there is some information that you might not be fully aware of, please consult the relevant functional department or person. How to answer the questions:

Most questions ask you to click a box. However, others you will need to write in the response. Please click the appropriate box or give your opinion in the appropriate area. Benefits to firm: Managers that contribute to the research will receive a summary of the findings on request and be eligible to go into the draw for a special prize?

258

Participant Information Sheet

A comparative evaluation of the Internets influence on international market

penetration and development strategies of Australian SME’s

Researcher: Shane Mathews PhD research

Description This project is being undertaken as part of a PhD project for Shane Mathews. The purpose of this project is to evaluate the overall influence the Internet is having on traditional international market growth for Australian small and medium firms (1-250 employees). The research investigator requests your assistance in identifying these influences. Participation

Your participation will involve a questionnaire that will take approximately 15 minutes to complete and will be generated online. That is, an emailwith a link to a Queensland University of Technology server will be sent to participants so the questionnaire can be completed online. Expected benefits

It is expected that the results of the survey will benefit the development of a better theoretical understanding of how the Internet is affecting the internationalisation of Australian firms. Further, participants can receive a summary of the findings on request. Confidentiality

All comments and responses are anonymous and will be treated confidentially. The names of individual persons are not required in any of the responses. Voluntary participation

Your participation in this project is voluntary. If you do agree to participate, you can withdraw from participation at any time during the study without comment or penalty. Your decision to participate will in no way impact upon your current or future relationship with QUT or with any external body. Questions / further information

Please contact the research team if you require further information about the project, or to have any questions answered. Shane Mathews 3138 5310 or [email protected] Concerns / complaints Please contact the Research Ethics Officer on 3138 2340 or [email protected] if you have any concerns or

complaints about the ethical conduct of the project.

mailto:[email protected]

259

Appendix D Phone screening script

Script for telephone

Internet and international customer growth

Hi My name is ______________ I am from the Queensland University of Technology we are doing

research which evaluates the Internet‘s capacity to attract and maintain international customers for

Australian firms. We would be willing to share the finding with you and your co. and there is a prize,

which is a $100 David Jones voucher.

We would need to speak to the person in charge of your international customers at a marketing

level/department.

Screaming question are:

1. You must have international customers

2. We must get the person who is responsible for the marketing/development of international

markets/customers

The research can be done in two ways:

1. online survey, which we can emailto you (on QUT website)

2. We can send you a hardcopy of the survey with a return envelope and you send it back via mail

All information is totally confidential and anonymous. A very high standard of ethics is kept for anyone

participating. Your input is very valuable to the research and appreciated.

260

Appendix E e-mail

Subject line: Queensland University of Technology: National Research

Dear David,

I recently contacted you about our national research project. Thank you kindly for agreeing to

participate in this important Australian research. Please follow the link below. The survey will only take

about 10-12 minutes. Your input is very valuable to the research and appreciated.

http://survey.bus.qut.edu.au/index.php?sid=70

A summary of findings and a chance for a $100 David Jones Voucher will be given on request.

If there any problems or questions please do not hesitate in contacting me.

Regards,

Shane Mathews

Note: If the link does not work, please cut and paste the link into the browser address.

Shane Mathews

Queensland University of Technology | Faculty of Business, School of Advertising Marketing and Public

Relations | 2 George Street, BRISBANE QLD 4000

T: 07 3138 5310 | F: 07 3864 1811 | www.bus.qut.com



http://www.bus.qut.com/

261

Appendix F: Education in SEM Date Event -Topic Expert-position &

expertise

Comment-outcome

2005

Jan 2005 ACSPRI: Level Advanced: Introduction to Structural Equation Modelling AMOS (1 week full

time)

Australian National University

Dr Everarda Cunningham, Swinburne University of

Technology

A better understanding of Multiple regression, factor analysis and covariance analysis. What

SEM can do and techniques to ensure the

highest of research standards

Jan 2005 ACSPRI: Level Advanced: Applied Structural

Equation Modelling (1 week full time) Australian

National University

Mr Philip Holmes-Smith,

School Research,

Evaluation and Measurement Services

(SREAMS)

An understanding of challenges and issues of an

applied nature in AMOS and LISREL

Workshop Queensland University of Technology

SEM workshop,

School of International Business (research)

Model process in the internationalisation of the firm

Workshop 1


SEM workshop,

Dr Stephen Cox

Faculty of Business

research advisor (QUT)

Measurement modelling & Structural modelling

Workshop 2

Queensland University of Technology SEM workshop,

Dr Stephen Cox

Faculty of Business research advisor (QUT)

Measurement modelling & Structural modelling

2006

Workshop


STAT07 Bivariate and multivariate regression

procedures (research)

QUT Research Teaching

and Learning training

A better understanding of what multivariate

analysis can do for your research

Workshop


STAT08 Advanced regression analysis

(research)

QUT Research Teaching

and Learning training

An understanding of multiple regression analysis

December2006 ANZMAC SEM seminar

Associate Professor Len

Coote, University of Queensland (SEM

marketing expert)

Introduction to Structural Equation Modelling

2007

October 2007 QUT: Faculty of Business seminar, topic: An introduction to SEM using PLS

Dr Ian Lings, University of Technology Sydney (SEM

expert)

Smart PLS potential

November 2007 QUT: Faculty of Business seminar, topic: An

introduction to SEM using LISREL

Associate Professor Len

Coote, University of

Queensland (SEM marketing expert)

LISREL potential for my research

Appendix G: SEM experts review Date Event -Topic Expert-position &

expertise

Comment-outcome

October 2005

25th School of International Business


Seminar (1 hour) ‗comparative evaluation of the Internet‘s influence on International market

Penetration and Development growth strategies. An

Australian SME perspective‘ Structural model presentation

Dr Rumintha

Wickramasekera (SL)

Prof. Gordon Boyce Dr Marilyn Healy

Dr Diane Hutchinson

Dr. Xiaohua Yang Dr Mike Quayle

Refining research question

Tighten hypotheses

Measurement scales Model not-specified

25th Private meeting

Queensland University of Technology Measures

Dr Rumintha

Wickramasekera (SL) Internationalisation

Justification for measures


University of Sydney

Research framework- Hypothesis

Dr Diane Hutchinson (SL)

Technology and


Conceptual formulation

Hypothesis

Strategy construct misspecification



Research question

Dr Mike Quayle

International economics

More refined research question

Better defined research focus

Research focus for model

November 2005

03rd Private meeting

Sunshine Coast University

Construct measures

Dr. Meredith Lawley (Ass.

Prof.) Director of Graduate

Studies (PhD SEM)

Refinement of the Structural equation model

Direction on measurements

262



Measures

Dr. Yunus Ali (SL)

Export expert

Measurements (internationalisation)



Item measures- Survey questions

Dr. Stephen Cox

Faculty of Business


Model measures

Model structure

December 2005

01st Private meeting

University of Queensland

SEM process-development Measurement scales

Dr Len Coote (SL)

Dr Coote runs the LISREL

course at ACSPRI

Model process

Model structure

Model measurements Mixing constructs. Re-design process


Queensland University of Technology Measures Model structure

Dr Stephen Cox


Survey refinement-model development

February 2006


Queensland University of Technology Questionnaire design

Model construct validity

Dr Yunus Ali (SL)

Export & internationalisation expert.

