An Explorative Study on the Effect of Digitization on Experiential Knowledge in the Internationalization Process

An Explorative Study on the Effect of Digitization on

Experiential Knowledge in the Internationalization Process

Sophie Grade Maria Nijenhuis

Supervisor: dr. M.P. Paukku

Student Number: 11953918

Date: 17th of August 2018

Research Area: Management of Digital Business, Knowledge, and Data

Amsterdam Business School, University of Amsterdam

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS

STATEMENT OF ORIGINALITY

This document is written by Sophie Grade Maria Nijenhuis who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS

ABSTRACT

This research investigates the effect of digitization on the internationalization process of traditional companies, with a special focus on the influence of digitization on the entry-mode decision-making. More specifically, the research investigates whether the importance of experiential knowledge within the internationalization is affected by the uprising use of digitization, as information and knowledge is nowadays widely available through the internet and big data. The research is based on the Uppsala model by Johanson and Vahlne (1977) and has added the phenomenon digitization to the model to study the research area. The study is an exploratory research, which has made use of a multiple case study, where data was collected through semi-structured interviews with Dutch and French companies operating in the consumer goods industry. The results show that digitization has become of great relevance in the internationalization process of companies, that digitization has accelerated the process, and that digitization assists companies in their entry-mode decision-making. Nevertheless, it has not been proven that it has overtaken the importance of experiential knowledge (yet), as the results indicate that companies still strongly rely on the knowledge developed during previous experiences in their internationalization process and their entry-mode decision-making.

Digitization is currently merely used as an accompanying tool that helps to optimize the internationalization process of companies.

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS

Table of Contents

1. Introduction ...... 5 2. Literature Review ...... 8 2.1 Digitization ...... 8 2.2 Internationalization Strategies ...... 12 2.3 Digitization and The Uppsala Model ...... 16 2.4 Digitization and Experiential Knowledge ...... 20 3. Theoretical Framework ...... 23 3.1 Conceptual Model and Working Propositions ...... 26 4. Research Design ...... 29 4.1 Research Method ...... 31 5. Data Collection, Case Analyses, and Results ...... 34 5.1 Data Collection ...... 34 5.2 Case Descriptions ...... 35 5.2.1 Dutch Flower Group ...... 35 5.2.2 Lamazuna ...... 36 5.2.3 G-Star Raw ...... 37 5.2.4 Vlisco ...... 37 5.2.5 Pretty Wild Lingerie ...... 38 5.3 Case Analyses and Results ...... 39 5.3.1 Digitization: The Internet and Big Data ...... 40 5.3.2 Experience and Experiential Knowledge ...... 51 5.3.3 Entry-Mode Decision-Making ...... 56 6. Discussion ...... 62 6.1 Working Proposition 1 ...... 62 6.2 Working Proposition 2 ...... 64 6.3 Working Proposition 3 ...... 66 6.4 Working Proposition 4 ...... 68 6.5 The Uppsala Model ...... 70 7. Conclusion ...... 72 7.1 Limitations ...... 75 7.2 Scientific Relevance and Managerial Implications ...... 76 7.3 Suggestions for Future Research ...... 77 8. References ...... 77 9. Appendix ...... 86 9.1 Case 1: Interview Dutch Flower Group ...... 86 9.2 Case 2: Interview Lamazuna ...... 88 9.3 Case 3: Interview G-Star Raw ...... 89 9.4 Case 4: Interview Vlisco ...... 93 9.5 Case 5: Interview Pretty Wild Lingerie ...... 95 9.6 Case 6: Interview Pretty Wild Lingerie II ...... 102

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS

1. Introduction Digitization is a worldwide increasing phenomenon, and the opportunities digitization brings should be noticed and responded to by companies (Saxena, 2018). Digitization influences companies in various ways, however, this paper will specifically focus at the impact of digitization on a company’s internationalization strategy, or more explicitly the paper will investigate the way digitization influences a company’s entry-mode decision-making process.

The Oxford English Dictionary refers to digitization as “the action or process of digitizing; the conversion of analogue data into digital form”. In this study, digitization is referred to as the following: the use of data and information in digital form by companies; where this data can be acquired through the internet or through big data. A lot of research has been done on internationalization strategies, as well as on digitization, nevertheless the interaction between these two has been researched limitedly. Digitization is more and more becoming a part of the standard way of doing business, where doing business can be described as the activities associated to the production and performance of a good or service to serve customer needs

(Weske, 2012; Kirchmer, 2017; von Scheel, von Rosing, & Scheer, 2014). Companies incorporate digitization as it can help to improve efficiency and performance.

Throughout the last few decades’ multiple internationalization strategies have been developed. Internationalization strategies are used to explain a company’s expansion, and include location, pace, rhythm, and entry-mode decision-making regarding the internationalization of a company. A few of the most well-known internationalization strategies are the following: The Transaction Cost theory by Williamson (1985); the Network model by

Johanson and Mattsson (1988); and, the Uppsala model by Johanson and Vahlne (1977). These theories all explain a company’s expansion process differently, using either a company’s resources, transaction costs, or experiences as main factors determining the internationalization process. For example, the Uppsala model states that lack of experiential knowledge about the

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS foreign market is the main reason why companies fail their international operations

(Hutzschenreuter & Matt, 2017), thus that experiential knowledge is the main driver behind successful internationalization. Nevertheless, whether the current theories are still relevant and applicable in today’s increasingly digitized and technological advanced world remains unclear.

Even though numerous internationalization theories exist, for the purpose of this study, the

Uppsala model is the internationalization theory used to provide an insight on the influence of digitization on entry-mode decision-making.

This research will investigate how corporations adjust their internationalization strategies to the pressures of digitization. As digitization is becoming increasingly important and woven into today’s everyday business, its influence on the way companies operate outside the home country is of interest. Digitization has transformed multiple processes within companies, such as: communications, transactions and distribution, and where and when business operates (Hagberg, Sundstorm & Egels-Zandén, 2016). E.g. Patrutiu-Baltes (2016) states that without active online business communications, a company is doomed to failure.

Furthermore, digitization offers great opportunities that should be taken advantage of (Benson-

Armer, Gast, van Dam, 2016). Companies should be aware that digitization could possibly lead to more beneficial entry modes, which are different from the ones companies have applied in previous eras. For example, how does digitization influence the internationalization process of companies? Do companies incorporate digitization in their internationalization process? Is the pace of the internationalization process influenced by digitization? Does digitization influence the entry-mode decision-making process? These are some examples of questions that arise after going through previous literature. And, finding answers to these questions mentioned above could help companies in their decision-making regarding entry-mode strategies in today’s increasingly digitized world. Furthermore, finding answers to these questions is of relevance to finding the answer to the main research question which will be mentioned below.

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS

Whether digitization creates new internationalization strategies, follows the traditional ones, or whether it rehashes traditional strategies is a topic that has been relatively little explored. Several researchers have tried to explain parts of the influence of digitization on internationalization strategies, nevertheless no clear outcome has been indicated yet. Because, scholars disagree whether digitization creates a new strategy or rehashes a traditional one

(Coviello, Kano & Liesch, 2017). This research will specifically look at the effects of digitization on the internationalization process, and whether it is incorporated in the entry-mode decision-making of companies. In the end, the results will be compared to the Uppsala model developed by Johanson and Vahlne (1977), one of the most widely used internationalization theories. The model has been revisited multiple times by Johanson and Vahlne (2009; 2017), but nevertheless this study will research whether the traditional theory is still of relevance to companies nowadays. It is of relevance for managers to be aware of the influence on digitization, as adjustments in their internationalization strategies due to digitization pressures might be necessary to improve efficiency and create optimization.

Therefore, theories that explain internationalization strategies might change by including digitization, and companies should be aware of the influence of digitization on their way of doing business. More specifically, the paper will look at the influence of digitization on the entry mode decision-making process of companies. Moreover, the aim of this research is to discover whether digitization, thus knowledge and information available through the internet and big data, has caught up, or even overtaken the importance of experience and experiential knowledge in the internationalization process of companies, and more specifically in their entry-mode decision-making. According to the Uppsala Model, companies make internationalization decisions based on experiential knowledge (Johanson & Vahlne, 1977).

This paper will research whether such experiential knowledge is still relevant in the decision-

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS making process in today’s increasingly digitized world. This paper will contribute to both theory and practice by trying to find an answer to the following research question:

How does digitization influence the importance of experiential knowledge in the entry-

mode decision-making process within the Uppsala model?

To investigate the research question above, a multiple case study was developed. The cases include Dutch and French companies operating in the consumer goods industry. The cases operate in various markets, differing from developed, to semi-developed, to developing markets, and in different segments within the industry, varying from flowers, to toiletries, to fashion. The differences and similarities between the cases ensure an interesting composition of the sample and will be used to present a valuable study.

This paper is structured as follows, firstly a detailed literature review will be presented, including all relevant concepts. Hereafter, the theoretical framework will be given, which includes the working propositions that are derived from the literature review. Next, the research design will be introduced, which will explain how evidence regarding the research question will be gathered. Fourthly, after performing all necessary tests regarding the working propositions, the results will be presented. Where after these results will be evaluated and discussed in the discussion section. Finally, a conclusion will be presented, which includes limitations, managerial implications and suggestions for future research.

2. Literature Review 2.1 Digitization

‘Digital is the new normal’ (TNS, 2012). And, especially the internet is expected to impact the business world majorly, e.g. through its global reach (Business Week, 1996; The

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS

Economist, 1999; Sivadas, Grewal and Kellaris, 1998). In this study, digitization is referred to as: the use of data and information in digital form by companies; where this data can be acquired through the internet or through big data. It is essential for companies nowadays to understand the value of digital knowledge from early on, as digitalization brings opportunities, as well as threats (Wittmott, 2014). Digitization can be described as the process where information is converted into a digital format, which indicates that information is organized into data (Rouse,

2007). The concept of information includes the information a company gathered through experience, as well as searching or scanning for new information specific to a market (Forsgren,

2002). Moreover, it is the application of information technology to increase human performance

(McDonald, 2015). Digital technologies are full-time available to companies (day and night), it offers personalized treatment, and it lowers costs and risks by the delivery of standardized offerings (Knight & Liesch, 2016).

Digitization changes the current business landscape rapidly, forcing companies to adjust their business models to meet new growth opportunities, customer demands, and operating realities (Saxena, 2018). Digitization is changing a company’s strategic context: it alters the structure of competitors, the conduct of business, and firm performance (Hirt & Wittmott,

2014). Furthermore, digitization changes the production, sales, and logistics of a company, and it revolutionizes a company’s integration with its customers (Acker, Gröne, Lefort &

Kropiunigg, 2015). Digitization provides the necessary information for knowing what, when, and how to efficiently produce products and services (Fulkerson, 2000). Furthermore, digitization simplifies many of a company’s processes as it eliminates repetitiousness and difficulties (Richnák & Porubanová, 2017). Digitization also lowers entry barriers and increases the amount of information available continuously due to big data (Hirt & Wittmott, 2014). And additionally, digital technologies itself know no borders. This creates new market entrants that develop rapidly and at a lower cost than the original players (Hirt & Wittmott, 2014), making

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS it important for original players to stay ahead or keep up with the digitization of new entrants, and possibly learn from their internationalization strategies. Furthermore, companies should be aware that international market entry is easier for highly digitized firms compared to their traditional counterparts (Yonatany, 2017). This indicates that an increase in the use and application of digitization of traditional companies could possibly ease the market entry of traditional firms as well. In conclusion, digitization impacts companies on many different levels and in various ways, and these effects should not persist unnoticed. Companies should incorporate the opportunities created by digitization to make sure they remain competitive in today’s globalizing market. This study will investigate the effect of digitization, or more specifically the effect of information available via the internet and via big data, on the internationalization process of companies.

The next two paragraphs will be dedicated to the importance of the internet and big data in businesses seperately, as the definition of digitization used for this study includes both the relevance of the internet as well as big data. In the recent years, digital technologies have increasingly been diffused and integrated in all areas of life (Dregger, Niehaus, Ittermann,

Hirsch-Kreinsen, ten Hompel, 2016). Especially the rise of the internet has created a new distribution channel, which has introduced a change to how accessible things are, and how revenues are generated and shared (Wunsch-Vincent, 2013). The internet has created the possibility to receive and use material that was not available to everyone previously (Cancro,

2016). Kahin (2016) describes the internet as a genuinely global tool, that is basically available everywhere and to everyone. Furthermore, the internet can be described as a research tool, that can be used to gather information and to evaluate secondary sources of information (Hewson

& Stewart, 2016). The internet, and its accessibility to people and businesses, has created great opportunities for companies communication wise, as well as eased the opportunity to reach necessary information. In this study, mainly the accessibility of secondary sources of

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS information and to what extent it is used is of relevance, as this information could be of great relevance in the internationalization process of companies, and their entry-mode decision- making.

Baessens, Bapna, Marsden, Vanthienen and Zhao (2016) claim that big data is becoming increasingly important and is changing the world dramatically. De Mauro, Greco and Grimaldi

(2016) dedicated their research to finding a thorough definition for the term big data. Their definition can be described as follows: big data is an information asset, that is characterized by velocity, variety and high volume, and requires specific technologies and analytical methods to transform it into understandable and valuable information. Baesens et al. (2016) explain that big data can be defined by 4 V’s: volume, variety, veracity, and velocity. It is these four V’s that make sure that we work with valid data. Big data offers the opportunity to acquire valuable information from a large amount of data, that has been collected through various sources

(Hashem, Chang, Anuar, Adewole, Yaqoob, Gani, Ahmed & Chiroma, 2016). Furthermore,

Antunes (2016) states that big data has the possibility to impact the decision-making process, when it is interpreted correctly. Big data has several effects on businesses. Firstly, it impacts the business processes. Secondly, in the commercial world, it rebalances the power of relations in decision-making. And thirdly, it alters the scale and scope of optimization challenges

(Baesens et al., 2016). Big data has become a useful research tool in management, as it deals with multiple amounts of sources and data (Rojas, Vega, Robayo, Montoya, & Piedrahita,

2016). From this it can be concluded that big data can be used as a useful research tool to collect necessary data and analytics, moreover, when the data is interpreted correctly, it can have a great influence on the decision-making of managers.

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS

2.2 Internationalization Strategies

One of the strategic decisions that companies are confronted with is which entry-mode to choose for internationalization (Lu, 2002). Moreover, selecting the right entry-mode decision is key to successful internationalization (Keegan, 1984; Root, 1987). Numerous internationalization strategies have been developed throughout the previous decades, with all a different view on what, how, and why firms internationalize. Three of such theories are the

Network model, the Transaction Cost theory, and the Uppsala model. The Network model, developed in 1988 by Johanson and Mattsson, explains that a company relies on the resources of other firms’ in the same network when internationalizing. The TCE was developed by

Williamson in 1985, and explains that firms internationalize when costs favor markets as the correct governance structure. The Uppsala model developed by Johanson and Vahlne in 1977 is used to describe the effects and influence of digitization in this paper. Therefore, this theory will be discussed in more detail below.

The Uppsala model is a well-known internationalization theory developed by Johanson and Vahlne (1977), which explains the internationalization method of a company. More specifically, the model considers the incrementally increasing commitment, and the gradual acquisition and integration into foreign markets. The model consists of two patterns. Firstly, internationalization starts in countries that are psychically close, and over time after evolving experience, companies enter markets that are psychically more distant. A second pattern of the

Uppsala model is the chosen entry mode. According to the Uppsala model, firms typically start internationalizing through the entry mode that contains the least commitment, namely, exporting. Hereafter, again due to the development of experience, companies gradually internationalize through sales subsidiaries, and eventually through manufacturing plants

(Johanson & Vahlne, 1977). Thus, based on the Uppsala model, it can be stated that entry-mode decision-making depends on a company’s international experience. Whereas an increase in a

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS company’s experience subsequently leads to an increase in psychic distance and resource commitment. Thus, by gaining experiential knowledge, the company is willing to take more risks when expanding abroad.