Refined survey question terminologies by

reducing. Redundant questions Model validity and possible parsimonious

outcomes

March 2006

07th Private meeting Queensland University of Technology

Questionnaire design - measures

Model refinement from ambiguity

Dr Stephen Cox Faculty of Business


Measurement refinement Convoluted factors. Ambiguous question

Major dependent variable needs to be

independently assessed to give model construct validity

14th Queensland University of Technology

Model structure

Dr. Rebekah Bennett (SL)

SEM

Dependant variable. Specifically the outcome

growth question

April -May 2006

Sunshine Coast University Questionnaire design

Model structure

Dr. Meredith Lawley (Ass. Prof.)

(PhD SEM)

Terminology-how does it relate to the model specifically

University of Queensland Questionnaire design

Model structure

Dr Len Coote (SL) Dr Coote runs the LISREL

course at ACSPRI

Mixing variables in questions. Model development issues

June-July 2006

Group meeting


Questionnaire design in relation to Model

refinement. Construct validity

Dr Yunus Ali (SL)

Export

Dr Marilyn Healy

A rigorous critique of variables and interaction.

Construct validly issues addressed

Private meeting


Questionnaire design - measures Model refinement from ambiguity

Dr. Stephen Cox

Faculty of Business


Measurement refinement

Items: potentially cross factoring

Tightening up terminology, Shorten the amount of items.

November-

December2006

ANZMAC PhD colloquium

Research track-SEM

Dr Nick Lee: Research Group Convenor and Senior

Lecturer, Marketing Group Aston Business School.

Model refinement

Dr Len Coote UQ

(Marketing SEM expert)

Dr Nick Lee University of

Aston, UK (Marketing

SEM expert)

Measurements (strengthen)

Focus model-narrow: Capabilities theory

International entrepreneurship Use controls in size, industry, product type

Model should be used as Internet-mediating

variable not moderating variable

November-

December2006

ANZMAC conference

Internet - international marketing track

Support model with a more conservative theoretical

foundation in capabilities theory and International

Entrepreneurship

Prof Richard Fletcher

(UWS)

(International Business &

Marketing expert)

Prof. Chris Styles (US)

(International Business & Marketing expert)

Outward internationalisation perspective, not

holistic internationalisation perspective

Capabilities theory focus

International entrepreneurship

Networks (IMP group)

Model should be used as Internet-mediating variable not moderating variable

263

Appendix H: Expert guidance in SEM

Date University, Event -Topic Expert-position &

expertise

Comment-outcome

October 2005


Questionnaire design

Dr Rumintha Wickramasekera (SL) (PhD

SEM)


Shorten questionnaire Shorten questions

Simplify design



Measures

Dr Rumintha

Wickramasekera (SL)


Justification for measures, measurement Table



Research question

Dr Mike Quayle

International economics

More refined research question

Better defined research focus in relation to

questions being asked

November 2005


Queensland University of Technology Measures

Dr. Yunus Ali (SL)

Export expert

Measurements (internationalisation), scale

development

December 2005


Questionnaire design- measures

Model structure

Dr Stephen Cox Faculty of Business


Survey refinement, wording, terminologies, redundancy

February 2006



Model construct validity

Dr Yunus Ali (SL) Export &

internationalisation expert.

Refined survey question terminologies by reducing redundant questions

Model validity and possible parsimonious

outcomes

March 2006


Queensland University of Technology Questionnaire design - measures


Dr Stephen Cox



Convoluted factors, Ambiguous question Major dependent variable needs to be

independently assessed to give model construct

validity

14th Queensland University of Technology Questionnaire design

Model structure

Dr. Rebekah Bennett (SL) SEM

Change to sequence of questionnaire The flow of questions. Specifically the outcome

growth question

April -May 2006

Sunshine Coast University


Model structure

Dr. Meredith Lawley (Ass.

Prof.)

(PhD SEM)

Question terminology adjustment-only one

meaning

University of Queensland Questionnaire design

Model structure

Dr Len Coote (SL) Runs the LISREL SEM

course at ACSPRI

Mixing variables in questions, validity issues

Queensland University of Technology Questionnaire design

Model structure

Dr Rumintha Wickramasekera (SL)

Industry classification code Highlight/underline topic in question

Open end question at the end

June-July2006

Group meeting


Questionnaire design in relation to Model

refinement. Construct validity

Dr Yunus Ali (SL)

Export

Dr Marilyn Healy

A rigorous critique of variables and interaction.

Construct validly issues addressed

Private meeting

Queensland University of Technology Questionnaire design - measures


Dr. Stephen Cox



Items: potentially cross factoring Tightening up terminology

Shorten the amount of items

More concise factor. Technical terminologies or jargon replaced

January 2007 Pilot-business: feedback on survey International Businesses

(12 firms)

Minor adjustment to terminology

Mar–Sept 2007 Data collection. Pilot study analysed after 100 sample firms

International firms with international manager

Positive feedback indicating the survey was not a burden or misunderstood. Limited missing data

264

Appendix I Descriptive Statistics

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation Skewness Kurtosis

Statistic Statistic Statistic Statistic Statistic Statistic Std. Error Statistic Std. Error

2 [1] 223 1 7 5.30 1.744 -.768 .163 -.451 .324

2 [2] 224 1 7 3.39 2.425 .418 .163 -1.473 .324

2 [3] 223 1 7 4.13 2.210 -.082 .163 -1.409 .324

2 [4] 224 1 7 4.53 2.055 -.385 .163 -1.160 .324

2 [5] 223 1 7 4.26 2.041 -.193 .163 -1.223 .324

2 [6] 224 1 7 3.94 2.012 .036 .163 -1.214 .324

2 [7] 224 1 7 3.62 2.105 .155 .163 -1.327 .324

2 [8] 224 1 7 4.24 2.166 -.161 .163 -1.327 .324

4 [1] 224 1 7 4.64 1.581 -.337 .163 -.556 .324

4 [2] 224 1 7 4.42 1.580 -.185 .163 -.630 .324

4 [3] 224 1 7 4.27 1.624 -.023 .163 -.885 .324

4 [4] 223 1 7 4.25 1.705 -.143 .163 -.892 .324

4 [5] 223 1 7 4.36 1.718 -.147 .163 -.905 .324

5 [1] 222 1 7 5.56 1.336 -.999 .163 1.007 .325

5 [2] 222 1 7 5.68 1.308 -1.176 .163 1.460 .325

5 [3] 222 1 7 5.69 1.307 -1.162 .163 1.298 .325

5 [4] 221 1 7 5.02 1.695 -.707 .164 -.371 .326

5 [5] 221 1 7 5.46 1.707 -1.102 .164 .444 .326

6 [1] 224 1 7 4.94 1.692 -.491 .163 -.746 .324

6 [2] 224 1 7 4.71 1.632 -.319 .163 -.877 .324

6 [3] 222 1 7 4.82 1.619 -.459 .163 -.616 .325

6 [4] 222 1 7 4.44 1.853 -.248 .163 -1.029 .325

6 [5] 223 1 7 4.51 1.808 -.270 .163 -1.004 .324

7a [1] 222 1 7 4.57 1.634 -.198 .163 -.509 .325

7a [2] 222 1 7 4.78 1.522 -.367 .163 -.151 .325

7a [3] 222 1 7 4.67 1.447 -.269 .163 .096 .325

7b [1] 219 1 7 4.55 1.648 -.250 .164 -.478 .327

7b [2] 217 1 7 4.40 1.548 -.170 .165 -.293 .329

7b [3] 218 1 7 4.44 1.511 -.212 .165 -.112 .328

9 [1] 224 1 7 5.92 1.566 -1.337 .163 .783 .324

9 [2] 222 1 7 4.95 1.660 -.494 .163 -.560 .325

9 [3] 221 1 7 5.09 1.752 -.567 .164 -.805 .326

265

9 [4] 222 1 7 5.23 1.751 -.771 .163 -.410 .325

9 [5] 224 1 7 5.94 1.577 -1.532 .163 1.350 .324

9 [6] 224 1 7 5.12 1.674 -.660 .163 -.433 .324

10 [1] 222 1 7 4.81 1.763 -.477 .163 -.689 .325

10 [2] 221 1 7 5.09 1.558 -.683 .164 -.052 .326

10 [3] 220 1 7 5.06 1.623 -.621 .164 -.388 .327

10 [4] 218 1 7 5.22 1.509 -.713 .165 -.091 .328

10 [5] 222 1 7 4.77 1.794 -.543 .163 -.699 .325

10 [6] 221 1 7 4.85 1.736 -.524 .164 -.656 .326

11 [1] 222 1 7 4.28 1.902 -.190 .163 -1.040 .325

11 [2] 223 1 7 4.21 1.825 -.114 .163 -1.018 .324

11 [3] 222 1 7 4.53 1.824 -.292 .163 -.924 .325

11 [4] 224 1 7 3.81 1.784 .123 .163 -.909 .324

11 [5] 224 1 7 4.29 1.842 -.197 .163 -1.060 .324

11 [6] 222 1 7 4.84 1.680 -.506 .163 -.615 .325

11 [7] 221 1 7 4.82 1.936 -.500 .164 -.959 .326

11 [8] 221 1 7 4.89 1.713 -.503 .164 -.597 .326

Mahalanobis: multivariate outlier analysis

Variable Case no. Mahalanobis d2 Variable Case no. Mahalanobis d2

Factor 1:

Information

availability

215

75

176

183

80

42.35

29.03

28.51

22.25

21.97

Factor 2:

Information

usage

215

143

25

22

40

31.29

20.47

18.74

17.70

16.50

Factor 3:

Interactive

communication

176

177

26

119

204

46.64

31.74

25.53

25.01

25.01

Factor 4:

Business

networks

176

216

80

142

69

39.07

28.69

27.78

26.36

24.60

Factor 5:

International

mindset

143

5

208

61

156

38.58

34.08

32.31

32.16

29.06

Factor 6:

Psychic distance

75

123

8

126

22

48.72

48.45

46.83

39.36

32.81

Factor 7:

Internet intensity 181

215

179

69

26

30.82

25.78

22.61

21.80

21.08

Factor 8:

International

market growth

208

98

112

158

142

39.11

32.76

27.31

24.66

23.51

266

Appendix J Saturated models English markets

INFAVL

4 [1]e11

.764 [2]e12

.844 [3]e13.81

4 [5]e15.71

INFOUSE

6 [1]e21

6 [2]e22

6 [3]e23

6 [5]e25

.86

.73

.80

.76

INTACT

5 [1]e31

5 [2]e32

5 [3]e33

5 [5]e35

.77

.83

.83

.64

BUSREL

10 [1]e51

.8710 [2]e52

.9710 [3]e53

.9210 [4]e54 .78

INTMND

9 [6]e46

.78

9 [4]e44.77

9 [3]e43 .88

9 [1]e41

.79

PSYDIS

11 [1]

e61

.89

11 [2]

e62

.97

11 [3]

e63

.88

11 [4]

e64

.62

.34

.43

.06

.40

.33

.64

.29

.35

.01

-.08

.46

.01

-.16

.38

.50

INTGRO E

7a [1] e65.75

7a [2] e66.95

7a [3] e67

.83

INTINS2 [4] e68.72

2 [5] e69.95

.49

.58

.22

.34

.37

.22

.07

.46

.34

.42

.24

.24

-.01

chi-square=681.107

df350

p=.000

gfi.834

tli=.913

cfi=.925

rmsea=.065

caic=1226.096

Non English markets

INFAVL

4 [1]e11

.764 [2]e12

.844 [3]e13.81

4 [5]e15.71

INFOUSE

6 [1]e21

6 [2]e22

6 [3]e23

6 [5]e25

.86

.74

.80

.76

INTACT

5 [1]e31

5 [2]e32

5 [3]e33

5 [5]e35

.77

.83

.83

.63

BUSREL

10 [1]e51

.8710 [2]e52

.9710 [3]e53

.9210 [4]e54 .78

INTMND

9 [6]e46

.78

9 [4]e44.77

9 [3]e43 .89

9 [1]e41

.79

PSYDIS

11 [1]

e61

.89

11 [2]

e62

.97

11 [3]

e63

.88

11 [4]

e64

.62

.33

.42

.06

.40

.33

.64

.29

.35

.01

-.08

.46

.01

-.16

.38

.50

INTGRO NE

7b [1] e65.84

7b [2] e66.97

7b [3] e67

.93

INTINS2 [4] e68.72

2 [5] e69.95

.49

.58

.22

.34

.37

.20

-.21

.54

.35

.24

.28

.16

-.01

chi-square=675.323

df350

p=.000

gfi.837

tli=.919

cfi=.930

rmsea=.065

caic=1220.312

267

Appendix K: Model 1 English market growth matrices

Matrices (Group number 1 - Default model)

Implied (for all variables) Covariances (Group number 1 - Default model)

INFAVL INTACT INTMND INFUSE BUSREL INTINS INTGRO

E BUSNET2 BUSNET3 INTMND1 INTMND3 INTACT1 INTACT3 INFUSE4 INFUSE5 INTINS5 INTINS4 INTGRO1 INTGRO2 INTGRO3 INFAVL1 INFAVL2