Recently, Johanson and Vahlne (2017) published an updated and augmented version of their Uppsala model. In this updated version, the authors explain the evolution of international companies in general, without narrowing to the characteristics of the internationalization process. They explain that for the Uppsala model, the focus on process is its most distinctive feature, which indicates the processes of increased resource commitment and knowledge development throughout expansion. The processes indicate that in general, companies start expanding through low-risk entry-modes (e.g. exporting), and over time, as their experience and knowledge grows, risk decreases, and companies increase their resource commitment by applying higher-risk entry-modes (e.g. wholly owned subsidiary). This indicates that risk decreases as companies gain more experience, and subsequently companies will increase their resource commitment for future expansions. Thus, it all starts with a low resource-commitment mode, and as experiential knowledge gains, companies move to higher commitment modes

(Carneiro, da Rocha & Ferreira da Silva, 2008). This illustrates that experiential knowledge is one of the main mechanisms used by companies to expand internationally following the

Uppsala model, as experience builds a company’s market knowledge (Johanson & Vahlne,

1977; Levitt & March, 1988; Gavetti & Levinthal, 2000). This paper will investigate potential changes in the relevance of experiential knowledge due to digitization, and therefore this section will mainly focus on the knowledge development process of the model.

As discussed above, by developing experiential knowledge, a company will subsequently increase its psychic distance and resource commitment when expanding abroad.

Knowledge development relies upon two concepts: the first being social construction, which implies that managers learn and make use of inputs to make information understandable and

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS useful (Berger & Luckmann, 1966; Gavetti & Levinthal, 2000). The second concept is sense- making, which indicates that the knowledge development process resides in the tacit experience of managers and in enactment of the collective (Brown & Duguid, 1991). Knowledge development, or more specifically experiential knowledge comes from repeated practice

(Teece, 2007; Eisenhardt & Martin, 2000). It unfolds over time, as the learning has to be consolidated in the minds of employees, in the company’s routines, and in its capabilities. Thus, experiential knowledge can be gained through personal experience only rather than be taught

(Whitelock, 2002), and is critical to internationalization according to Johanson and Vahlne

(1977). However, Barkema and Drogendijk (2007) found that mainly companies with above- average international experience benefit from experiential knowledge, and companies whose international experience is below-average do not. For learning to be successful, companies have to develop joint social capital (Johanson & Vahlne, 2017), which can be defined as the resources gained from relationships (Lollo, 2012). In 1990 Johanson and Valhne suggested three exceptions to their model, which mainly diminish the importance of experiential knowledge for the internationalization of companies. Firstly, firms with large resources might take larger internationalization steps than indicated by the model. Second, relevant market knowledge does not necessarily come from experience when market conditions are homogeneous and stable.

And thirdly, experience from similar markets makes knowledge generalization possible. These exceptions affect the importance of experiential knowledge in the internationalization process of companies, and offer possibilities for different motives behind the way companies internationalize.

Forsgren (2002) states that there exist various ways to learn. Moreover, Nelson and

Winter (2002) explain that knowledge development comes from trial-and-error cumulative learning, exercised by individuals, companies and society as a whole. Johanson and Vahlne

(2017) agree that at the moment a radical transformation of the entire context of international

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS business is happening due to the increasing development of information technologies.

Nevertheless, they maintain to believe that the Uppsala model continues to be a useful guidance in the international expansion of companies. The authors believe that the knowledge development process, and more specifically experiential knowledge remain of value for the entry-mode decision-making process (Johanson & Vahlne, 2017), regardless of the influence of digitization on the decision-making process.

The Uppsala model presents an overview of how companies expand by means of experiential knowledge, and covers the whole internationalization process (including pace, location and type of entry-mode). Therefore, the rest of this paper will use the Uppsala model as the traditional internationalization strategy, and will look at specific modifications within the strategy that may have occurred due to digitization. More specifically, the paper will look at the entry-mode decision-making process of the Uppsala model, and whether experience and experiential knowledge development used to gradually increase psychic distance and resource commitment throughout the expansion process are still of relevance.

As mentioned above, entry-mode decision-making is based on a company’s experiential knowledge according to the Uppsala model (Johanson & Vahlne, 1977). Experiential knowledge can be described as all the knowledge accumulated by firms through their activities in foreign markets, and it implies that through this knowledge, people are able to search, analyze, and react to difficulties in the foreign market. The use of experiential knowledge helps in the detection of errors and to implement corrective action (Blomstermo, Eriksson, Lindstrand

& Sharma, 2004). Experiential knowledge is tacit and develops over time, and can only be acquired through personal experiences. Internationalization decisions made by companies are a response to the risks and opportunities in the market, which are based on experience

(Yonatany, 2017). As a company’s internationalization experience increases, it will subsequently increase the psychic distance and resource commitment of its following

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS expansions. Whereas psychic distance covers the location selection of a company when expanding, the increase in resource commitment explains the entry-mode selection. To expand on this, Johanson and Vahlne (1977) describe resource commitment as the product (entry- mode) that evolves from the size of the investment times its degree of inflexibility (e.g. dedication to customer needs). Companies frequently start their expansion with exporting. The next step would be to enter through deals with intermediaries, which, if successful, will be replaced by a self-owned sales organization. Subsequently, manufacturing plants would be opened to overcome trade barriers (Johanson & Vahlne, 1977). Thus, as international expansion is successful and experience increases, companies will subsequently increase their resource commitment by eventually selecting high-commitment entry-modes for international expansion. This study will focus on companies that have already experienced parts of this internationalization process, but that are not fully saturated globally. Furthermore, the study challenges Johanson and Vahlne’s (2017) statement that experiential knowledge will remain of value for the entry-mode decision-making process, as changes may arise due to the rise of digitization. Thus, this study believes that knowledge which has become available through digitization, could become of greater relevance in the internationalization process of companies, than the relevance of experiential knowledge as mentioned by Johanson and Vahlne (1977).

The following section will discuss the concepts of digitization and internationalization simultaneously and will investigate what previous research has discovered about the effects of digitization on internationalization strategies.

2.3 Digitization and The Uppsala Model

Digitization in the sense of using the internet for business processes, has been widely adopted globally and should become the essence of current and future business strategies. Thus, the way companies organize their activities nationally and internationally associated to the

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS production and performance of a good or service to serve customer needs (Weske, 2012;

Kirchmer, 2017; von Scheel, von Rosing, & Scheer, 2014). Furthermore, transforming businesses by including digital makes sense, as consumers are becoming increasingly aware of the opportunities of digitization and create new demands (McDonald, 2015). For firms to derive value from the increasing availability of big data, it is necessary that companies are aware how to make effective decisions in the current digital economy (Dhar & Sundararajan, 2007).

BarNir, Gallaugher, and Auger (2003) researched the field of internet commerce and found that firms differ in the way they digitize business processes through the internet, depending on a firm’s age and size, as they found that the relationship between digitization and strategy is stronger for new and smaller firms, compared to established and larger firms. Furthermore, digitization and the use of the internet are both associated with low cost and innovation strategies. Additionally, this implicates that numerous firms appear to use the internet to support strategic objectives.

Appropriate entry-mode decision-making is critical to ensure the success and endurance of an international operation (Root, 1994; Terpstra & Sarathy, 2000). This study looks at the market-seeking behavior of companies, and more specifically focuses on what type of information is used to make decisions regarding the entry-modes these companies use to enter new markets. Market-seeking investments generally involve the physical location of the company abroad (Zaheer & Manrakhan, 2001). Market-seeking companies enter new markets to increase their global presence, and to gain a substantial international market position.

Companies use market-seeking behavior to sustain their existing markets, or to exploit new markets (Cui, Meyer & Hu, 2014). Furthermore, it is used to strengthen the market position of the firm, and to intensify competition in the home market (Cui et al., 2014). For market-seeking companies to successfully operate abroad a few necessities exist: the company has to find

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS partners to cooperate with, it has to detect the needs of the host country, and it has to establish relations with firms abroad (Majkgård & Sharma, 1998).

Digitization has dramatically changed the nature of businesses, therefore also influencing the adequate entry-mode strategies (Ekeledo & Sivakumar, 2004). Nowadays, when discussing entry-mode, technology and digitization are important factors to consider for traditional firms (Ekeledo & Sivakumar, 2004). Ekeledo and Sivakumar (2004) developed a framework for (service) firms to understand the impact of e-commerce on entry-mode strategies. They found that the level of digitization influences both the location choice as well as the level of control, whereas the latter determines the entry-mode strategy. In the end, the appropriate entry-mode strategy depends on a combination of internal factors (e.g. assets, competencies, and strategic considerations), external factors (e.g. economic environment), and e-commerce technologies. Furthermore, digitization dramatically decreases transaction costs

(Coase, 1037; Ellram, Tate, & Billington, 2008), which is an important factor influencing the entry-mode decision (Williamson, 1993). The question remains to what extent digitization has an influence on the current internationalization strategies of MNEs, and whether these strategies are similar to the traditional strategies, whether these strategies are slightly adjusted due to digitization pressures, or whether completely new strategies are applied by companies to incorporate digitization in their internationalization process.

In the following paragraphs, literature about the influence of digitization on the Uppsala model will be discussed. Yonatany (2017) found that highly digitized companies or born globals’ experience a different internationalization process, compared to the traditional firm’s process. According to his research, the choice of host market becomes less important, because digitization decreases the influence of psychic distance and liability of foreignness, whereas liability of foreignness can be described as a disadvantage of the company entering a country compared to local companies within the country. This argument diminishes one of the main

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS concepts of the Uppsala model, namely expanding to psychically close countries at the beginning, and gradually expanding as experience increases. Welch, Nummela and Liesch

(2016) claim that in today’s digitized world it has become easier to overcome challenges regarding costs and access to information in the internationalization process than it was back in the 1970s when the Uppsala model was developed. Nevertheless, even though research has occurred regarding the effect of digitization, these researches do not indicate whether traditional companies have also increasingly incorporated digitization into their internationalization process and their entry-mode decision-making, which is being researched in this study. And, the advantages and disadvantages these companies perceive regarding the effect of digitization.

The greater access to knowledge has decreased the time lag between firm foundation and the initial international expansions. Coviello et al. (2017) describe the effect of digitization as the creation of a worldwide market for economic and social transactions, and for tangible and intangible elements. And, they try to investigate whether this new digital worldwide market still fits the process of the Uppsala model. Some researchers argue that new highly internationalized companies do not apply the steps of the Uppsala model, whereas other argue that they represent special cases of the Uppsala model (Coviello et al., 2017). Marsh (2017) agrees that firms evaluated in the Uppsala model are utterly different from nowadays highly digitized companies, and therefore the Uppsala model cannot explain the internationalization process of these highly digitized companies.

The application of digitization by firms, and the eased access to market information has not proven to guarantee successful market entry (Welch et al., 2016). Access to information can create an illusion of understanding the market (Nummela, Saarenketo & Loane, 2016), whereas information alone is not knowledge. And, for the information to become valuable it must be absorbed, learned, processed and acted upon (Welch et al., 2016). Nevertheless, whether successful market entry could ever be guaranteed, independent of whether digitization was

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS incorporated or not, is questionable. Furthermore, to what extend companies incorporate digitization and what they perceive as the advantages and disadvantages regarding digitization remains unclear, and will hopefully be clarified to a certain extent by means of this study.

According to Coviello et al. (2017), digitization can influence the internationalization process in many other ways as well, such as: the timing, rhythm and pace, the location and entry-mode decision-making, and overcoming the liability of foreignness. This can be explained by the reduction of transaction costs and reshaping of boundaries due to technological advances (Chen

& Kamal, 2016). Even though benefits can come from digitization, highly digitized firms, such as born globals, can still experience similar country barriers as traditional companies (Coviello et al., 2017). What differs between digital and traditional firms is the actual process of internationalization, including the FSA transfer, recombination and exchange (Coviello et al.,

2017). Furthermore, new digitized firms appear to be engaged in business exchange rather than production (Coviello et al., 2017), nevertheless, traditional firms that operate in production rather than business exchange also experience effects of digitization. In conclusion, even though scholars do not fully agree about the impact of digitization on the Uppsala model, in general they suggest an updated version of the Uppsala model, rather than the development of a new internationalization strategy. The following section will more specifically focus on the influence of digitization on the experiential knowledge process of the Uppsala model.

2.4 Digitization and Experiential Knowledge

In the Uppsala model, knowledge development or experiential knowledge is one of the main mechanisms used during international expansion (Johanson & Vahlne, 2017).

Nevertheless, this paper aims to research whether this knowledge process remains of interest, or whether digital technologies such as the internet and big data diminish the importance of experiential knowledge in the internationalization process of companies. As information is

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS becoming increasingly available through the internet and databases, the importance of previous experiences and the developed experiential knowledge might decrease. Johanson and Vahlne

(1977, 2009) state that gaining experience, or more specific learning and accumulating knowledge, are the heart of the Uppsala model. The Uppsala model states that lack of experiential knowledge about the foreign market is the main reason why companies fail their international operations (Hutzschenreuter & Matt, 2017). As lack of knowledge of the foreign market increases liability of foreignness, which subsequently increases operational risk

(Hutzschenreuter & Matt, 2017). The experiential knowledge gained from previous expansions is used for further internationalization of the company. However, this study wonders whether previous experiences remain as relevant in the decision-making process, when all necessary information is becoming increasingly available digitally. An example of the type of information that can nowadays be acknowledge online or via big data, without being present in a foreign market, is country-specific knowledge necessary for expansion, such as market standards, legal requirements, consumer behavior, norms and values, and legislations.

Companies nowadays increasingly rely on digital knowledge technologies by means of information technologies (Sambamurthy, Bharadwaj, & Grover, 2003). The ability to digitally store information has created the opportunity for companies to generate competencies and knowledge at any location within the MNE (Sambharya, Kumaraswamy, & Banerjee, 2005), which can provide assistance during the internationalization process. Liu and Ravichandran

(2015) found that information technologies positively moderate the integration of experience.

This indicates that due to digitization, knowledge and information about new markets is integrated within a company faster, which subsequently accelerates the internationalization process. Furthermore, companies significantly invest in information technologies to support their knowledge development (Choi, Lee, & Yoo, 2010). Digitization reshapes business models, which in the future might lead to the replacement of less efficient business models by

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS digitized business models (Loebbecke & Picot, 2015). Even though nowadays information technologies are mainly used to support knowledge development, previous literature shows positive signs that in the future digitization could possibly overtake knowledge development and become the main driver behind internationalization.