INFAVL 1.800

INTACT .530 1.138

INTMND .795 .705 3.003

INFUSE 1.063 .313 .470 2.708

BUSREL .609 .315 1.031 .571 2.697

INTINS .892 .308 .652 1.027 .702 1.963

INTGRO

E .368 .453 .800 .262 .617 .337 1.410

BUSNET2 .609 .315 1.031 .571 2.697 .702 .617 2.417

BUSNET3 .507 .262 .858 .475 2.245 .585 .514 2.245 2.618

INTMND1 .526 .466 1.986 .311 .682 .431 .529 .682 .568 2.440

INTMND3 .795 .705 3.003 .470 1.031 .652 .800 1.031 .858 1.986 3.097

INTACT1 .543 1.166 .722 .321 .322 .316 .463 .322 .268 .478 .722 1.764

INTACT3 .530 1.138 .705 .313 .315 .308 .453 .315 .262 .466 .705 1.166 1.688

INFUSE4 1.063 .313 .470 2.708 .571 1.027 .262 .571 .475 .311 .470 .321 .313 3.468

INFUSE5 1.095 .323 .484 2.789 .588 1.057 .270 .588 .489 .320 .484 .330 .323 2.789 3.316

INTINS5 1.296 .448 .947 1.492 1.021 2.853 .490 1.021 .849 .626 .947 .459 .448 1.492 1.537 4.171

INTINS4 .892 .308 .652 1.027 .702 1.963 .337 .702 .585 .431 .652 .316 .308 1.027 1.057 2.853 4.191

INTGRO1 .377 .463 .818 .268 .631 .345 1.442 .631 .525 .541 .818 .474 .463 .268 .276 .501 .345 2.637

INTGRO2 .445 .547 .967 .317 .746 .408 1.705 .746 .621 .640 .967 .560 .547 .317 .326 .593 .408 1.743 2.286

INTGRO3 .368 .453 .800 .262 .617 .337 1.410 .617 .514 .529 .800 .463 .453 .262 .270 .490 .337 1.442 1.705 2.065

INFAVL1 1.800 .530 .795 1.063 .609 .892 .368 .609 .507 .526 .795 .543 .530 1.063 1.095 1.296 .892 .377 .445 .368 2.489

INFAVL2 1.653 .487 .731 .977 .560 .820 .338 .560 .466 .483 .731 .499 .487 .977 1.006 1.191 .820 .346 .409 .338 1.653 2.485

Implied (for all variables) Correlations (Group number 1 - Default model)

INFAVL INTACT INTMND INFUSE BUSREL INTINS INTGRO

E BUSNET2 BUSNET3 INTMND1 INTMND3 INTACT1 INTACT3 INFUSE4 INFUSE5 INTINS5 INTINS4 INTGRO1 INTGRO2 INTGRO3 INFAVL1 INFAVL2

INFAVL 1.000

INTACT .370 1.000

INTMND .342 .381 1.000

INFUSE .482 .178 .165 1.000

BUSREL .277 .180 .362 .211 1.000

INTINS .475 .206 .268 .445 .305 1.000

INTGRO

E .231 .357 .389 .134 .316 .203 1.000

BUSNET2 .292 .190 .383 .223 1.057 .322 .334 1.000

BUSNET3 .234 .152 .306 .178 .845 .258 .267 .892 1.000

INTMND1 .251 .280 .734 .121 .266 .197 .285 .281 .225 1.000

INTMND3 .337 .376 .985 .162 .357 .264 .383 .377 .301 .723 1.000

INTACT1 .305 .823 .314 .147 .148 .170 .294 .156 .125 .230 .309 1.000

INTACT3 .304 .821 .313 .146 .147 .169 .293 .156 .125 .230 .308 .675 1.000

INFUSE4 .426 .158 .146 .884 .187 .393 .119 .197 .158 .107 .143 .130 .129 1.000

INFUSE5 .448 .166 .153 .931 .197 .414 .125 .208 .166 .113 .151 .137 .136 .822 1.000

INTINS5 .473 .206 .268 .444 .304 .997 .202 .321 .257 .196 .264 .169 .169 .392 .413 1.000

INTINS4 .325 .141 .184 .305 .209 .684 .139 .221 .176 .135 .181 .116 .116 .269 .284 .682 1.000

INTGRO1 .173 .267 .291 .100 .237 .152 .748 .250 .200 .213 .286 .220 .219 .089 .093 .151 .104 1.000

INTGRO2 .220 .339 .369 .127 .300 .193 .949 .317 .254 .271 .364 .279 .278 .113 .119 .192 .132 .710 1.000

INTGRO3 .191 .295 .321 .111 .261 .168 .826 .276 .221 .236 .316 .243 .242 .098 .103 .167 .115 .618 .785 1.000

INFAVL1 .850 .315 .291 .410 .235 .404 .197 .249 .199 .213 .287 .259 .259 .362 .381 .402 .276 .147 .187 .163 1.000

INFAVL2 .782 .289 .267 .377 .216 .371 .181 .229 .183 .196 .263 .238 .238 .333 .351 .370 .254 .135 .172 .149 .665 1.000

268

Implied Covariances (Group number 1 - Default model)

BUSNET2 BUSNET3 INTMND1 INTMND3 INTACT1 INTACT3 INFUSE4 INFUSE5 INTINS5 INTINS4 INTGRO1 INTGRO2 INTGRO3 INFAVL1 INFAVL2

BUSNET2 2.417

BUSNET3 2.245 2.618

INTMND1 .682 .568 2.440

INTMND3 1.031 .858 1.986 3.097

INTACT1 .322 .268 .478 .722 1.764

INTACT3 .315 .262 .466 .705 1.166 1.688

INFUSE4 .571 .475 .311 .470 .321 .313 3.468

INFUSE5 .588 .489 .320 .484 .330 .323 2.789 3.316

INTINS5 1.021 .849 .626 .947 .459 .448 1.492 1.537 4.171

INTINS4 .702 .585 .431 .652 .316 .308 1.027 1.057 2.853 4.191

INTGRO1 .631 .525 .541 .818 .474 .463 .268 .276 .501 .345 2.637

INTGRO2 .746 .621 .640 .967 .560 .547 .317 .326 .593 .408 1.743 2.286

INTGRO3 .617 .514 .529 .800 .463 .453 .262 .270 .490 .337 1.442 1.705 2.065

INFAVL1 .609 .507 .526 .795 .543 .530 1.063 1.095 1.296 .892 .377 .445 .368 2.489

INFAVL2 .560 .466 .483 .731 .499 .487 .977 1.006 1.191 .820 .346 .409 .338 1.653 2.485

Implied Correlations (Group number 1 - Default model)


BUSNET2 1.000

BUSNET3 .892 1.000

INTMND1 .281 .225 1.000

INTMND3 .377 .301 .723 1.000

INTACT1 .156 .125 .230 .309 1.000

INTACT3 .156 .125 .230 .308 .675 1.000

INFUSE4 .197 .158 .107 .143 .130 .129 1.000

INFUSE5 .208 .166 .113 .151 .137 .136 .822 1.000

INTINS5 .321 .257 .196 .264 .169 .169 .392 .413 1.000

INTINS4 .221 .176 .135 .181 .116 .116 .269 .284 .682 1.000

INTGRO1 .250 .200 .213 .286 .220 .219 .089 .093 .151 .104 1.000

INTGRO2 .317 .254 .271 .364 .279 .278 .113 .119 .192 .132 .710 1.000

INTGRO3 .276 .221 .236 .316 .243 .242 .098 .103 .167 .115 .618 .785 1.000

INFAVL1 .249 .199 .213 .287 .259 .259 .362 .381 .402 .276 .147 .187 .163 1.000

INFAVL2 .229 .183 .196 .263 .238 .238 .333 .351 .370 .254 .135 .172 .149 .665 1.000

Residual Covariances (Group number 1 - Default model)


BUSNET2 .017

BUSNET3 .014 .012

INTMND1 -.068 -.048 .000

INTMND3 .040 .045 .000 .000

INTACT1 .047 .149 -.035 -.028 .000

INTACT3 .158 .307 .045 .026 -.001 .000

INFUSE4 .093 .162 .254 .447 .005 .111 .000

INFUSE5 .135 .167 .323 .274 -.004 .137 .000 .000

INTINS5 .063 .122 .013 .105 .015 .021 .060 .038 .028

INTINS4 -.156 -.097 -.013 .276 .014 .073 .145 .074 .019 .013

INTGRO1 .217 .251 .423 .344 .097 .163 .280 .114 .220 .107 .005

INTGRO2 -.037 -.079 .079 -.061 .021 -.043 .067 -.066 -.003 -.072 .009 .008

INTGRO3 .017 -.034 .087 .023 .066 -.031 .136 .078 .034 -.143 -.068 .017 .005

INFAVL1 .041 .041 .048 .037 .005 .015 -.062 -.079 -.012 -.033 .016 -.083 -.142 .000

INFAVL2 -.132 -.188 -.142 -.142 -.033 -.020 .055 .052 -.011 .109 -.121 .000 -.048 .010 .000

269

Standardized Residual Covariances (Group number 1 - Default model)


BUSNET2 .073

BUSNET3 .062 .046

INTMND1 -.402 -.279 .000

INTMND3 .202 .226 .000 .000

INTACT1 .334 1.029 -.249 -.168 .000

INTACT3 1.151 2.165 .321 .159 -.004 .000

INFUSE4 .469 .793 1.296 2.015 .032 .678 .000

INFUSE5 .698 .837 1.687 1.264 -.024 .855 .000 .000

INTINS5 .283 .532 .060 .420 .079 .114 .219 .141 .071

INTINS4 -.716 -.432 -.062 1.127 .079 .409 .548 .284 .057 .034

INTGRO1 1.243 1.397 2.436 1.727 .659 1.128 1.376 .572 .980 .479 .022

INTGRO2 -.224 -.467 .479 -.324 .154 -.314 .355 -.356 -.014 -.345 .044 .035

INTGRO3 .112 -.216 .561 .130 .504 -.238 .754 .440 .170 -.719 -.372 .092 .027

INFAVL1 .240 .233 .284 .189 .035 .108 -.295 -.382 -.053 -.146 .090 -.513 -.923 .000

INFAVL2 -.783 -1.084 -.842 -.740 -.229 -.145 .266 .254 -.048 .490 -.699 -.001 -.312 .050 .000

Sample Moments (Group number 1)

Sample Covariances (Group number 1)


BUSNET2 2.433

BUSNET3 2.259 2.630

INTMND1 .614 .519 2.440

INTMND3 1.071 .903 1.986 3.097

INTACT1 .369 .417 .442 .694 1.764

INTACT3 .472 .569 .511 .731 1.165 1.688

INFUSE4 .663 .637 .565 .917 .326 .424 3.468

INFUSE5 .723 .657 .643 .758 .326 .459 2.789 3.316

INTINS5 1.084 .971 .639 1.052 .474 .469 1.552 1.575 4.199

INTINS4 .546 .487 .418 .928 .330 .382 1.171 1.131 2.872 4.204

INTGRO1 .848 .776 .964 1.162 .571 .626 .548 .390 .721 .452 2.642

INTGRO2 .709 .542 .718 .906 .582 .504 .384 .260 .590 .336 1.752 2.294

INTGRO3 .635 .479 .616 .823 .530 .422 .398 .347 .524 .195 1.373 1.722 2.070

INFAVL1 .650 .548 .574 .832 .548 .545 1.002 1.016 1.284 .859 .392 .362 .226 2.489

INFAVL2 .428 .278 .342 .589 .465 .466 1.032 1.058 1.180 .929 .225 .409 .291 1.663 2.485

Sample Correlations (Group number 1)


BUSNET2 1.000

BUSNET3 .893 1.000

INTMND1 .252 .205 1.000

INTMND3 .390 .316 .723 1.000

INTACT1 .178 .194 .213 .297 1.000

INTACT3 .233 .270 .252 .320 .675 1.000

INFUSE4 .228 .211 .194 .280 .132 .175 1.000

INFUSE5 .255 .222 .226 .237 .135 .194 .822 1.000

INTINS5 .339 .292 .200 .292 .174 .176 .407 .422 1.000

INTINS4 .171 .147 .130 .257 .121 .143 .307 .303 .683 1.000

INTGRO1 .334 .294 .380 .406 .265 .296 .181 .132 .217 .136 1.000

INTGRO2 .300 .221 .304 .340 .289 .256 .136 .094 .190 .108 .712 1.000

INTGRO3 .283 .205 .274 .325 .277 .226 .148 .133 .178 .066 .587 .790 1.000

INFAVL1 .264 .214 .233 .300 .261 .266 .341 .354 .397 .266 .153 .151 .100 1.000

INFAVL2 .174 .109 .139 .212 .222 .228 .352 .369 .365 .287 .088 .171 .128 .669 1.000

270

Appendix L: Model 2 non-English market growth matrices

Matrices (Group number 1 - Default model)

Implied (for all variables) Covariances (Group number 1 - Default model) Psychic INFAVL INTACT INTMND BUSREL INFUSE INTINS

INTGRO NE

PSYDIS3 PSYDIS2 BUSNET2 BUSNET3 INTMND1 INTMND3 INTACT1 INTACT3 INFUSE4 INFUSE5 INTINS5 INTINS4 INTGRO4 INTGRO5 INTGRO6 INFAVL1 INFAVL2