Regarding the internet, Petersen, Welch, and Liesch (2002) found that specifically the internet has a range of effects on international expansion, from limited impact to, in most cases, rapid widespread expansion. The authors found that the internet challenges the use of experiential knowledge, which is of interest as they found that experiential knowledge is used as a propelling factor for companies to expand. This would indicate an influence of the internet on the importance of experiential knowledge, or even a possible replacement. Nevertheless, the authors do emphasize that experiential knowledge remains a propelling factor in the expansion process of companies. They claim that the internet improves market transaction efficiency, and thereby reduces the amount of knowledge needed. Alon and Cannon (2000) state that the current advances of digitization have made foreign resources more accessible as they can be found and explored through the internet. Thus, digitization supports expansion through the internet, and subsequently decreases the risks of operating in a foreign country. As the internet increasingly provides all information necessary when expanding, the necessity of experiential knowledge may become less relevant as complications and obstacles can be overcome through thorough digital research. The results of Alon and Cannon (2000) would indicate that at the moment digitization has not replaced experiential knowledge yet, but that the internet is diminishing the amount of experiential knowledge needed, and may replace experiential knowledge in the future. Nevertheless, not all scholars agree. In the updated version of the

Uppsala model by Johanson and Vahlne (2017), the authors once again emphasized the importance of experiential knowledge in the expansion process of companies. This study will provide additional data to the debate regarding the relevance of the Uppsala model in todays

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS digitized world, and will investigate the effect of digitization on the use of experiential knowledge in the internationalization process and entry-mode decision-making of traditional companies. Moreover, if possible a new perspective regarding the importance of experiential knowledge and digitization will be provided.

According to Brennan and Garvey (2009) born globals have already found another driver for internationalization, rather than experiential knowledge, namely their technological advantages. However, they also notify that internationalization experience, together with the ability to integrate knowledge acquired through international network relationships remain to moderate the pace and pattern of the internationalization of traditional firms. Nevertheless, the internet appears to have a positive impact on internationalization and organizational growth

(Davis & Harveston, 2000), thus the substitution of experiential knowledge by the internet in the future remains contingent. Because, the internet has the potential to reduce one of the greatest obstacles of doing business in foreign markets, namely uncertainty.

3. Theoretical Framework In this section, the information discussed in the literature review will be reviewed, summarized and the main issues underlying this research will be presented. In section 3.1 the conceptual framework underlying this study can be found, as well as the working propositions.

This information is the basis of the research and will be used as the starting point of further analysis.

Digitization has created the opportunity to access great amounts of data more easily, and has eased international communications and expansion. Especially in the internationalization process companies should acknowledge the influence of digitization, as international growth appears to be easier for highly digitized firms compared to traditional companies (Yonatany, 2017). Thus, becoming more digitized could possibly bring international

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS growth opportunities to traditional companies as well. This study claims that traditional firms already start to incorporate digitization increasingly within their internationalization process, and investigates whether it has become the main source underlying the entry-mode decision- making within companies. Furthermore, due to digitization, changes in the current business landscape are occurring, which subsequently forces companies to modify their business models and entry-modes to digital pressures to be able to meet customer demands, growth opportunities, international expansion, and operating realities (Saxena, 2018). In the past, mainly experiences and experiential knowledge have been the main sources used by companies in the internationalization process. Nevertheless, for traditional firms to remain successful in the future it is important to incorporate the opportunities offered by digitization in their internationalization process. In this research digitization is described as the usage of the internet and big data by companies to gather relevant knowledge and information. More specifically, the study looks at the effect of digitization on the entry-mode decision-making within the internationalization process. Thus, whether information obtainable via the internet and/or big data affects the entry-mode selection by companies entering (new) markets, and whether this type of information/knowledge has overcome the importance of experiential knowledge.

A great number of traditional companies follows the Uppsala model for their international expansion process, which indicates that through experience and experiential knowledge they expand their business by increasing psychic distance and resource commitment

(Johanson & Vahlne, 1977). As can be read above, digitization has become an important factor in the internationalization process of companies (Ekeledo & Sivakumar, 2004). Therefore, the question arises whether the applicability of the Uppsala model remains the same, whether adjustments are necessary, or whether the theory is no longer of relevance in the future. For example, Coviello et al. (2017), argue that the actual internationalization process differs due to digitization, and that the Uppsala model should not be eliminated, but needs to be adapted to

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS current digitization developments. More specifically, this paper will focus on the essence of experience and experiential knowledge in the Uppsala model, and whether this remains of essence with the rise of digitization. Thus, whether digitization influences the importance of experience and experiential knowledge when internationalizing, and whether this subsequently influences the entry mode decision-making process of companies. More specifically, this paper will investigate whether experiential knowledge remains one of the main drivers behind international expansion, or whether digitization replaces the fundament of experiential knowledge.

In this section, all concepts discussed above will be combined as the relationship between digitization, the Uppsala model, and the importance of experiential knowledge will be described. Digitization can affect the internationalization process by influencing the timing, rhythm and pace, the location, the entry-mode decision-making of a company, and more

(Coviello et al., 2017). Digitization does so by decreasing transaction costs and reshaping existing boundaries (Chen & Kamal, 2016). Moreover, using digitization during the internationalization process has become inevitable (Ekeledo & Sivakumar, 2004). The process of the Uppsala model may be challenged by digitization. Experiential knowledge is one of the main factors underlying the Uppsala model, as when experiential knowledge increases, a company increases the psychic distance and resource commitment in its internationalization process. Nevertheless, the importance of experiential knowledge is challenged in this research due to the rise of digitization. The internet has helped companies to expand more rapidly and widespread, due to an improvement in market transaction efficiency (Petersen, et al., 2002).

Furthermore, foreign resources, including local knowledge, have become more accessible due to digitization, which decreases the risk of operating abroad (Alon & Cannon, 2000). Moreover,

Petersen et al. (2002) found that the internet challenges the use of knowledge, as it is nowadays used as a propelling factor for companies to expand. In conclusion, decreasing the risks and

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS uncertainty of expansion could possibly decrease the importance of experiential knowledge when expanding abroad. Nevertheless, based on the literature it seems that at the moment digitization has not replaced the importance of experiential knowledge yet, however, the internet is diminishing the amount of experiential knowledge necessary for international expansion.

After analyzing the literature, it can be concluded that digitization certainly affects internationalization strategies to some extent. Whether a completely new strategy should be developed or whether digitization rehashes the existing theory remains unclear, as scholars share different views. Digitization most probably has an influence on the importance of experiential knowledge, but whether digitization will ever replace experiential knowledge remains unclear. Nevertheless, what can be concluded is that links can be made between digitization, experiential knowledge and entry-mode decision making, and that an effect of digitization is highly certain.

3.1 Conceptual Model and Working Propositions

This section provides the conceptual model and the working propositions developed specifically for this study. The conceptual model presented in figure 1 below is an extension of the Uppsala Model by Johanson and Vahlne (1977), as their model is used for comparison in this study. Digitization was added as it is expected to be an influential factor in the entry-mode decision-making process of companies nowadays.

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS

Figure 1: The Uppsala Model (Johanson & Vahlne, 1977), including the Influence of Experiential Knowledge and Digitization. Experiential Knowledge Digitization

State Change

Market Relationship Knowledge Commitment Opportunities Decisions

Market Learning, Commitment/ Creating, Network Trust-Building Position

The traditional Uppsala model is similar to the model presented in figure 1, excluding the arrow aligning digitization. The focus of this study is on the box of the relationship commitment decision, or rephrased on the decisions made regarding the entry-mode during expansion. The traditional model by Johanson and Vahlne (1977) claims that experiential knowledge is the main mechanism used in the entry-mode decision-making process. This study challenges the importance of experiential knowledge by the rise of digitization, as information and knowledge is becoming increasingly available through the internet and big data. Thus, the research questions whether the importance of experiential knowledge in the internationalization process as described by Johanson and Vahlne (1977) remains reliable, or whether knowledge provided through digitization covers the importance of experiences knowledge. Therefore, to demonstrate the influence of digitization on the entry-mode decision-making process (the digital availability of necessary information), the mechanism digitization is added to the framework. More specifically, this research investigates whether the mechanism of experiential knowledge including the arrow remains of importance within the Uppsala model, or whether it

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS will be replaced by digitization. Whether experiential knowledge remains of importance, or whether this mechanism is overtaken by digitization in the internationalization process will be researched by means of a multiple case study. The study will evaluate how digitization is incorporated in the internationalization process, and whether experiential knowledge is still the main mechanism used in a company’s internationalization process and its entry-mode decision- making process, or whether it is overtaken by digitization.

The working propositions composed for this study are aligned with the research field

(sections 2 and 3), the conceptual model and research question of this paper. The working propositions are presented in table 1 below.

Table 1: Working propositions Working Propositions Digitization is increasingly being incorporated in a traditional company’s 1 internationalization strategy. Digitization is increasing the pace of a traditional company’s internationalization 2 process. Digitization diminishes the importance of experience and experiential knowledge in 3 the internationalization process (the Uppsala model). 4 Digitization influences the entry-mode decision-making process of companies.

The first working proposition focuses on the use of digitization to an increasing extent. As digitization is rising, this working proposition expects that companies subsequently increasingly incorporate the use of digitization in their internationalization process.

The second working proposition is slightly more concentrated, as it looks at the increasing pace of the internationalization process due to digitization. The literature suggests that one of the major effects of digitization on the internationalization process is the increased pace of the total process. Working proposition 2 is therefore developed to research whether this also accounts for Dutch and French companies operating in the consumer goods industry.

The third working proposition is focused on the diminishing importance of experience and experiential knowledge in the internationalization process due to the rise of digitization. It

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS suggests that digitization is becoming one of the main mechanisms in the internationalization process, rather than experiential knowledge.

The last working proposition, working proposition 4 states that digitization is of influence in the entry-mode decision-making process. According to the Uppsala model by

Johanson and Vahlne (1977), the main mechanisms influencing the entry-mode decision- making process remains experience and experiential knowledge. Nevertheless, this paper suggests that digitization has become of relevance within this process as well.

4. Research Design This section will discuss the research design used for answering the research question of this study. The research question is as follows: How does digitization influence the importance of experiential learning in the entry-mode decision-making process within the

Uppsala model? The research design used to answer this question includes what type of research will be conducted, the research strategy, and which instruments and procedures will be used.

This paper will conduct a qualitative inductive research. The research strategy is a multiple case study, where data and evidence for answering the research question will be collected through multiple cases by means of interviews, as interviews can be used to provide information of how companies coop with digitization in their entry-mode decision-making process. The research is a descriptive and explorative study and is executed cross-sectional. For the data collection, a single method is used, as data will be collected only by means of a case study. The paper focuses on Dutch and French companies in the consumer products industry.

Thus, companies that produce products specifically for consumers, such as clothing, toiletries and flowers. All of the interviewed companies have an international sales format (McGurr,

2002), indicating that they are all operating and selling their products internationally, making

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS the industry interesting and suitable to this research. The different segments within the consumer goods industry help to provide different insights, and to provide all together generalizable results for the consumer goods industry. Furthermore, the availability of consumer goods companies in the Netherlands and France is of relevance for the choice of this industry. Moreover, the consumer goods industry is affected by digitization through e- commerce pressures, as well as in their business processes and internationalization strategies.

This study will focus on how companies expand abroad, thus the entry-mode decision-making process of companies. This also implies that the companies included in the cases have previous experiences with operating abroad. Furthermore, the case companies plan to expand even further in the (near) future. Thus, companies with international expansion experience, but that are not saturated globally (yet). This type of company can provide information about the influence of digitization when they first started expanding, and the way they incorporate digitization in their internationalization decision-making process nowadays.

The companies that were reached out to are internationally active, but not globalized.

Dutch and French companies were reached out to, to collect appropriate data and evidence. The selection of multiple companies or cases rather than one ensures reliability of the research. On the downside, even though generalizability within the Dutch and French consumer goods industry may be accomplished, international generalizability within different industries cannot be ensured by using this sample. Regarding the interviews, within these companies, the persons associated with the internationalization process, such as business development managers, were reached out to. These individuals were reached out to by means of LinkedIn or via e-mail.

People associated with the internationalization process (e.g. business development managers) were selected as these persons deal with a company’s expansion, and thus are involved in the entry-mode decision-making process. Moreover, the interviewees provided this paper with information regarding the influence of digitization on the importance of experiential knowledge

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS within the entry-mode decision-making process. Digitization in the sense that the necessary information can nowadays be found through the use of big data, and the availability of information on the internet. The case companies provided information regarding the incorporation, the usage, and the importance of experience and experiential knowledge, and digitization in the entry-mode decision-making process of internationalization.

4.1 Research Method

For the person responsible for the internationalization of a company (e.g. the business development manager) to be able to provide sufficient answers, interviews were conducted.

These interviews included (semi-)structured questions. The questions were based on the interview guide approach by Patton (2002). Three cases (DFG, Lamazuna, and Pretty Wild

Lingerie II) provided their answers via e-mail due to time constraints of the company, whereas with the other three cases (G-Star Raw, Vlisco, and Pretty Wild Lingerie) either face-to-face or skype interviews were conducted. For these last three cases, with each individual one interview was conducted, that lasted about half an hour to an hour, depending on the extension of the interviewee’s answers. Furthermore, the interviews were recorded, transcribed and codified afterwards. The interview questions can be found in table 2 below. The working propositions described in section 3.1 were the baseline for the interview questions. How the working propositions and the interview questions align is described below.

The questions accompanying WP 1 cover the theme of digitization: the internet and big data. WP 1 claims that digitization is nowadays increasingly incorporated in the internationalization process of traditional companies. The accompanying interview questions therefore focus on the usage of digitization by companies in their internationalization process, and their perception of the importance of digitization in the internationalization process.

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS

The answers provided to the interview questions accompanying WP 2 were developed to provide the necessary information to confirm or reject WP 2. WP 2 focuses on the increased pace of the internationalization process due to increasingly incorporated use of digitization and digitally acquired knowledge by companies. Therefore, the aligning questions ask the cases about their opinions regarding digitization, and whether it has, in their opinion and in their company, eased and/or fastened the pace of the internationalization process.

WP 3 claims that the rise of digitization has diminished the importance of experiential knowledge in the internationalization process. More specifically, it supposes that knowledge available through digital channels, such as the internet and big data, has become of greater importance than knowledge gained through previous experiences. The interview questions accompanying WP 3 focused on obtaining the opinions of the cases regarding whether they believe that digitization has overcome the importance of experiential knowledge, or whether for the current business landscape experiential knowledge remains of greater importance than digitization within their internationalization process.

The final working proposition, WP 4, focuses on the influence of digitization on the entry-mode decision-making. WP 4 assumes that digitization has an influence on the entry- mode decision-making, which according to the Uppsala Model is mainly based on previous experiences, thus experiential knowledge. The interview questions accompanying WP 4 investigate whether digitization is of importance for the entry-mode decision-making, and why the cases believe this mechanism is of importance in the process

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS

Table 2: Interview questions Interview Questions WP 1 WP 2 WP 3 WP 4 General Questions Could you shortly introduce [company]? Does [company] plan to further expand operations abroad in the future? Could you explain the internationalization process of [company]? What do you expect the main future development within the internationalization process will be? Experience and Experiential Knowledge What is your perception about the use of previous expansion experience in the internationalization process of [company]? X Do you believe that previous experience of expanding abroad is of importance in the subsequent expansions abroad of X [company]? If yes, why? Digitization: The Internet and Big Data What is your perception about the use of the internet and/or big data in the internationalization process of [company]? X Does [company] make us of the internet and/or big data when researching a target market? X Is information provided online used as the main source of information that is used when expanding abroad? If yes, why? X If not, why? Do you believe that digitization, or more specifically the internet and/or big data, has eased the internationalization X X process of [company]? If yes, how? Has digitization/the internet/big data increased the pace of the expansion process of [company]? Thus, has the decision- X X making time when expanding abroad decreased? Do you believe that digitization will become increasingly important within the expansion process of [company]? X X Do you believe that digitization to some extent has weakened the importance of previous expansion experience? X X Do you believe that digitization to some extent has replaced the importance of previous expansion experience? X X Entry-Mode Decision-Making Is previous experience of expanding abroad of importance in the selection of an entry-mode for [company]? If yes, why? X Is digitization of importance in the selection of an entry-mode for [company]? If yes, why? X

The interview questions above, more specifically the answers to these interview questions provided by the interviewees, will be used to derive an answer to the research question of this paper. Furthermore, by using these accurately composed interview questions that focus on providing an answer to the paper’s research question, credibility and validity of the research can be ensured.

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS

5. Data Collection, Case Analyses, and Results 5.1 Data Collection

Data has been collected through multiple case studies (in total 6 cases). Within these cases interviews with business development managers, or persons involved in the international expansion process of several Dutch and French consumer goods companies have been conducted. The cases were sampled through a non-probability, purposiful sampling technique

(Saunders, 2000). This indicates that cases were selected based on a specific focus, in this case country and industry. Firstly, a great number of companies in the Dutch retail industry was reached out to (over 50 companies), nevertheless due to disappointing responses, the sample focus was extended and convenience sampling was applied. This indicates that another great number of companies was reached out to, and based on their availability interviews were conducted. This extended the sample into companies within the Dutch and French consumer goods industry. The cases include companies from the Netherlands and France, and vary between flowers, toiletries, and textile products. The companies that have been interviewed are the following: Dutch Flower Group, Lamazuna, G-Star Raw, Vlisco, and Pretty Wild (two interviews). Background information about the companies was retrieved from the interviews, their websites and the LexisNexis database. Thorough case descriptions can be found in section

5.2 below. The interviews covered the interview questions mentioned above (table 2). Three of the companies, the Dutch Flower Group, Lamazuna, and one of the interviewes with Pretty

Wild Lingerie answered the questionnaire via e-mail due to their limited time available. With

G-Star Raw, Vlisco, and Pretty Wild face-to-face interview sessions took place. All interviews have been transcribed and can be found in the appendix (section 9). In table 3 below an overview of the cases and interviews is presented. After the data collection, and the transcription of the data, the data was codified through use of NVivo 12. Codifying the data offers the ability to identify patterns within the data. Many codes were used to codify the data,

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS including the main themes: experience and experiential knowledge; digitization: the internet and big data; and entry-mode decision-making.

Table 3: Overview of case studies and interviews Case # Company Function Interviewee Interview Date 1 Dutch Flower Group CIO May 21, 2018 2 Lamazuna Business Manager May 25, 2018 3 G-Star Raw Digital Business Developer June 6, 2018 4 Vlisco Business Development Manager June 7, 2018 5 Pretty Wild Lingerie Founder & Director June 29, 2018 6 Pretty Wild Lingerie CMO August 10, 2018

5.2 Case Descriptions

This section will provide an overview and descriptions of the cases. Background information about the companies is retrieved from the interviews conducted, as well as from the LexisNexis database and the companies’ websites. The companies are from Dutch and

French origin and operate in the international consumer goods industry. The following paragraphs will provide company specific information, as well as the underlying reasons why these cases were specifically selected for this study.

5.2.1 Dutch Flower Group

For the first case the Dutch Flower Group (DFG) was used. DFG is a Dutch family- owned company that sources flowers and plants directly from growers, and sells them to large retailers and wholesalers. DFG was founded in 1999 out of a merger of two Dutch family- owned companies, namely OZ Group and Van Duijn Goep. Furthermore, the company is specialized in the international trade of flowers and plants, operates in over 60 countries worldwide, and with over 30 partners they cover all possible sales channels. Regarding the internationalization process of DFG, the company explains that the company sources flowers and plants, predominantly directly from the growers, and then sells them to large retailers and

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS wholesalers. Subsequently, the retailers and wholesalers sell the flowers and plants to the end consumer. The company explains to not vary much when it comes to market-entry, and makes almost always use of export. The company generally expands through market share with its existing and new customers, or in creating market share in most of the cases by acquisitions.

The company believes that due to their operating segment (fresh products) they do not have many other options to enter new markets. Furthermore, the company believes that within their market segment, when it comes to expanding a lot is still based on trust and experiences, rather than through digitization.

5.2.2 Lamazuna

Lamazuna covers the second case of this research. Lamazuna was founded in 2010, starting off by offering ecologically accepted cleaning wipes. Nowadays the company offers a great amount of ecologically accepted products including shampoo, deodorant and other toiletries. At the moment, the company employs around 13 employees, but hopes to continue growing in the following years. The company’s products are sold internationally, mainly in

Europe and mainly through e-commerce. Lamazuna explains that for them to expand they engage with wholesalers all around the world. They look for partnerships with these wholesalers to export their products and sell their Zero Waste toiletries globally. The company is very digitally focused to be as environmentally friendly as possible, and makes great use of digitization when it comes to researching new markets and new partners, in maintaining the relationships with their current partners, and in their communications with partners as well as with consumers.

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5.2.3 G-Star Raw

The third case covers the fashion company G-Star Raw. G-Star Raw was founded in

1989 in Amsterdam, where its headquarter is still located nowadays. The company designs, produces and sells clothes under the brand name of G-Star Raw. The company is well-known for its denim designs, and describes itself as an innovative denim brand. The company is located in approximately 70 countries worldwide, and operates in 53 countries online. And, even though the company has a wide presence internationally, its focus countries are Japan, the USA, and Australia, thus the developed market. The company operates in the retail industry, and still strongly believes in the importance of experiential knowledge. Digitization has been incorporated, but many decisions are still based on the knowledge the company has developed, and the experiences it has gained throughout its lifetime. The company makes use of many different entry-modes, based on a country’s legal requirements, as well as what entry-mode suits a country best. Therefore, the entry-mode used to enter a new market is based on experiences as well as digital research.

5.2.4 Vlisco

Vlisco is used as the fourth case of this study. It is a Dutch textile company established in 1846 in the name of P. Fentener van Vlissingen & Co. The company designs and produces colorful fashion fabric, and focuses its sales on western and central Africa. The company’s fabrics are adjusted to the African style, and is aimed at sophisticated African women of style.

Since 2006 the company has opened several flagship stores in capital cities throughout western and central Africa, where it sells its fabrics, but also Vlisco’s own fashion, including a range of accessories. The company employs around 2500 employees located in the Netherlands and western and central Africa. Vlisco’s internationalization process can be explained in two ways.

Firstly, the company starts researching and exploring new markets, to find out whether it would

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS be interesting to expand into the new market. And secondly, the company receives a lot of demand requests, from wholesalers, to collaborations. In this case, Vlisco does a thorough research regarding where the demand comes from, and whether it would be interesting to develop into a partnership. In the interview Vlisco described that as markets differ, entry-modes differ as well. For example, in East-Africa entering new markets through retail has become a very relevant channel. The company mainly defines its exact entry strategy through previous experiences, but makes use of the internet and big data to support these decisions.

5.2.5 Pretty Wild Lingerie

The fifth and sixth cases cover the Dutch lingerie brand Pretty Wild Lingerie. The brand was founded in 2011 by Firouzè Akhbari. The brand produces luxurious lingerie, that stands prestige in the Dutch quality, femininity, elegance, and artistry. The brand is positioned in the high-end lingerie industry, with its main competitor being La Perla. After a shutdown in 2015, the brand has restarted in 2018. The company currently has multiple flagship boutiques in China and Korea, and plans to open a new flagship boutique in the Bijenkorf in Amsterdam in the fall of 2018 (a store-in-store). Furthermore, the company has plans to open additional retail stores in Thailand, Singapore, South Africa, Portugal and Indonesia as of 2019. These flagship stores show that the company expands mainly through opening new stores, but adjusts its entry-mode to what suits best in a specific market. The company explains in the interview that opening a store has all kinds of uniqueness, and therefore for every store thorough research is necessary about how and with what type of store to enter a new market.

The six cases above form the multiple case study used to provide an answer regarding the research question of this study. Within these companies, people responsible for the downstream internationalization of the company were interviewed. These cases were selected due to their similarities as well as their differences. Firstly, the similarities between the cases.

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The companies are Dutch and French from origin, and operate in the consumer goods industry.

Nevertheless, regarding the differences between the companies, even though they all operate in the consumer goods industry, they operate in slightly different markets, as well as different segments, which all together provides a sample for the consumer goods industry. For example, fashion company G-Star Raw operates mainly in the developed market (Japan, the USA and

Australia), whereas textile producer Vlisco mainly operates in the developing world (western and central Africa), and Pretty Wild Lingerie momentarily mainly operates in Asia and the

Netherlands. Lamazuna, a company producing environmental friendly toiletries, operates worldwide through wholesalers and retailers, whereas DFG, a company focused on the sales of flowers, operates mainly in the developed world (Europe and the USA). The great diversity of segments and operating markets offers many insights and generalizability for the consumer goods industry in The Netherlands and France.

5.3 Case Analyses and Results

After conducting, transcribing and codifying the cases and interviews, conclusions can be made regarding the working propositions of this study (the working propositions can be found in section 4.1, table 1). The working propositions were used to investigate whether digitization has become of increasing importance to companies in their internationalization process, and whether it has overtaken the importance of experiential knowledge. The research does not investigate whether all companies apply the same internationalization method, or whether they apply the same entry modes. The research is focused on the application and use of knowledge gathered through digitization by companies, thus through the internet and big data, and whether this aligns with the statements set in the working propositions. In the following sections, the results from the data analyses are presented, and conclusions regarding the working propositions are drawn and explained.

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Table 4: Overview of the support or rejection of the working propositions Working Propositions Case ¯ 1 2 3 4 1 Supported Supported Rejected Rejected 2 Supported Supported Rejected N/A 3 Supported Supported Rejected Supported 4 Supported Supported Rejected Supported 5 Supported Supported Rejected Supported 6 Supported Supported Rejected Supported

In table 4 above, the support and rejection of the working propositions can be found.

These conclusions are based on the results that were gathered through interviews with multiple cases. The goal of these working propositions is to assist in answering the research question:

How does digitization influence the importance of experiential learning in the entry-mode decision-making process within the Uppsala model?

In following sections of this chapter, the conclusions regarding the working propositions will be discussed in detail. Firstly, all information provided by the interviewees regarding the main themes of the working propositions presented in table 2: experience and experiential knowledge; digitization: the internet and big data; and entry-mode decision-making; will be discussed. Hereafter, the conclusions regarding the working propositions will be elaborated on in the discussion (section 6).

5.3.1 Digitization: The Internet and Big Data

This section will present all the information provided by the interviewees regarding their perception about the importance of digitization (the internet and big data) in their internationalization process. Firstly, the within case analyses are presented, where after cross case analyses are performed. The information provided in this theme influences the support or rejection of working propositions 1, 2, and 3, and will eventually be used to answer the research question.

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Based on the analysis of the interviews, it can be concluded that digitization (the internet and big data) is an important tool within the internationalization process of companies.

Furthermore, it can be concluded that digitization increases the pace of the internationalization process. Nevertheless, the cases believe that digitization has not diminished the importance of experience and experiential knowledge (yet), but that both mechanisms are of importance in the internationalization process.

5.3.1.1 Within Case Analyses

Case 1 (2018) believes that digitization will become increasingly important in society.

It has become more important everywhere, therefore also in the way of doing business, including potential expansions. Case 1 (2018) believes that the path of the increasing usage of digitization has started, and will continue with high speed. When it comes to big data, the company claims that it does not have a prominent role during the internationalization process itself, but is of great importance when predicting customer demand. Moreover, when researching a market, the internet and big data are incorporated and are used in the company’s decision-making. Case 1 (2018) explains that due to the internet data and information can travel fast without boundaries, which facilities business processes as well as communications, and has therefore eased doing business abroad. Case 1 (2018) has incorporated digitization in several ways and acknowledge that due to digitization internationalization can happen at a high speed.

Nevertheless, case 1 does not believe it to be the main mechanism of the internationalization process, as within their business field a lot is still done based on trust and previous experiences.

What can be learned from case 1 is that the company has incorporated digitization as a supporting mechanism that eases the internationalization process, but does not replace the importance of experiential knowledge. Digitization is used to provide market specific

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS information and predict customer demand, but is not the main mechanism used for decision- making.

When it comes to digitization, case 2 (2018) explains that it is very helpful to find distributors, and to find out about new stores where their product could be launched, both abroad and at home. Moreover, case 2 (2018) explains that mainly the internet is a vital tool to communicate with clients. Without their online community, the company does not believe to have succeeded in growing as much as they did. Furthermore, case 2 (2018) states that the internet allows a company to get more information in a shorter amount of time. Indicating that the process has fastened due to digitization. Nevertheless, Case 2 therefore merely uses digitization as a tool to communicate with their customers and possible distributors, to fasten the process, to gather information about their customer demands, and to create minimal environmental waste. Even though digitization is applied widely, the case cannot confirm that digitization has replaced experiential knowledge within the internationalization process.

Case 3 (2018) explains that, first of all, digitization helps in the visibility of your company. It brings awareness to the public regarding the existence of a company. Furthermore, case 3 (2018) explains that digitization has fastened the internationalization process. It provides extra information, and has made information more measurable and visible, which could definitely increase the pace of internationalization. The company explains that when internationalizing, experiential knowledge is used as a framework, as the baseline of the process. But when it comes to the details, big data is used to provide customer information, and information available on the internet is used to provide country specific information. This indicates that, especially big data, is the main tool determining the possible customer demand within a new market, which subsequently determines whether a company should enter a market or not. The internet is subsequently used for the localization within a new market. It provides information regarding how to target a market, and how to set up in a new market. Thus, case 3

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(2018) explains that the internet and big data are tools used to provide relevant information that is used to make conclusions regarding expansions and that digitization has eased and increased the pace of the process, but that experiential knowledge remains the main mechanism used when it comes to decision-making within the internationalization process. Nevertheless, the importance of digitization has been identified by case 3, and adds great value to the knowledge and the internationalization process of the company.

Case 4 (2018) describes, similar to case 3, that digitization makes it easier to be found, and helps to facilitate with new partners. Furthermore, the internet has accelerated the opportunities for market expansion. When it comes to the internationalization process, the company explains that when you’ve expanded a lot into markets, you learn from the patterns of the expansions, creating experiential knowledge. Nevertheless, you also learn about where you are expanding to through online analyses. To expand, or to build an entry strategy a lot of inputs are used, amongst them big data and the internet. The company believes that digitization will become increasingly important, and at one point in time be the main mechanism in the internationalization process. Currently, the internet and big data are used as important sources that help in the optimization of the internationalization process, as well as the market entry.

Digitization helps to develop better insights for markets, as well as products. Thus, even though case 4 believes that digitization is an important mechanism and has accelerated the expansion process, it still believes that currently experiential knowledge is of greater importance.

When it comes to big data, case 5 (2018) strongly believes that it should be taken as something positive. The company describes that its sister company is based in Shanghai and

Singapore, countries which are ahead of Europe when it comes to data. Therefore, the company possibly relies on data more than other traditional European companies. Data is incorporated in the company’s internationalization process and is used to expand even further. Data is for example used to analyze the patterns and experiences of companies that operate in the same

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS industry. Furthermore, the company explains that using data and the internet is more cost effective. Nevertheless, even though the company has a positive attitude towards digitization, it believes that a strong company DNA is of great importance for the internationalization process. Whereas a strong company DNA comes from experiences and builds from a company’s experiential knowledge. Thus, the company has a positive look on the use and importance of digitization, but does not necessarily believe that experiential knowledge undermines the importance of digitization, as experiential knowledge offers a company its strong DNA, which according to case 5 (2018) is of great importance within the internationalization process. Nevertheless, case 5 (2018) acknowledges the importance of digitization to gather information and to create knowledge, making it also of relevance in the entry-mode decision-making of the company. Therefore, indicating that digitization has become an indispensable mechanism within the internationalization process, but it does not necessarily diminish the importance of experiential knowledge.