Psychic 2.549

INFAVL .000 1.788

INTACT .000 .546 1.201

INTMND -.282 .799 .746 2.869

BUSREL -.088 .633 .351 1.072 2.575

INFUSE .000 1.083 .331 .484 .383 2.750

INTINS -.028 .889 .321 .646 .681 .997 1.936

INTGRO NE -.486 .381 .313 1.168 .707 .247 .374 1.934

PSYDIS3 2.820 .000 .000 -.311 -.098 .000 -.031 -.538 3.290

PSYDIS2 2.549 .000 .000 -.282 -.088 .000 -.028 -.486 2.820 3.317

BUSNET2 -.088 .633 .351 1.072 2.575 .383 .681 .707 -.098 -.088 2.437

BUSNET3 -.078 .556 .308 .941 2.262 .337 .598 .621 -.086 -.078 2.262 2.633

INTMND1 -.196 .558 .521 2.002 .748 .338 .451 .815 -.217 -.196 .748 .657 2.451

INTMND3 -.282 .799 .746 2.869 1.072 .484 .646 1.168 -.311 -.282 1.072 .941 2.002 3.120

INTACT1 .000 .530 1.165 .724 .340 .321 .312 .304 .000 .000 .340 .299 .505 .724 1.764

INTACT3 .000 .546 1.201 .746 .351 .331 .321 .313 .000 .000 .351 .308 .521 .746 1.165 1.688

INFUSE4 .000 1.083 .331 .484 .383 2.750 .997 .247 .000 .000 .383 .337 .338 .484 .321 .331 3.468

INFUSE5 .000 1.098 .335 .491 .389 2.789 1.011 .250 .000 .000 .389 .342 .343 .491 .325 .335 2.789 3.316

INTINS5 -.041 1.303 .471 .947 .998 1.462 2.838 .548 -.045 -.041 .998 .877 .661 .947 .457 .471 1.462 1.482 4.150

INTINS4 -.028 .889 .321 .646 .681 .997 1.936 .374 -.031 -.028 .681 .598 .451 .646 .312 .321 .997 1.011 2.838 4.182

INTGRO4 -.482 .378 .311 1.159 .701 .245 .371 1.920 -.534 -.482 .701 .616 .809 1.159 .302 .311 .245 .248 .544 .371 2.693

INTGRO5 -.519 .406 .335 1.248 .754 .263 .399 2.065 -.574 -.519 .754 .663 .870 1.248 .325 .335 .263 .267 .585 .399 2.050 2.349

INTGRO6 -.486 .381 .313 1.168 .707 .247 .374 1.934 -.538 -.486 .707 .621 .815 1.168 .304 .313 .247 .250 .548 .374 1.920 2.065 2.238

INFAVL1 .000 1.788 .546 .799 .633 1.083 .889 .381 .000 .000 .633 .556 .558 .799 .530 .546 1.083 1.098 1.303 .889 .378 .406 .381 2.489

INFAVL2 .000 1.648 .503 .737 .584 .998 .820 .351 .000 .000 .584 .513 .514 .737 .488 .503 .998 1.012 1.201 .820 .348 .375 .351 1.648 2.485

Implied (for all variables) Correlations (Group number 1 - Default model)

Psychic INFAVL INTACT INTMND BUSREL INFUSE INTINS INTGRO

NE PSYDIS3 PSYDIS2 BUSNET2 BUSNET3 INTMND1 INTMND3 INTACT1 INTACT3 INFUSE4 INFUSE5 INTINS5 INTINS4 INTGRO4 INTGRO5 INTGRO6 INFAVL1 INFAVL2

Psychic 1.000

INFAVL .000 1.000

INTACT .000 .373 1.000

INTMND -.104 .353 .402 1.000

BUSREL -.034 .295 .200 .394 1.000

INFUSE .000 .488 .182 .172 .144 1.000

INTINS -.013 .478 .211 .274 .305 .432 1.000

INTGRO NE -.219 .205 .206 .496 .317 .107 .193 1.000

PSYDIS3 .974 .000 .000 -.101 -.034 .000 -.012 -.213 1.000

PSYDIS2 .877 .000 .000 -.091 -.030 .000 -.011 -.192 .854 1.000

BUSNET2 -.035 .303 .205 .405 1.028 .148 .314 .325 -.035 -.031 1.000

BUSNET3 -.030 .256 .173 .342 .869 .125 .265 .275 -.029 -.026 .893 1.000

INTMND1 -.079 .266 .303 .755 .298 .130 .207 .374 -.077 -.069 .306 .259 1.000

INTMND3 -.100 .338 .385 .959 .378 .165 .263 .476 -.097 -.088 .389 .328 .724 1.000

INTACT1 .000 .298 .800 .322 .160 .146 .169 .165 .000 .000 .164 .139 .243 .308 1.000

INTACT3 .000 .314 .843 .339 .168 .154 .178 .173 .000 .000 .173 .146 .256 .325 .675 1.000

INFUSE4 .000 .435 .162 .153 .128 .891 .385 .095 .000 .000 .132 .111 .116 .147 .130 .137 1.000

INFUSE5 .000 .451 .168 .159 .133 .923 .399 .099 .000 .000 .137 .116 .120 .153 .135 .142 .822 1.000

INTINS5 -.013 .478 .211 .274 .305 .433 1.001 .194 -.012 -.011 .314 .265 .207 .263 .169 .178 .385 .400 1.000

INTINS4 -.009 .325 .143 .187 .208 .294 .681 .132 -.008 -.007 .213 .180 .141 .179 .115 .121 .262 .272 .681 1.000

INTGRO4 -.184 .172 .173 .417 .266 .090 .163 .841 -.179 -.161 .274 .231 .315 .400 .138 .146 .080 .083 .163 .111 1.000

INTGRO5 -.212 .198 .199 .480 .307 .104 .187 .969 -.206 -.186 .315 .266 .363 .461 .159 .168 .092 .096 .187 .127 .815 1.000

INTGRO6 -.203 .190 .191 .461 .294 .099 .180 .930 -.198 -.178 .303 .256 .348 .442 .153 .161 .089 .092 .180 .122 .782 .901 1.000

INFAVL1 .000 .848 .316 .299 .250 .414 .405 .173 .000 .000 .257 .217 .226 .287 .253 .266 .369 .382 .406 .276 .146 .168 .161 1.000

INFAVL2 .000 .782 .291 .276 .231 .382 .374 .160 .000 .000 .237 .200 .208 .265 .233 .246 .340 .353 .374 .254 .135 .155 .149 .663 1.000

271

Implied Covariances (Group number 1 - Default model) PSYDIS3 PSYDIS2 BUSNET2 BUSNET3 INTMND1 INTMND3 INTACT1 INTACT3 INFUSE4 INFUSE5 INTINS5 INTINS4 INTGRO4 INTGRO5 INTGRO6 INFAVL1 INFAVL2

PSYDIS3 3.290

PSYDIS2 2.820 3.317

BUSNET2 -.098 -.088 2.437

BUSNET3 -.086 -.078 2.262 2.633

INTMND1 -.217 -.196 .748 .657 2.451

INTMND3 -.311 -.282 1.072 .941 2.002 3.120

INTACT1 .000 .000 .340 .299 .505 .724 1.764

INTACT3 .000 .000 .351 .308 .521 .746 1.165 1.688

INFUSE4 .000 .000 .383 .337 .338 .484 .321 .331 3.468

INFUSE5 .000 .000 .389 .342 .343 .491 .325 .335 2.789 3.316

INTINS5 -.045 -.041 .998 .877 .661 .947 .457 .471 1.462 1.482 4.150

INTINS4 -.031 -.028 .681 .598 .451 .646 .312 .321 .997 1.011 2.838 4.182

INTGRO4 -.534 -.482 .701 .616 .809 1.159 .302 .311 .245 .248 .544 .371 2.693

INTGRO5 -.574 -.519 .754 .663 .870 1.248 .325 .335 .263 .267 .585 .399 2.050 2.349

INTGRO6 -.538 -.486 .707 .621 .815 1.168 .304 .313 .247 .250 .548 .374 1.920 2.065 2.238

INFAVL1 .000 .000 .633 .556 .558 .799 .530 .546 1.083 1.098 1.303 .889 .378 .406 .381 2.489

INFAVL2 .000 .000 .584 .513 .514 .737 .488 .503 .998 1.012 1.201 .820 .348 .375 .351 1.648 2.485

Implied Correlations (Group number 1 - Default model)


PSYDIS3 1.000

PSYDIS2 .854 1.000

BUSNET2 -.035 -.031 1.000

BUSNET3 -.029 -.026 .893 1.000

INTMND1 -.077 -.069 .306 .259 1.000

INTMND3 -.097 -.088 .389 .328 .724 1.000

INTACT1 .000 .000 .164 .139 .243 .308 1.000

INTACT3 .000 .000 .173 .146 .256 .325 .675 1.000

INFUSE4 .000 .000 .132 .111 .116 .147 .130 .137 1.000

INFUSE5 .000 .000 .137 .116 .120 .153 .135 .142 .822 1.000

INTINS5 -.012 -.011 .314 .265 .207 .263 .169 .178 .385 .400 1.000

INTINS4 -.008 -.007 .213 .180 .141 .179 .115 .121 .262 .272 .681 1.000

INTGRO4 -.179 -.161 .274 .231 .315 .400 .138 .146 .080 .083 .163 .111 1.000

INTGRO5 -.206 -.186 .315 .266 .363 .461 .159 .168 .092 .096 .187 .127 .815 1.000

INTGRO6 -.198 -.178 .303 .256 .348 .442 .153 .161 .089 .092 .180 .122 .782 .901 1.000

INFAVL1 .000 .000 .257 .217 .226 .287 .253 .266 .369 .382 .406 .276 .146 .168 .161 1.000

INFAVL2 .000 .000 .237 .200 .208 .265 .233 .246 .340 .353 .374 .254 .135 .155 .149 .663 1.000

Residual Covariances (Group number 1 - Default model)


PSYDIS3 .000

PSYDIS2 .000 .000

BUSNET2 .002 .059 -.004

BUSNET3 .193 .325 -.003 -.003

INTMND1 .050 -.042 -.134 -.138 -.011

INTMND3 .134 .121 -.001 -.038 -.016 -.023

INTACT1 .396 .294 .029 .118 -.063 -.029 .000

INTACT3 .117 .073 .121 .261 -.009 -.015 .000 .000

INFUSE4 .036 -.212 .280 .300 .227 .433 .005 .093 .000

INFUSE5 -.291 -.431 .334 .315 .301 .267 .001 .124 .000 .000

INTINS5 .147 -.016 .086 .094 -.021 .105 .017 -.002 .090 .092 .049

INTINS4 .093 .017 -.135 -.111 -.033 .282 .019 .061 .174 .120 .033 .023

INTGRO4 .036 -.029 -.053 .003 .226 .067 -.080 .082 .213 .336 .112 -.068 -.012

INTGRO5 .098 .062 .025 .045 .033 -.074 -.162 .057 .217 .318 -.004 -.219 -.006 -.014

INTGRO6 -.067 -.067 .003 .061 .111 .000 -.100 .028 .289 .438 .055 -.120 -.033 -.012 -.012

INFAVL1 .051 -.119 .017 -.008 .016 .033 .018 -.001 -.082 -.082 -.019 -.030 -.100 -.119 -.051 .000

INFAVL2 .297 .190 -.155 -.235 -.172 -.148 -.023 -.037 .034 .045 -.021 .109 -.033 -.100 -.072 .015 .000

272

Standardized Residual Covariances (Group number 1 - Default model)


PSYDIS3 .000

PSYDIS2 .000 .000

BUSNET2 .011 .310 -.016

BUSNET3 .980 1.644 -.014 -.011

INTMND1 .260 -.218 -.781 -.784 -.049

INTMND3 .621 .557 -.005 -.189 -.069 -.079

INTACT1 2.454 1.815 .203 .812 -.440 -.178 .000

INTACT3 .740 .459 .881 1.829 -.068 -.095 .000 .000

INFUSE4 .157 -.931 1.426 1.474 1.154 1.943 .030 .570 .000

INFUSE5 -1.317 -1.939 1.739 1.582 1.565 1.228 .006 .774 .000 .000

INTINS5 .594 -.065 .384 .411 -.098 .420 .091 -.011 .331 .344 .125

INTINS4 .373 .070 -.618 -.492 -.153 1.148 .101 .338 .661 .464 .099 .058

INTGRO4 .179 -.142 -.297 .017 1.255 .321 -.542 .570 1.038 1.671 .495 -.301 -.046

INTGRO5 .516 .329 .147 .260 .196 -.371 -1.176 .420 1.131 1.691 -.020 -1.033 -.029 -.061

INTGRO6 -.362 -.359 .018 .364 .670 .001 -.746 .211 1.543 2.389 .266 -.581 -.159 -.056 -.057

INFAVL1 .267 -.618 .100 -.047 .096 .169 .124 -.006 -.389 -.398 -.083 -.133 -.571 -.726 -.318 .000

INFAVL2 1.554 .986 -.918 -1.344 -1.020 -.768 -.159 -.262 .161 .223 -.093 .491 -.188 -.614 -.451 .075 .000

Sample Correlations (Group number 1)


PSYDIS3 1.000

PSYDIS2 .854 1.000

BUSNET2 -.034 -.010 1.000

BUSNET3 .036 .084 .893 1.000

INTMND1 -.059 -.084 .252 .205 1.000

INTMND3 -.056 -.050 .390 .316 .723 1.000

INTACT1 .164 .122 .178 .194 .213 .297 1.000

INTACT3 .050 .031 .233 .270 .252 .320 .675 1.000

INFUSE4 .011 -.062 .228 .211 .194 .280 .132 .175 1.000

INFUSE5 -.088 -.130 .255 .222 .226 .237 .135 .194 .822 1.000

INTINS5 .027 -.015 .339 .292 .200 .292 .174 .176 .407 .422 1.000

INTINS4 .017 -.003 .171 .147 .130 .257 .121 .143 .307 .303 .683 1.000

INTGRO4 -.167 -.171 .254 .233 .405 .426 .102 .185 .150 .196 .196 .090 1.000

INTGRO5 -.172 -.164 .327 .285 .379 .436 .080 .197 .169 .210 .186 .058 .817 1.000

INTGRO6 -.223 -.203 .305 .282 .398 .445 .103 .176 .193 .253 .197 .083 .772 .901 1.000

INFAVL1 .018 -.041 .264 .214 .233 .300 .261 .266 .341 .354 .397 .266 .108 .119 .140 1.000

INFAVL2 .104 .066 .174 .109 .139 .212 .222 .228 .352 .369 .365 .287 .122 .114 .118 .669 1.000

273

Appendix M Country markets summary

Country markets summary (78 countries) (overall)