Case 6 (2018) explains that when it comes to consumer behavior, market trends and sales trends, subjects that inform management decision making, that “digitalization is everything”. Case 6 (2018) believes that big data, resources and disciplined strategy offers the opportunity to less experienced companies to have an equal chance of success as experienced companies. The internet and big data have become an integral part of the company’s online as well as offline retail strategy, and business strategies. The case explains that nowadays reliable sources of data from market trends to consumer tastes are widely available and have eased the internationalization process of companies. Furthermore, the company explains that data has improved the responsiveness and decisiveness when entering a new market. When it comes to international expansions, digital strategic data, as well as field research and conversing, assists the company in how to approach new markets. Nevertheless, according to the company limitations exist, such as cultural nuances, where only big data is not sufficient enough.

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Altogether, it can be concluded that the company makes great use of digitization when it comes to internationalization, and furthermore that digitization has eased the internationalization process. Nevertheless, the case also mentions the importance of field research, and that limitations exist regarding what data can cover, indicating that the importance of experiential knowledge has not been completely diminished yet.

5.3.1.2 Cross-Case Analysis

This paragraph covers the cross-case analysis regarding working proposition 1. Case 2

(2018) indicates that digitization is of importance to their internationalization process, as besides necessary knowledge, it also helps them to become aware of the opening of new stores, to contact influencers and bloggers, to find distributors, etc. that help in the creation of brand awareness. Case 3 (2018) states that digitization increases the visibility, as well as your knowledge. Case 4 (2018) agrees that digitization is of great importance for the visibility and leads to an increasing awareness of the brand: “… digitization can strongly help to be found more easily and to facilitate”. Furthermore, they believe that digitization eases the process and can be used as a facilitator. Case 5 (2018) agrees that digitization has eased the whole process of going abroad, they believe that data should be taken as something positive. Case 3 (2018) describes that big data is mainly used to determine interesting markets and to optimize. Case 4

(2018) agrees that the internet and big data are used for internationalization optimization: “… we use internet and big data as a source to optimize our market entry or internationalization”.

This indicates that digitization is a very valuable and useful tool in the internationalization process of companies. Moreover, case 1 (2018) even claims that the internet and big data are the main tools used when reaching markets. This finding confirms the importance of digitization in the internationalization process, but does not indicate that it is the only mechanism used in the process. Case 6 (2018) explains that for their company, data has

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS improved the responsiveness and decisiveness to enter markets: “… we see trends on a year to year basis in which data has improved our responsiveness and decisiveness to enter a market.”.

Moreover, when it comes to capturing consumer behavior, market trends and sales trends, digitization can inform management decision-making, and is described as “everything” by case

6. Moreover, case 5 (2018) explains that the use of social media helps to increase visibility and in being closer to your target audience. Case 3 (2018) uses the internet and big data for localization within the internationalization process, as it helps in the segmentation of your customers: “… with the access to the internet and big data it would be easier to localize and to segment your audiences”. Moreover, they state that for companies to become more concrete in their internationalization process, the internet and big data are of big relevance. This indicates that digitization has various purposes within companies and their internationalization process.

Case 4 (2018) describes that the internet and data can be used as a tool to develop better insights for a market or a product. Case 5 (2018) explains that data and the internet are important for tracking consumers, knowing where the consumers are, and what products they buy. What can be learned from these perspectives is that all cases have incorporated digitization into their internationalization process, and that companies mainly use it to capture information about, e.g. consumer behavior and market trends, and to optimize market entry. From this it can be concluded that digitization (the internet and big data) is of great importance in the internationalization process of traditional companies.

This paragraph covers working proposition 2, regarding the fastening pace of the internationalization process due to digitization. Case 1 (2018) heads of with an interesting quote regarding WP 2: “the internet eases the international way of doing business. Data and information travels without boundaries, and fast. It facilitates communication and business processes in an easier way than in the past”. This implies that the pace of the internationalization process has decreased and the process has become easier due to digitization.

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This could suggest that digitization has already replaced some of the functions of experiential knowledge, as through digitization doing business has become easier than doing business purely based on experiential knowledge. Moreover, Case 2 (2018) states that through the internet information can be gathered in a shorter amount of time. Case 1 (2018) believes that digitization facilitates communication and business processes nowadays in an easier way than in the past:

“Data and information travels without boundaries and fast. It facilitates communication and business processes”. Case 5 (2018) explains that data is incorporated and used by the company to grow even further internationally. Case 4 (2018) claims that the internet has enhanced the opportunities to expand, as well as the accessibility of your brand. Moreover, case 6 (2018) describes that digitization has eased internationalization due to the wide availability of data from consumer tastes and market trends: “…widely available and reliable sources of data from market trends to consumer tastes is available and has eased internationalization.”. Case 3

(2018) also describes that digitization creates visibility, which increases the accessibility of your brand. Furthermore, case 3 (2018) describes that digitization fastens the internationalization process as you have access to extra data, knowledge, as well as increasing the measurability of the process: “[…] it has fastened cause you have extra data, you have extra knowledge, but it is also something which you can make it more measurable and more visible, which can absolutely increase the pace”. These results present that the cases all agree that digitization has eased and fastened the internationalization process of their companies.

Therefore, it can be concluded that digitization nowadays increases the pace of the internationalization process of companies, as due to digitization, e.g. communication and business processes are facilitated more easily.

In the next section the perception of the cases regarding working proposition 3 are discussed and analyzed, which focuses on the diminishing importance of experiential knowledge due to digitization. Case 1 (2018) claims that when expanding abroad, the

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS information provided online is not the main source used. They see information provided online as a useful addition to experiential knowledge. Case 6 (2018) explains that even though data helps to decipher how to approach a market, there are limitations to what data can do. More specifically, the company explains that topics such as cultural nuances, legal and geo-political forces that may not be covered accurately by data: “There are however limitations to this, which specifically are cultural nuances, legal and geo-political forces that data might not accurately capture”. This implies that even though the company makes great use of digitization, it also indicates that digitization does not provide all necessary information. Case 3 (2018) describes that based on experience they develop a framework, that provides the start of the internationalization, hereafter the internet and big data are incorporated to fill in the blanks of the framework. This indicates that even though digitization of is great importance, without experience and experiential knowledge, no framework would be developed for which digitization is necessary to fill in the blanks. Furthermore, the company does not believe that they will purely lean on digitization in the near future. Case 4 (2018) explains that neither experience nor digitization is labelled as one over the other. They believe that for the development of your exact strategy a company still strongly relies on experience, but that digitization is a useful support mechanism during the whole process. From this it can be concluded that both experiential knowledge and digitization are both important mechanisms in the internationalization process, and that it differs per company which one is of greater relevance, but that the cases covered in this study still strongly rely on experience and use digitization as a support system. Table 6 below presents the illustrative quotes provided by the interviewees that are used to either support or reject working propositions 1, 2 and 3.

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Table 6: Illustrative quotes digitization: the internet and big data Theme: Digitization: The Working Propositions: 1, 2 & 3 Internet and Big Data Codes Illustrative Quotes Digitization Ø “Whether digitization/internet/big data increase the pace of expansion, is strongly determined by the fact whether digitization is on the critical path of growing activities” – Case 1, 2018 Ø “Digitization will become more important in society. This process started and will continue with an enormous speed. Therefore, digitization will become more important everywhere, thus also in the way we are doing business including potential expansions.” – Case 1, 2018 Ø “When we need to replace current business models for new ones, we will do so gradually.” – Case 1, 2018 Ø “… to find about new stores opening, to contact influencers and bloggers to work with, to find distributors specialized in organic natural products.” – Case 2, 2018 Ø “We’ll keep on be super active on social networks and to use Internet and digital automatization to save time” – Case 2, 2018 Ø “… firstly visible, you have the visibility also.” – Case 3, 2018 Ø “… it has fastened cause you have extra data, you have extra knowledge, but it is also something which you can make it more measurable and more visible, which can absolutely increase the pace.” – Case 3, 2018 Ø “… digitization will become more dominant,” – Case 4, 2018 Ø “… digitization can strongly help to be found more easily and to facilitate,” – Case 4, 2018 Ø “Cause if you expand a lot into markets, you also learn from, from patterns and from online where you are successful through analysis. So than the data etc. will become more and more important. So probably at one point in time digitization will takeover.” – Case 4, 2018 Ø “..because our sister our main company is based in Shanghai and Singapore are ahead of the game when it comes to data, social media etc. so what we’re gonna incorporate right now hopefully the new website will be up in a few days.” – Case 5, 2018 Ø “Its harder to follow and keep up with our millennial consumer target, but harnessing and interacting with them both digitally and physically at retail has presented us with unique capabilities of building our business.” – Case 6, 2018 Ø “Internationally, though all our expansions, strategic data from third party sources as well as our on ground research and conversing, allows us to decipher how we approach each market. There are however limitations to this, which specifically are cultural nuances, legal and geo-political forces that data might not accurately capture.” – Case 6, 2018 Ø “In the context of capturing consumer commercialistic behavior, market trends and sales trends, or every touchpoint that informs a managements decision making, digitalization is everything.” – Case 6, 2018 Big Data Ø “Big data in the sense of analysis, algorithms, AI etc., does not play a prominent role when internationalizing. It does, once we have related to a customer to predict demand, steer sourcing and manage our logistic chain.” – Case 1, 2018 Ø “The experience gives it a framework, and that's how you fill in is more relying on the details you get and the details are getting from the big data we ehm we have and, and the the available internet regarding that specific country.” – Case 3, 2018 Ø “Within a country you still have lots of profiles, lots of needs, lots of behaviors, and that is where big data is coming handy to pinpoint each consumer in, and not only consumer profile but also what kind of need that person at that moment might have.” – Case 3, 2018

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Ø “… currently big data is mostly used not perse for localization, but for personalization.” – Case 3, 2018 Ø “We use big data as in to determine whether the country would be interested in G-Star to open it.” – Case 3, 2018 Ø “When you optimize, we ehh, we are using data,” – Case 3, 2018 Ø “I think nowadays, I think you should take data as something positive.” – Case 5, 2018 Ø “There’s a lot that you can do with data.” – Case 5, 2018 Ø “So yes we are incorporating data, and yes we are using data to grow even further. I think when you look into experiences of fashion brands that’s what they’re doing as well.” – Case 5, 2018 Ø We have a team actually specially studying the data and seeing what’s working.” – Case 5, 2018 Ø “Data is important, its important to know your consumer, but if you don't have the strong story telling and the strong DNA you don't know how to expand internationally.” – Case 5, 2018 Ø “We are at a junction that brands need and feed on data constantly to inform our management decisions. Big data and the internet are an integral part of our online to offline retail strategy, as much as our business strategies. This is our most heavily invested operating (as well as R&D) expenditure.” – Case 6, 2018 Ø “…widely available and reliable sources of data from market trends to consumer tastes is available and has eased internationalization.” – Case 6, 2018 Ø “…we see trends on a year to year basis in which data has improved our responsiveness and decisiveness to enter a market.” – Case 6, 2018 The Internet Ø “The internet eases the international way of doing business. Data and information travels without boundaries and fast. It facilitates communication and business processes” – Case 1, 2018 Ø “Internet is a vital tool for us to communicate with our clients.” – Case 2, 2018 Ø “We also have a great community online following us since the beginning of the adventure: social networks are a big part of our communication strategy, we wouldn’t have succeeded in growing so much without that.” – Case 2, 2018 Ø “Internet is the first contact we have with a new distributor” – Case 2, 2018 Ø “Internet allows to get more information in a shorter time” – Case 2, 2018 Ø “And but internet, yeah that is one of the ehmm, biggest, but that is a big source for us, to also know how we should do localization, how should we target that specific country, how should we set it up” – Case 3, 2018 Ø “Yeah for sure, internet has ehm, really accelerated the, the opportunities to expand your market, but also the accessibility of your brand, of your product, of potential customers, so today we can be found, and we can describe our full proposition immediately online” – Case 4, 2018 Ø “And on the other hand we also expand a lot because people find us, yeah, and for that part internet is more dominant, for sure” – Case 4, 2018 Ø Cause I feel there’s only so much you can do through social media through being in publications and being visible…” – Case 5, 2018 Big Data and The Internet Ø “When researching a market, we use internet and public/acquired data to base our conclusions on. Combination of data sources is also part of the analysis.” – Case 1, 2018 Ø “… with the access to the internet and big data it would be easier to localize and to segment your audiences” – Case 3, 2018 Ø “… we need the internet, we need big data, to make it also relevant.” – Case 3, 2018 Ø “… we use internet and big data as a source to optimize our market entry or internationalization” – Case 4, 2018 Ø “…and business intelligence which we have built. We’ve also partly built that through the internet, through big data.” – Case 4, 2018

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Ø “… and well than internet or data, its it's a source, or almost a tool, to to develop better insights for for a market, or a product.” – Case 4, 2018 Ø “… building an entry strategy, for which we use a lot of inputs, amongst them big data and internet, that's one, and for expansion.” – Case 4, 2018 Ø “That all comes from […] information and data. […] its more cost effective as well.” – Case 5, 2018 Ø “information (big-data), resources and disciplined strategy execution is likely to give a less experienced company an equalizing chance of success than an experienced market leader. Information in this day and age can make the difference in success or failure.” – Case 6, 2018

5.3.2 Experience and Experiential Knowledge

This section will present all the information provided by the interviewees regarding the usage of experience and experiential knowledge in the internationalization process. The information provided in this theme is used to develop a conclusion regarding working proposition 3. Firstly, individual within case analyses will be performed, where after the cases will be analyzed all together through across-case analyses.

5.3.2.1 Within Case Analyses

Case 1 (2018) operates in the horticulture sector, and explains that in this sector companies still greatly operate through trust and experiences. The case explains that their past experiences, both the failures and the successes, are of great importance in the decision-making of further expansions. Furthermore, case 1 (2018) explains that through learning from previous experience, from making use of the experiential knowledge, and from smart repletion of what worked, the things that did not work in the past can be avoided in the future. In conclusion, case

1 still strongly believes in the importance of experiential knowledge, and does not believe digitization has overtaken the importance of experiential knowledge in the internationalization process.

The second case (2018) explains that even though they’ve encountered difficulties in the past, for example by working with the wrong distributors, they’ve always managed to learn

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS from their mistakes, which eventually has led to the continuous growth of their international market. Thus, evaluating previous difficulties can help in overcoming problems in the future and stimulate company growth. Even though in section 5.3.1 case 2 (2018) explains to make great use of digitization, is does not neglect the importance of experiential knowledge, and remains to make use of their learnings from the past.

Case 3 (2018) explains that firstly they base their experience and experiential knowledge to set countries, and to open new channels. Hereafter, when the countries are selected, the internet and big data are used to localize the countries. Case 3 (2018) believes that in their company a lot is still done by relying on experiences. Furthermore, the company appears skeptical regarding the possible diminishing of experiential knowledge by digitization. The case assumes that it is not the type of company that will switch to pure digitization soon, indicating that experiential knowledge will remain the main mechanism within the internationalization process of the company.

The answers provided by case 4 (2018) state that you always incorporate what you’ve learned about previous entries, about what was successful and what failed. Defining the exact entry strategy still strongly relates to previous experience according to case 4 (2018). The case explains that online is a useful tool, whereas the internationalization decisions still strongly depend on knowledge. Therefore, even though case 4 makes grateful use of digitization as an accompanying tool in their internationalization process, it maintains to perceive experiential knowledge as the main mechanism within the internationalization process.