Country Firms % Country Firms %

United States 134 59.80 Finland 5 2.23

New Zealand 121 50.01 Samoa 5 2.23

United Kingdom 99 44.19 Spain 5 2.23

Singapore 73 32.58 Sri Lanka 5 2.23

China 68 30.35 Cambodia 4 1.78

Japan 63 28.12 Kuwait 4 1.78

Malaysia 53 23.66 New Caledonia 4 1.78

Hong Kong 52 23.21 Saudi Arabia 4 1.78

Canada 42 18.75 Brunei 3 1.33

Indonesia 41 18.30 Burma 3 1.33

Thailand 37 16.51 Columbia 3 1.33

Papua New Guinea 35 15.62 Czech Republic 3 1.33

South Korea 34 15.17 Egypt 3 1.33

Germany 32 14.28 Iran 3 1.33

Taiwan 31 13.83 Kenya 3 1.33

South Africa 28 12.5 Tonga 3 1.33

India 26 11.60 Turkey 3 1.33

France 25 11.16 Vanuatu 3 1.33

Philippines 25 11.16 Bangladesh 2 .89

Fiji 22 9.82 Ecuador 2 .89

Netherlands 22 9.82 Hungary 2 .89

UAE 22 9.82 Lebanon 2 .89

Sweden 15 6.69 Luxemburg 2 .89

Vietnam 14 6.62 Mauritius 2 .89

Denmark 11 4.91 Monaco 2 .89

Switzerland 11 4.91 Romania 2 .89

Mexico 11 4.91 Tahiti 2 .89

Brazil 10 4.46 Yemen 2 .89

Belgium 9 4.01 Uruguay 1 .44

Dubai 9 4.01 Algeria 1 .44

Norway 9 4.01 Argentina 1 .44

Austria 8 3.57 Cayman Islands 1 .44

Oman 8 3.57 Jordan 1 .44

Solomon Islands 8 3.57 Laos 1 .44

Italy 7 3.12 Lithuania 1 .44

Russia 7 3.12 Mongolia 1 .44

Pakistan 6 2.67 Paraguay 1 .44

Chile 6 2.67 Poland 1 .44

Greece 6 2.67 Syria 1 .44

Qatar 6 2.67


International country markets summary

Market concept Mean Break-up Percentage Comment

International

markets

14.79

countries 1-2 markets

3-5 markets

6-10 markets

10-20 markets

20 + markets

9.3 %

34.9 %

21.8 % 16.3 %

17.7 %

Nearly 15 markets is a large dispersion of international

markets for the mean whereby the majority of firms are small

and medium.

Pace of


Age time of survey

16.6 countries

11 countries 11.5 countries

3 years or younger (9 firms)

5 years or younger (26 firms) 10 years or younger (75 firms)

Firms were not explicitly asked retrospectively about country

markets pertaining to pace of internationalisation. That is, firms were asked about age of firm and number of country

markets as opposed to retrospective questions about

countries where they had customers. Thus, firms are presented with respect to current standing.

International

percentage

37.97 % 1-5%

6-15%

16-49%

50%-100%

17.2 %

19.6 % 28.8 %

34.4 %

With the mean of almost 38 % of revenue as a proportion of

the total firm turnover the international percentage is considerable.

First country

market

United Sates

New Zealand

United Kingdom

Singapore

Hong Kong

Papua New Guinea

Japan

19.54 % 16.81 %

11.36 %

7.27 % 5.90 %

5.45 %

4.09 %

Other minor groups of markets include South Africa, Middle East, Canada and some European countries such as France,

Germany, Netherlands etc. as seen in county summary Table

Appendix M. However, the three markets are all English speaking markets

274

Major markets 1st Market

United States

United Kingdom

New Zealand

China

Japan

Singapore

18.68 %

12.62 %

8.58 % 7.57 %

6.56 %

4.04 %

Pacific 6.06 %

Europe 7.57 %

Canada 3.53 %

Africa 3.53 %

Other Asian countries 16.66 %

Total Asia 34.83 %

2nd Market United Kingdom

United States

China

Singapore

New Zealand

Hong Kong

10.88 %

8.29 %

7.77 % 6.21 %

5.18 %

5.18 %

Pacific 6.21 %

Asia total 43.0 %

3rd Market New Zealand

Singapore

United States

Korea

United Kingdom

Germany

7.90 % 6.77 %

5.64 % 5.64 %

5.08 %

5.08 %

New Zealand 9.15 % 4th Market China 7.04 %

Japan 5.63 % Hong Kong 5.63 %

Singapore 4.22 %

United States 4.22 % United Kingdom 4.22 %

Physical office or

store within

international

market

Presence

No presence

32.6 %

67.4 %

Only 32.6 % of firms have indicated they have a physical

presence such as a store or office in the international markets

which they conduct their business. Conversely, 67.4 % of firms who engage in international business do not have a

physical presence in international markets even though their

customers are in these markets.


Appendix N: 1st Country market

Country Firms % Country Firms %

United States 37 16.51 Finland 0 0

New Zealand 39 17.41 Samoa 0 0

United Kingdom 25 11.16 Spain 0 0

Singapore 14 6.25 Sri Lanka 0 0

China 4 1.78 Cambodia 0 0

Japan 9 4.01 Kuwait 0 0

Malaysia 6 2.67 New Caledonia 0 0

Hong Kong 12 5.35 Saudi Arabia 3 1.33

Canada 5 2.23 Brunei 1 0.44

Indonesia 6 2.67 Burma 1 0.44

Thailand 3 1.33 Columbia 0 0

Papua New Guinea 13 5.80 Czech Republic 0 0

South Korea 5 2.23 Egypt 0 0

Germany 1 0.44 Iran 0 0

Taiwan 6 2.67 Kenya 0 0

South Africa 3 1.33 Tonga 0 0

India 3 1.33 Turkey 0 0

France 1 0.44 Vanuatu 0 0

Philippines 2 0.89 Bangladesh 0 0

Fiji 2 0.89 Ecuador 0 0

Netherlands 2 0.89 Hungary 0 0

UAE 2 0.89 Lebanon 0 0

Sweden 1 0.44 Luxemburg 0 0

Vietnam 0 0 Mauritius 0 0

Denmark 0 0 Monaco 0 0

Switzerland 2 0.89 Romania 0 0

Mexico 0 0 Tahiti 0 0

Brazil 0 0 Yemen 0 0

Belgium 0 0 Uruguay 0 0

Dubai 0 0 Algeria 0 0

Norway 0 0 Argentina 0 0

Austria 0 0 Cayman Islands 0 0

Oman 1 0.44 Jordan 0 0

Solomon Islands 0 0 Laos 0 0

Italy 0 0 Lithuania 0 0

Russia 0 0 Mongolia 0 0

Pakistan 2 Paraguay 0 0

Chile 0 0 Poland 0 0

Greece 0 0 Syria 0 0

Qatar 1


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