Case 5 (2018) describes that a company’s unique selling point is its experiences. Making use of your experiences and your learnings of the past helps in staying close to the company’s

DNA. The case believes digitization is of great importance, but when it comes to expanding the main mechanism used remains experiential knowledge.

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The final case, case 6 (2018), describes to be cautious when it comes to relying solely on the internet and bit data, as not all data might be reliable or sources might be inconsistent.

As when it comes to cultural nuances, legal and geopolitical forces, experience appears to be of greater importance than data. They believe that the most reliable information comes from relationships, and that relationships should be built on the ground, which might take a significant amount of time learning and appreciating. The company does not believe that data has replaced first hand perspective (experiential knowledge) yet. Overall, the case explains that digitization has not weakened the importance of experiential knowledge, but instead it has strengthened the decision-making with sound and viable data. Digitization is determined to be a great equalizer, not a replacement. Thus, digitization has not diminished the importance of experiential knowledge in the internationalization process, it has rather strengthened the importance.

5.3.2.2 Cross-Case Analyses

This section will present the cross-case analyses. It analyzes the case results to find out whether digitization has diminished the importance of experiential knowledge in the internationalization process. Case 3 (2018) indicates that from the base experience is used to open new channels, mainly the beginning of the setup starts with experiential knowledge, where after the internet and big data are introduced for further support. Thus, experience provides a framework that is used for further expansions, and digitization is used to provide additional information. Case 1 (2018) claims that within their sector, a lot is still done based on experiences: “The horticulture sector is a sector where a lot is still being done on trust and experience(s)”. Furthermore, case 1 (2018) describes that both failures and successes from the past, are included in their future decision-making. Case 4 (2018) agrees that previous experience is used in the internationalization process, as through experience you’ve learned

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS about previous entries and adaptations, and you’ve seen what works and what not: “So, do we use previous experience? Yes of course, everybody does, cause you always have learned about previous entries or adapt where you failed etc., so we always take that into account”. This indicates that all companies would make use of experiential knowledge, as you automatically take into account what the company experienced in the past. Furthermore, case 4 (2018) believes that currently experience and experiential knowledge are of greater importance within the internationalization process than digitization. Case 2 (2018) also states that they have learned from the difficulties they encountered at previous expansions, and use these experiences in their future international expansions. Case 6 (2018) explains to be cautious when it comes to relying on digital information only, as sometimes the data may not be reliable or consistent.

Moreover, the company explains that for some types of information first hand capturing and learning is of great importance. To be more specific, the company explains that experience is more important than digitization when it comes to counter cultural nuances, and legal and geo- political forces. Lastly, case 5 (2018) provides an example of the importance of experiential learning, as the company explains that previous unsuccessful expansions have taught them important information that is taken into account when making decisions regarding their future international operations (e.g. location wise). From these perspectives, it can be concluded that the cases still strongly incorporate their previous experiences when making decisions regarding the internationalization process.

Case 2 (2018) does not believe that digitization has weakened the importance of experiential knowledge. Case 3 (2018) agrees that for their sector, totally cutting out experience will not happen in the near future. Furthermore, Case 4 (2018) also agrees that experience is more important. But, case 4 (2018) also believes that over time, at one point, digitization will take over. Case 5 (2018) believes that experience is still one of the unique selling points of the company. Case 6 (2018) explains that the company believes that data is improving, but that

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS they have not reached the point where data replaces the first-hand perspective yet. The case explains that digitization is a great equalizer, but not a replacement for experiential knowledge.

And, case 6 (2018) explains that digitization has not weakened the importance of digitization but has strengthened the decision-making with viable data: “Not weakened it [experiential knowledge], it has strengthened the decision making with sound and viable data”. Analyzing the case results presents that digitization has not overtaken the importance of experiential knowledge in the internationalization process. Both experiential knowledge and digitization are perceived as important mechanisms in the internationalization, where digitization supports experiential knowledge, rather than replaces it.

The literature review above (section 2.5) suggests that the importance of experience and experiential knowledge in the internationalization process will diminish over time. However, even though digitization (the internet and big data) is becoming increasingly used and of importance in the internationalization process of companies, currently, it has not diminished, nor overtaken the importance of experiential knowledge yet. Digitization is merely used for support and as an accompanying tool in the internationalization process. Table 5 below shows illustrative quotes of the interviewees on the interview questions regarding WP 3.

Table 5: Illustrative quotes experience and experiential knowledge Theme: Experience and Working Proposition: 3 Experiential Knowledge Codes Illustrative Quotes Experience Ø “The horticulture sector is a sector where a lot is still being done on trust and experience(s)” – Case 1, 2018 Ø “Learnings from the past, both success factors as well as failures, are included in decision making around further expansions.” – Case 1, 2018 Ø “Learning by doing and smart repletion of what worked and avoidance of the things that did not work.” – Case 1, 2018 Ø "We have encountered difficulties in the past by working with the wrong distributors, but our international market is always growing, we never went back on our steps.” – Case 2, 2018 Ø “… we had first based on experience, set one country, than set the other countries live, than further on, we use what you’ve mentioned the internet and big data to localize it.” – Case 3, 2018 Ø “… we used experience as in to open a new channel” – Case 3, 2018 Ø “… the execution itself we mainly still, […], that we kind of rely on experience though yet,” – Case 3, 2018

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Ø “But would it be at some point that you have a switching to, that you indeed cut out experience, purely leaning on data, purely leaning on internet, I don’t think that we are the type of organization that will have it that fast.” – Case 3, 2018 Ø “… we have noticed that the setup is ehm, starting with knowledge, with experience.” – Case 3, 2018 Ø “So, do we use previous experience? Yes of course, everybody does, cause you always have learned about previous entries or adapt where you failed etc., so we always take that into account” – Case 4, 2018 Ø “… you always have learned about previous entries or adapt where you failed etc., so we always take that into account.” – Case 4, 2018 Ø “… well maybe to define your exact entry strategy, I think that still strongly relates to previous experience,” – Case 4, 2018 Ø “No no, for me its really related to, if we say I want to enter Africa, online is a tool, but we depend strongly on knowledge” – Case 4, 2018 Ø “… I’d say that, ehm, experience, etc. is more important.” – Case 4, 2018 Ø “…when it comes to you know our experience and learning what we’ve done in the past I think its extremely important to stay close to the DNA…” – Case 5, 2018 Ø “…but I think our main unique selling point is that we have the experience..” – Case 5, 2018. Ø “…data is important but at the same time, its research and ehm I mean how do you say that in dutch we say gevoel yeah yeah a feeling” – Case 5, 2018 Ø “However, we are very cautious to rely on just internet and big data as there are parts of the international market where that data might not be reliable, or the sources are inconsistent. We therefore believe that cultural nuances, legal and geo-political forces can, to the greater extent, only be capture first hand and on the ground. This is an area we spend a significant amount of time learning and appreciating.” – Case 6, 2018 Ø “Absolutely not, the business of fashion and local business at large is far more complicated, in ways that online sources cannot capture. We believe that data is improving, but we are not quite tater yet where that data replaces the first hand (on ground) perspective.” – Case 6, 2018 Ø “However, as much as insight counts, experience is perhaps more important to counter cultural nuances, legal and geo-political forces (specifically, relationships) that can open doors.” – Case 6, 2018 Ø “Not weakened it [experiential knowledge], it has strengthened the decision making with sound and viable data.” – Case 6, 2018 Ø “When looking at the entirety of the global market, in both emerging and developed markets, digitalization is a great equalizer, but not a replacement.” – Case 6, 2018

5.3.3 Entry-Mode Decision-Making

This section will present all the information provided by the interviewees regarding the entry-mode decision-making in the internationalization process, and will therefore be of great relevance when answering the paper’s research question. It does not focus on the specific type of entry-mode used by the companies, but whether in their entry-mode decision-making digitization plays a prominent role, thus digital information and knowledge required via the

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS internet and through big data. The information provided by the cases in this theme influences working proposition 4. Working proposition 4 focuses on the incorporation of digitization in the entry-mode decision-making of companies. More specifically, it focuses on the decision- making process, not necessarily on the type of entry-mode that companies select.

5.3.3.1 Within Case Analyses

The entry-mode decision-making of case 1 (2018) appears to be relatively similar throughout its (newly) operating countries. It expands by expanding its market share with existing and new customers, or it creates market share through acquisitions. Especially for the firstly explained expansion method, experiential knowledge is the main mechanism. For acquisitions, digital information may be of interest to gather relevant information, nevertheless the decision continuous to be made based on experiential knowledge. To conclude, case one claims to still strongly rely on experiential knowledge when it comes to the entry-mode decision-making.

The company covering case 2 (2018) is very focused on being environmentally friendly, and incorporates this explicitly in their internationalization process, and entry-mode decision- making. The company expands by reaching out to new partners, such as wholesalers and retailers, all around the world that are interested in selling their Zero Waste products. The company operates directly with partners in France, but operates through distributors in other countries. To spare waste, the company does not make country visits but communicates almost completely via the internet. To conclude, for the company to investigate new markets and to find and reach new partners, it makes great use of digitization rather than experiential knowledge. Therefore, it appears that case 2 makes great use of digitization in its entry-mode decision-making.

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Case 3 (2018) explains that pure copy-paste of the type of entry-mode is not sufficient.

The company explains that firstly experiences are used when opening a new channel, hereafter big data is used not necessarily for localization, but for personalization. Whereas experiential knowledge is used for the initial decision, further on in the process digitization is a helpful tool that creates the opportunity to thoroughly investigate a country to become aware of the country- specifics. Furthermore, digitization is used for the optimization of the process, thus to become as cost effective as possible and to achieve highest possible performance, digitization could be used to provide the relevant information. Thus, for the entry-mode decision-making, case 3 still bases its decision on experiential knowledge, but also incorporates information provided through digitization to optimize decisions.

Case 4 (2018) describes that within their company they make use of continuous learning.

Over time you find out what went worked and what went wrong, and you learn about the entry- mode you tried. Therefore, the case explains that to define their entry-mode decision-making they make use of knowledge and learnings from the past. The internet and big data are merely a source to develop better insights for the market, rather than to determine the type of entry- mode.

According to case 5 (2018) research is the most important mechanism before making any kind of move. And, for them to develop valuable researches they make use of both experiences and data. The company explains that where you locate a new store, and how you open it is of great relevance for the successfulness of the company. Therefore, case 5 explains that extensive research, both online and offline is of importance when it comes to entry-mode decision-making. Indicating that digitization and experiential knowledge are used for their entry-mode decision-making.

Case 6 explains that the way you enter a market drives all you do as an organization. In some countries past experience matters more than in others, for example in countries that are

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS very opposite from your home country. In these distant foreign countries, it is very important to develop strong relationships with external partners to ensure successful market entry.

Indicating that experiential knowledge remains of importance in the entry-mode decision- making. Nevertheless, the case also explains that strategic data from third party sourcing allows to decipher how to approach each market. It makes use of available and reliable sources of data for specific market knowledge, and has experienced that in some cases applying a more digitized approached has eased market entry. Therefore, case 6 confirms the use of digitization in its entry-mode decision-making, but also continues to incorporate experiential knowledge in this process.

5.3.3.2 Cross-Case Analyses

Based on the individual analysis of the interviews, experience and experiential knowledge remains of importance in the entry-mode decision-making, however some companies also take advantage of digitization in their decision-making. Cases 1 and 2 do not explicitly elaborate on the use of digitization in their entry-mode decision-making. Case 1

(2018) explains that they do not vary much in the way they enter markets. They either expand through market share or through acquisitions, depending on the market. Case 2 (2018) works mainly through distributors. However, the company does make use of digitization when it comes to reaching new market opportunities and distributors.

Case 5 (2018) describes that experience, data, and research are of importance for the way you enter a country: “Experience, data but definitely, definitely research. We do our research very well, we have focus groups that search the country that will search anything before we make any kind of move.”. Case 3 (2018) has experienced that copy-pasting their expansions and entry-modes is not sufficient. The company agrees that digitization is used in the entry-mode decision-making, as it is used to provide information on how to target a specific

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS country, and how to set up in a new country. However, they also mention that the legal requirements of the host country play an important role in the entry-mode decision-making.

Case 4 (2018) explains that building an entry strategy exists of a lot of inputs, including big data and the internet. Furthermore, the combination between customer and product differs across markets, which immediately influences your entry strategy. Case 6 (2018) explains that both digital sources as well as ground research assists in how to decipher a market:

“Internationally, though all our expansions, strategic data from third party sources as well as our on ground research and conversing, allows us to decipher how we approach each market.”.

Furthermore, the company believes that digital information is truly necessary in the management decision-making regarding how to enter a market. Nevertheless, the case also claims that a company can have all the digital resources, but without expertise and relationships, market entry may still flounder. This indicates that even though digitization is taken advantage of, without experiential knowledge, entry-mode decision-making may be less successful. Case

4 (2018) states that knowledge and learning from the past remains of importance in defining the right entry-mode, thus that defining the exact entry strategy still strongly depends on previous experiences: “… but well maybe to define your exact entry strategy, I think that still strongly relates to previous experience, market knowledge, but also business knowledge, and business intelligence which we have built”. Case 3 (2018) agrees that experience provides the framework for expansion, which can later in the process be accompanied by digitization for completion. What can be learned from the cases is that many of them make use of multiple inputs in their entry-mode decision-making, amongst them digitization, which is used to provide supporting information such as market specific knowledge. Nevertheless, what can be concluded is that even though digitization is used to assist the entry-mode decision-making, in most cases the decision-making is still mainly based on experiences and experiential

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS knowledge, and assisted by digitization. Table 7 below illustrates the answers provided by the interviewees used to generate an answer regarding working proposition 4.

Table 7: Illustrative quotes entry-mode decision-making Theme: Entry-Mode Working Proposition: 4 Decision-Making Codes Illustrative Quotes Entry-Mode Ø “In the way we do our business, we do not vary very much in the way we enter a market.” – Case 1, 2018 Ø “It is either expanding market share with existing and new customers, or it is creating market share in most of the cases by acquisitions.” – Case 1, 2018 Ø “… from base indeed we learn” – Case 3, 2018 Ø “… copy paste is not sufficient anymore” – Case 3, 2018 Ø “We used experience as in to open a new channel, if your question was whether we use big data for localization, ehm currently big data is mostly used not perse for localization, but for personalization.” – Case 3, 2018 Ø “… we had first based on experience, set one country, than set the other countries live, than further on we use what you’ve mentioned the internet and big data to localize it.” – Case 3, 2018 Ø “… we’re looking very specifically at the country where we want to go. And less leaning on. And than that the data or the internet what is also relevant for this, or what is country-specific things for this.” – Case 3, 2018 Ø “When you optimize, we ehh, we are using data and ehm, so I think there’s a shift as in its not only talking by someone who says he has gone through the same process before, ehm, but that's, it gives us a framework, from the experience, but when you’re filling it in you have to become more concrete, we need the internet, we need the big data, to make it also relevant.” – Case 3, 2018 Ø “…you attract or find out how you can change your proposition so it becomes more for the market, so that's continuous learning, and that can also go over time and take a few years before you come back and than found out what went wrong and learn about the entry we tried, and well than internet or data, it’s it's a source, or almost a tool, to to develop better insights for for a market, or a product.” – Case 4, 2018 Ø “…because markets differ, the combination between your consumer and your product can differ across markets, so that also determines your entry strategy.” – Case 4, 2018 Ø “… we use knowledge, or learning from the past to define the right entry- mode for a product, or a market, or whatsoever.” – Case 4, 2018 Ø “I would not necessary label it as we would use one over another, but well maybe to define your exact entry strategy, I think that still strongly relates to previous experience, market knowledge, but also business knowledge, and business intelligence which we have built. We’ve also partly built that through the internet, through big data.”- Case 4, 2018 Ø “Building an entry strategy, for which we use a lot of inputs, amongst them big data and internet” – Case 4, 2018 Ø “And on the other hand we also expand a lot because people find us, yeah, and for that part internet is more dominant, for sure” – Case 4, 2018 Ø “Experience, data but definitely, definitely research. We do our research very well, we have focus groups that search the country that will search anything before we make any kind of move.” – Case 5, 2018 Ø “Its important to have stores in the right locations, and its important to have stores in a location that works for you. For instance for us if we even open a store at this point its not even going to be a store its gonna be a store-in- store in the Bijenkorf. The risk I quite low, you know you already have a following of people that are going into the Bijenkorf…” – Case 5, 2018

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Ø “Internationally, though all our expansions, strategic data from third party sources as well as our on ground research and conversing, allows us to decipher how we approach each market.” – Case 6, 2018 Ø “In the context of capturing consumer commercialistic behavior, market trends and sales trends, or every touchpoint that informs a managements decision making, digitalization is everything.” – Case 6, 2018 Ø “A clear market entrance strategy drives all you do. Past experience matters in some countries (such as China) where business norms are quit opposite to the west. It is far more important to know and develop longterm relationships with your external partners, such as governmental authorities. New entrants into a market with lack of expertise and relationships, might flounder despite all the digital data and resources they yield. A good example is Google, which dominates data globally, but has no impact and no presence in China (due to inadequacies to build legal and political relationships). Despite being technologically savvy, its dominance can be relinquished by a smaller, more cultural savvy player.” – Case 6, 2018

6. Discussion In the results section above, the themes identified for the interviews and in the working propositions were elaborated on by means of the results of the interviews. The results show that two of the working propositions are supported, one was partially supported, and one was rejected. The following section will provide a deeper understanding of regarding the support or rejection of the working propositions.

6.1 Working Proposition 1

The results presented in section 5.2.2, covering the theme: digitization: the internet and big data; have an influence on working proposition 1. Working proposition 1 is the following:

Digitization is increasingly being incorporated in a traditional company’s

internationalization strategy.

All the interviewed cases agree that digitization is incorporated in their internationalization strategy. Case 3 (2018) and 4 (2018) believe that in the future digitization could possibly takeover experiential knowledge in the internationalization process. Thus, case 3 and 4 believe

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS that the necessary information is currently provided through experiential knowledge when entering new markets, but this information will in the future be available through digitization, indicating a future diminishment of the importance of experiential knowledge. Case 6 (2018) explains that digitization provides information that helps in management decision-making, and that digitization has improved the decisiveness and responsiveness when entering markets.

Nevertheless, they also agree that at the moment experience remains of great importance within the internationalization process of traditional companies. The cases mainly make use of digitization to ease the process, to gather more inside information, and to create visibility and awareness. Moreover, research shows that the application of digitization is a good thing as it increases human performance (McDonald, 2015). Digitization changes the current business landscape, and forces companies to adjust their business models and strategies to meet the new growth opportunities (Saxena, 2018). Furthermore, digitization eases a lot of a company’s processes as it eliminates repetitiousness and difficulties (Richnák & Porubanová, 2017).

Digitization provides the necessary information for knowing what, when and how (Fulkerson,

2000), and has become inevitable (Ekeledo & Sivakumar, 2004).

After analyzing the cases it can be concluded that the companies agree that digitization is helpful in many ways throughout the internationalization process, and is used sufficiently by traditional companies. Companies make us of the internet and big data to extend their experiential knowledge. Digitization is used to gather more information, such as market specific knowledge, which is necessary in the execution of a successful internationalization strategy when expanding. It helps them to become more visible (case 2, 2018), and helps them to expand their network (case 1, 2018; case 2, 2018; case 4, 2018). Furthermore, it helps in the localization and personalization of international expansions and it helps to determine the countries of interest (case 3, 2018). It can be used to track your consumers and consumer behavior (case 5,

2018; case 6, 2018), and helps to capture market and sales trends (case 6, 2018). Moreover,

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS digitization helps in the optimization of international expansion (case 3, 2018; case 4, 2018), and has improved the responsiveness and decisiveness to enter markets (case 6, 2018). Through optimization companies try to become as cost effective as possible, and want to achieve the highest possible performance. Digitization could support companies in the optimization of their expansion as it provides knowledge, e.g. market specific knowledge, that experiential knowledge lacks. Therefore, using digitization within the internationalization process is a great advantage for companies, and can help to achieve best possible performance. Thus, from the results it can be concluded that in today’s digitized world, digitization is also increasingly incorporated in a company’s internationalization strategy, and helps companies to expand more successfully. Therefore, it can be concluded that the case results support the first working proposition.

6.2 Working Proposition 2

For working proposition 2 the data provided in section 5.2.2 is used, covering the theme: digitization: the internet and big data. The second working proposition is the following:

Digitization is increasing the pace of a traditional company’s internationalization process.

For this working proposition, all cases agree that digitization increases the pace of the internationalization process. Case 2 (2018) explains that the internet allows to provide more information in a shorter amount of time. Moreover, case 3 (2018) states that the process has fastened as through digitization you have extra data and knowledge, that make the process more measurable and visible. Nevertheless, pointing out that it offers extra data and knowledge, would indicate that digitization is rather complementary than substitutional to experiential knowledge. Case 6 (2018) describes that the wide availability of data regarding consumer tastes

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS and market trends has eased the internationalization process. This indicates that digitization provides information that accompanies and corroborates the choices based on experiential knowledge, and makes the decision-making within the internationalization process easier and faster. Thus, rather than overtaking experiential knowledge, digitization seems to augment the experiential knowledge of companies. Case 4 (2018) agrees that the internet has really accelerated the opportunities of market expansion. Case 5 (2018) also agrees that digitization has increased the pace of the internationalization process. Nevertheless, case 5 (2018) describes that it remains of importance to stick to your strategy when it comes to opening new stores, and not rush due to digitization. Case 1 (2018) describes that digitization eases the international way of doing business, as data and information can travel without boundaries and fast.

Furthermore, it facilitates communication and business processes. These results are in line with the findings of Coviello et al. (2017) that digitization can influence the internationalization process in many ways, including the pace. This influence can be explained by the reduction of the transaction costs, and the reshaping of boundaries due to technological advances (Chen &

Kanal, 2016). Moreover, Liu and Ravichandran (2015) found that digitization positively moderates the integration of experience.

The results from the literature and the cases presented above indicate that due to digitization, knowledge and information can travel within a company faster, which subsequently accelerates the internationalization process. These findings align with working proposition 2, that digitization increases the pace of the internationalization process, and therefore it can be concluded that working proposition 2 is supported.

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6.3 Working Proposition 3

The third working proposition of this study is covered by the themes: experience and experiential knowledge, and digitization: the internet and big data; which can be found in sections 5.2.1 and 5.2.2. The third working proposition is the following:

Digitization diminishes the importance of experience and experiential knowledge in the

internationalization process (the Uppsala model).

In previous literature, the importance of experiential knowledge within the internationalization process is described, mainly within the Uppsala model by Johanson and Vahlne (1977). The

Uppsala model believes that companies work as follows: the entry-mode decision-making of a company depends on the company’s international experience. Whereas an increase in a company’s experience subsequently leads to an increase in psychic distance and resource commitment abroad (Johanson & Vahlne, 1977). Thus, by gaining experiential knowledge, the company is willing to take more risks when expanding abroad. They believe that experience builds a company’s market knowledge, and that experiential knowledge is one of the most important mechanisms used by companies to expand internationally (Johanson & Vahlne, 1977;

Levitt & March, 1988; Gavetti & Levinthal, 2000).

In working proposition 3 the importance of experience and experiential knowledge is questioned due to the rise of digitization, nevertheless all interviewees agree that even though digitization is of importance in the internationalization process, experience and experiential knowledge remain of great(er) importance. Based on the information provided by the cases, it could be said that digitization is rather complementary to experiential knowledge than substitutional. Thus, it assists the decision-making, rather than taking over the whole process.

Case 1 (2018) explains that in their sector, a lot is still done based on trust and experience. Case

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS

3 (2018) explains that experience is the baseline, which provides the framework used for internationalization, which later in the process is accompanied by digitization. Case 4 (2018) explains that everything you learn in your previous entries, failures and successes, are taken into account when entering a new market. Truly defining your entry strategy mainly relies on experience. Case 5 (2018) perceives both experience and digitization as important sources for internationalization, but also emphasized that especially your experiences and learnings of what you’ve done in the past are extremely important for further developments. Case 2 (2018) believes that digitization has not weakened the importance of experiences in the expansion process. Learnings from previous expansions remains of relevance. Case 6 (2018) does not believe digitization has replaced experiential knowledge yet, but does believe that the effectiveness of data is improving. At the moment, case 6 (2018) does not perceive digitization as a replacement for experiential knowledge, it rather has strengthened the decision-making based on experiential knowledge with viable data.

Based on the results from the cases, it can be concluded that even though digitization is of importance to a company’s internationalization strategy, it does not diminish the importance of experience and experiential knowledge (yet). Companies still strongly rely on their experiences, which are supported by knowledge and information gathered through digitization.

Rather than replacing experiential knowledge, the cases presented above see digitization as a tool that has eased and optimized the internationalization process. Moreover, digitization provides viable and supporting data that can be used in when making decisions. This suggests that digitization would rather have a positively moderating effect on use of experiential knowledge in the internationalization process, than completely replace the experiential knowledge mechanism. However, these results do not indicate that digitization will not overtake the importance of experiential knowledge in the future, as according to Brennan and

Garvey (2002) born globals (highly digitized companies) have already managed to develop a

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS new main driver for their internationalization process, namely their technological advantages.

Nevertheless, the results indicate that working proposition 3, that digitization diminishes the importance of experiences and experiential knowledge in the internationalization process, is rejected.

6.4 Working Proposition 4

The final working proposition, working proposition 4, is based on the theme entry-mode decision-making. Working proposition 4 is the following:

Digitization influences the entry-mode decision-making process of companies.

The cases presented some mixed results regarding the influence of digitization on the entry- mode decision-making process. Unfortunately, Case 2 (2018) presented no valuable information. Case 1 (2018) states that mainly learnings from the past, both the successes and failures, are used regarding the entry-mode decision-making. Case 3 (2018) describes that experience is used to start the process, but that it is later accompanied by digitization.

Digitization provides the information regarding what country to enter, and how to enter most successfully in this country specifically. Thus, the country-specific information that is crucial when entering a new market could be accessed through the internet and big data. This could mean that, even though experiential knowledge is the initiating mechanism, throughout the entry-mode selection process digitization has become increasingly relevant. Case 6 (2018) expounds that both digital sources and experiential knowledge assist in the way a company enters a market. Digital information assists in the management decision-making regarding market-entry, but claims that without expertise and relationships market entry may still flounder, regardless of the relevance of the digital information. Case 4 (2018) explains that they

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS do not classify one over the other, regarding digitization and experiential knowledge. To define their exact entry strategy, experience is the main source, however, when expanding into new markets you also learn from patterns and online data. Indicating that digitization is used to optimize the market entry. Case 5 (2018) explicates that their experience and learnings from what they've done in the past is of great importance when expanding. Nevertheless, they claim that besides experience, data helps in tracking your customers, and that focus groups provide them with information before making any expansion move. Thus, the information helps them to select the right entry-mode and the amount of resource commitment when entering a new market. In conclusion, digitization is an important mechanism assisting the entry-mode decision-making with relevant information, but experiential knowledge remains of importance within the decision-making as well.

Whether digitization influences the entry-mode decision-making within the internationalization process is most likely company dependent. Nevertheless, in today’s world it is insurmountable that digitization will be incorporated increasingly by companies to be able to keep up with the competition. Coviello et al. (2017) state that digitization can influence the internationalization process in many ways, including the entry-mode decision-making.

Johanson and Vahlne (2017) claim that experiential knowledge will definitely remain of value currently and in the near future for the entry-mode decision-making process. Nevertheless, the authors also address that the Uppsala model and its assumptions are not final and will continuously be modified and appointed to changes. This indicates that even though the authors still strongly believe in the importance of experiential knowledge, they do not neglect the possibility that mechanisms such as digitization will incorporate a greater role within the entry- mode decision-making in the future. The results from the cases merely confirm this statement, as the interviewees mention that in most cases both experience and experiential knowledge remain of great importance for their entry-mode decision-making. Nevertheless, some of the

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS cases also claim that digitization, and the information obtained via the internet and big data, is of importance in their entry-mode decision-making process. In the end, selecting the right entry- mode depends on the right combination of internal factors (e.g. assets, competencies, and strategic considerations), external factors (e.g. economic environment), and e-commerce technologies (Ekeledo & Sivakumar, 2004).

To conclude, a certain influence of digitization on the entry-mode decision-making can be discovered, but cannot be considered as the most important mechanism, therefore partially supporting working proposition 4. The support is not as strong as the support for working propositions 1 and 2, as most companies still rely mainly on experience and use digitization as an accompanying tool within the entry-mode decision-making process. Table 8 below presents an overview of the results regarding the working propositions.

Table 8: Results of the working propositions Working Propositions Result Digitization is increasingly being incorporated in a traditional company’s 1 Supported internationalization strategy. Digitization is increasing the pace of a traditional company’s 2 Supported internationalization process. Digitization diminishes the importance of experience and experiential 3 Rejected knowledge in the internationalization process (the Uppsala model). Digitization influences the entry-mode decision-making process of Partially 4 companies. Supported

6.5 The Uppsala Model

The Uppsala model has been the foundation of this study throughout. The original model, developed in 1977 by Johanson and Vahlne, has been used, with the addition of the mechanism digitization to the model (see section 4.1, figure 1). In this study digitization is described as digital information available through the internet and big data. This multiple case study has been used to develop an understanding of the effect and importance of digitization in the internationalization process, and more specifically in the entry-mode decision-making

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS process. The updated version of the Uppsala model (Johanson & Vahlne, 2017) remains to rely on the importance of experience and experiential knowledge within this process, which has been questioned by this research. Nevertheless, even though the findings present an increasing usage of digitization by companies in the internationalization process, an increasing pace of the process by digitization, and the usage of digitization in the entry-mode selection-making process by several of the cases, it appears that experience and experiential knowledge remain of great importance in the internationalization process of traditional companies. The cases indicate that the internationalization process starts with experience and experiential knowledge, and that digitization is merely a support tool to optimize the process. Instead of becoming the most relevant mechanism within the entry-mode decision-making of the internationalization process, digitization merely supports the decisions made through experiential knowledge, as it provides information such as market-specific knowledge and customer insights that can help building decisions based on experiential knowledge. This study has challenged the statement by Johanson and Vahlne (2017) that experiential knowledge will remain of value for the entry- mode decision-making process, nevertheless even though digitization is highly incorporated in a company’s internationalization process, it has not (yet) diminished the importance of experience and experiential knowledge.

These results indicate that the Uppsala model (Johanson and Vahlne, 1977) remains a valuable, reliable, and useful model for successful internationalization of companies. Even though digitization can nowadays be used as a support mechanism in the internationalization process, it has not overtaken the importance of experience and experiential knowledge. This indicates that companies still rely strongly on their past experiences when entering new countries, and use this type of knowledge to make decisions regarding new markets.

Digitization assists the process merely by providing extra information, such as customer preferences, locational advantages, and market knowledge. This information can subsequently

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS be used by companies to look at, and be compared to their previous experiences, which will help in selecting the appropriate and most successful entry-model when entering a (new) market. Nevertheless, this only accounts when companies do not meet the three exceptions added by Johanson and Vahlne in 1990. These three exceptions are the following: firstly, firms with large resources might take larger internationalization steps than indicated by the model.

Second, relevant market knowledge does not necessarily come from experience when market conditions are homogeneous and stable. And thirdly, experience from similar markets makes knowledge generalization possible. When it comes to the effect of digitization within these exceptions, especially for companies meeting exception two, digitization may have overtaken experiential knowledge in their internationalization process already. This is as with homogeneous and stable market conditions, information provided on the internet and through big data should be sufficient enough to successfully expand into the new market.

7. Conclusion The aim of this research was to discover whether digitization has caught up, or even overtaken, the importance of experience and experiential knowledge in the internationalization process of companies, and more specifically whether it has an impact on the entry-mode decision-making of companies. Prior research has investigated digitization and the internationalization process endless times, nevertheless a gap appeared to exist on the effect of digitization on the entry-mode decision-making within the internationalization process. The

Uppsala model developed by Johanson and Vahlne (1977) has been used as to execute this research, as according to this model, companies make internationalization decisions mainly based on their experiences and experiential knowledge. This model was challenged in this paper due to the rise of digitization.

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The identified research gap – the influence of digitization (the internet and big data) on entry-mode decision-making in the internationalization process – has been addressed by an in- depth multiple case study. Previous researches have investigated whether digitization guaranteed successful market entry (Welch et al., 2016), or whether digital information corresponds with knowledge (Nummela et al., 2016), or in what ways digitization could possibly influence the internationalization process (Coviello et al., 2017), but no research was performed regarding the perception of companies towards the importance of digitization in their internationalization process. Therefore, this research seized this research gap and, more specifically, focused on the entry-mode decision-making, and investigated whether digitization has nowadays become of greater importance to companies than experiential knowledge when making decisions. The importance and use of digitization was confirmed by some of the cases, but is not seen as the main source. Therefore, it can be concluded that whether digitization is included in the entry-mode decision-making process of a company remains company- dependent. And, even though digitization is incorporated into the internationalization process of all companies, it has not diminished the importance of experiential knowledge (yet). The selected cases were Dutch and French companies that operate in the consumer goods industry.

Within these firms, persons involved with the internationalization and expansion processes of the company were interviewed (e.g. business development managers). These interviews provided a better insight of the effects of digitization on companies within these industries, and the results were used to establish an answer to the research question. More detailed information regarding the research method and the data collection can be found in sections 4 and 5.

The results of this research present several findings. Firstly, all companies confirmed to make use of digitization, thus information available on the internet and through big data, in their internationalization process. Secondly, the cases confirm that digitization increases the pace of the internationalization process. Thus, the time it takes for a company to internationally

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS expand has decreased. These results are in line with the statement by Ekeledo & Sivakumar

(2004) that the use of digitization during the internationalization process has become inevitable.

Thirdly, although expected differently, experience and experiential knowledge still appear to be the main driver behind international expansion for companies. Multiple cases describe that digitization is merely used as an accompanying tool, which is of great importance, but does not diminish the importance of experience and experiential knowledge. Other cases do not explicitly explain how digitization is used, but they do mention that learning from previous experiences and experiential knowledge remains the most important source of knowledge.

Lastly, whether digitization has an influence on the entry-mode decision-making process of a company appears to be company dependent. Again, this process still strongly relies on experience and experiential knowledge within most companies, nevertheless in a few the cases, digitization appears to be of great importance within the decision-making. Overall, digitization

(the availability of information and knowledge via the internet and big data) is merely seen as a tool that accompanies the process, it is perceived the second step of the process (after experiential knowledge), and is used to gather information and to optimize the process. Some of the cases believe that in the far future digitization might possibly pass by the importance of experience of experiential knowledge, but in the near future they do not believe this will be the case.

To answer the research question (How does digitization influence the importance of experiential learning in the entry-mode decision-making process within the Uppsala model?): digitization does not necessarily influence the importance of experience in the entry-mode decision-making process, it merely supports experiential knowledge in the decision-making process. It is used as a support function that helps a company in optimizing their entry-mode selection procedure. Nevertheless, as the world and companies are continuously becoming more

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS digitized (Strategy&, 2018), it remains of interest to continue investigating whether in the future digitization will fully takeover the function of experience and experiential knowledge.

To conclude, currently digitization is not the main mechanism within the internationalization process of companies. The results show that some cases support the idea that in the future digitization might develop into the main mechanism, as it is continuously improving nowadays. Case 6 (2018) provided some interesting insights into what digitization might become in the future. The company explains that very soon, e-commerce will change towards a new dimension, driven by artificial intelligence and big-data. New consumer experiences will develop, where in the future physical presence of companies may not be of importance anymore. Therefore, it is of great importance for companies to stay focused at new technologies and digital innovations that might help in the simplification of the internationalization process.

7.1 Limitations

This section will discuss the limitations of the study. A number of limitations were discovered. First of all, the number of interviews conducted is relatively small (6). This limited sample causes a lack of generalizability of the results. Nevertheless, gathering a greater sample was a struggle. Over 50 companies were reached out to, but most did not reply, or had no time available for interviews. Continuing on the lack of time availability, another limitation of this research is that not all interviews were conducted face-to-face. Three of the interviewees did not have time for a personal meeting, but were willing to answer the interview questions by e- mail. Even though the questionnaire included an explicit explanation and a list of definitions, it is possible that the interviewees still struggled with ambiguities as the interview was conducted via e-mail. Furthermore, the information provided by the interviewees was relatively general.

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Which may be subject to company regulations regarding the openness to outsiders, or can be the result of the interpretation of the interview questions.

The research was performed qualitative due to the lack of accessible quantitative data.

The method used generated an insight into the influence of digitization on the internationalization process, nevertheless in the future it would be interesting to see whether quantitative methods could possibly lead to different outcomes.

7.2 Scientific Relevance and Managerial Implications

This study includes a few interesting learnings for academic researchers and international business theorists. First of all, the influence and usage of digitization within traditional companies is increasing. Companies confirmed to make use of both the internet and bit data in their internationalization process. Secondly, besides the increasing incorporation of digitization in the internationalization process, digitization appears increase the pace of the process. This indicates that due to digitization, steps within the process are conducted faster than they were previously without the usage of the internet and big data. Thirdly, even though digitization incorporates an important role within the internationalization process, experience and experiential knowledge still appear to be the main starting point for companies within the internationalization process. Which is in line with the Uppsala model by Johanson and Vahlne

(1977). Digitization is mostly used as an accompanying tool, to create visibility and accessibility, and for the optimization of the process. Experience and experiential knowledge still remain the main factors within the actual decision-making of the internationalization process. Fourthly, regarding the entry-mode decision-making mixed results were found. The use of digitization in the entry-mode decision-making process appears to be company- dependent in the investigated cases.

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7.3 Suggestions for Future Research

This study was conducted explorative and through qualitative data, meaning that the quantitative effects of the influence of digitization on the internationalization process, and the entry-mode decision-making within the process were not tested. For future research it would be interesting to investigate the study quantitatively. Furthermore, a relatively small sample size was created (6 cases), future research could enlarge generalizability by generating more cases and creating a greater sample size. Moreover, it would be interesting to redo the research in a decade (or 2), as possibly the impact of digitization has increased by that time. Lastly, it would be interesting for future research to consider the effects of digitization on the country selection rather than the entry-mode selection within the internationalization process, as possibly digitization has a different effect within this selection process.

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9. Appendix 9.1 Case 1: Interview Dutch Flower Group

Could you shortly describe the Dutch Flower Group? We make life colourful! How? By sourcing flowers and plants, predominantly direct from growers and sell them to: • large retailers • wholesalers They sell these flowers and plants to the end consumer. Our business model is based on trade and we do that in the B-2-B segment.

Could you explain the internationalization process of DFG? Over the past couple of years, we have seen a few lines of internationalization: 1. Within our companies: the number of nationalities increased 2. Within our compliancy: international laws and regulations apply more and more to our sector, with sustainability as one of the most prominent 3. Within our sources: the growers have spread over the world more and more 4. Within our customers: the number of countries we create or increase market share, has increased 5. Within our eco-system: consolidation, entrance of private equity and digitalization are examples of changes in our surroundings that bring in a more international character.

Does DFG plan to further expand operations abroad in the future? By sharing the above, I more or less answered question 2 except for the details that belong to item 4 above. I am not ready to share our strategy on that one other than that we would like to continue growing.

What is your perception about the use of previous expansion experience in the internationalization process of DFG? The horticulture sector is a sector where a lot is still being done on trust and experience(s). A systematic approach to make use and track past experiences, is not present. However, that does not mean that the past experiences are not being used. On the contrary. Learnings from the past, both success factors as well as failures, are included in decision making around further expansions. I would say that this is done in an agile/entrepreneurial way. Learning by doing and smart repletion of what worked and avoidance of the things that did not work.

What is your perception about the use of the internet and/or big data in the internationalization process of DFG? The internet eases the international way of doing business. Data and information travels without boundaries and fast. It facilitates communication and business processes like ordering flowers, in an easier way than in the past (usage of phone, fax). Needless to say, that we are still in a hybrid mode. That means that a substantial part of our orders is still coming via the phone! Big data in the sense of analysis, algorithms, AI etc does not play a prominent role when internationalising. It does, once we have related to a customer to predict demand, steer sourcing and manage our logistic chain.

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Does DFG make us of the internet and/or big data when researching a target market? When researching a market, we use internet and public/acquired data to base our conclusions on. Combination of data sources is also part of the analysis.

Is information provided online used as the main source of information that is used when expanding abroad? If yes, why? If not, why? When expanding abroad, information provided online is not the main source. We truly believe that there is more than that and that information online should be put in its local context. That means that online info is a nice addition to the face-to-face info and site visits we do. It’s like a house on funda: the house looks nice, the price is nice….but in fact it is next to a highway!

Do you believe that digitization, or more specifically the internet and/or big data, has eased the internationalization process of DFG? If yes, how? Question 7 already answered before

Has digitization/the internet/big data increased the pace of the expansion process of DFG? Thus, has the decision-making time when expanding abroad decreased? Whether digitization/internet/big data increase the pace of expansion, is strongly determined by the fact whether digitization is on the critical path of growing activities or not. For our business, it is not the case. So it helps, but as long as setting up supply chains etc is on the critical path, setting more pace is not the case (yet).

Do you believe that previous experience of expanding abroad is of importance in the subsequent expansions abroad of DFG? If yes, why? Question 9 relates strongly to my answer on question 3

Is previous experience of expanding abroad of importance in the selection of an entry-mode for DFG? If yes, why? In the way we do our business, we do not vary very much in the way we enter a market. It is either expanding market share with existing and new customers or ii is creating market share in most of the cases by acquisitions. As the physical and fresh product plays such an important role and therefore we need a freezer/warehouse and handling space, we do not have many other options to enter.

Do you believe that digitization will become increasingly important within the expansion process of DFG? Do you believe that digitization to some extent has weakened the importance of previous expansion experience? Do you believe that digitization to some extent has replaced the importance of previous expansion experience? Digitization will become more important in society. This process started and will continue with an enormous speed. Therefore digitization will become more important everywhere, thus also in the way we are doing business including potential expansions. Taking away friction points in our sales process, usage of Robotic Process Automation to get rid of everything that is dull, dirty or dangerous, making use of technology including IoT to meet more detailed customer mand, usage of algorithms to better analyse and forecast, will all impact our business. Only when we achieve top class standards in compliance, operational excellence and cost control and create platforms in our eco-system we can maintain and expand our leading position in supply of flowers and plants.

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When we need to replace current business models for new ones, we will do so gradually. In that sense I expect us to be the first to sell hologram flowers!

What do you expect the main future development within the internationalization process will be? To me, there is not one main future development within the internationalization process. As said earlier, it is there in many occasions and manifestations. I do belief a company has to act on all of these. Maybe that’s the main development: you need to be at least at par with your competitors and be in front on a few. When you lag behind on ne or two items, you’re in an unfortunate situation.

9.2 Case 2: Interview Lamazuna

Could you shortly introduce Lamazuna? Lamazuna is a French brand of Zero Waste cosmetics, born 8 years ago. Our products are solutions to everyday trash produced in the bathroom: we developed solid cosmetics to avoid plastic bottles and long lasting accessories to replace single-use products. Our products are vegan and cruelty free, and made from organic ingredients in France. Our Zero Waste goal is also in application inside the company: we buy second hand furniture and and used carton boxes.

Does Lamazuna plan to further expand operations abroad in the future? We are currently expanding our business abroad, working with engaged wholesalers all around the world. We keep on looking for new partners to spread our Zero Waste products and philosophy in countries where this cause is less advanced than in France. We are convinced that in each countries there are people wishing to lower their environmental impact and to avoid waste and toxic products.

Could you explain the internationalization process of Lamazuna? We work directly with our clients in French-speaking countries, and with distributors in the other countries. We go slowly because we want to make sure our distributors share our values and will choose engaged retailers.

What is your perception about the use of previous expansion experience in the internationalization process of Lamazuna? We have encountered difficulties in the past by working with the wrong distributors, but our international market is always growing, we never went back on our steps.

What is your perception about the use of the internet and/or big data in the internationalization process of Lamazuna? Since we try to reduce our footprint, our business commercial team is rarely travelling to meet our retailers in person: Internet is a vital tool for us to communicate with our clients. We also have a great community online following us since the beginning of the adventure: social networks are a big part of our communication strategy, we wouldn’t have succeeded in growing so much without that.

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Does Lamazuna make us of the internet and/or big data when researching a target market? Yes, to find about new stores opening, to contact influencers and bloggers to work with, to find distributors specialized in organic natural products.

Is information provided online used as the main source of information that is used when expanding abroad? If yes, why? If not, why? Internet is the first contact we have with a new distributor, though we ask much questions once we are in direct contact with them, with emails, Skype or telephone.

Do you believe that digitization, or more specifically the internet and/or big data, has eased the internationalization process of Lamazuna? If yes, how? Sure, the Internet is our showcase: our products can be ordered online from any country in the world, and we are very active on social medias, which is attractive both for the public and potential retailers and distributors.

Has digitization/the internet/big data increased the pace of the expansion process of Lamazuna? Thus, has the decision-making time when expanding abroad decreased? Internet allows to get more informations in a shorter time, and also to get opinions from other people on our potential retailers or distributors through social medias etc.

Do you believe that previous experience of expanding abroad is of importance in the subsequent expansions abroad of Lamazuna? If yes, why? We created a network of distributors and suppliers which gave us the opportunity to meet new potential partners faster.

Is previous experience of expanding abroad of importance in the selection of an entry-mode for Lamazuna? If yes, why? Do you believe that digitization will become increasingly important within the expansion process of Lamazuna? We’ll keep on be super active on social networks and to use Internet and digital automatization to save time, but as we also defend local commerce, we privilege physical shops over online shops for our retailers.

Do you believe that digitization to some extent has weakened the importance of previous expansion experience? Not really

What do you expect the main future development within the internationalization process will be? Keep on finding new distributors in each countries!

9.3 Case 3: Interview G-Star Raw

Could you shortly introduce G-Star Raw? Ehhh, ja, G-Star that's a denim brand, as you may know, and I think we’re now originated almost 30 years ago. Origin a wholesale partner, so distributing to partners instead of directly talking to consumers, and slightly I think less than 10 years, 7-8 years ago, slightly changed due to the e-commerce, changing into a retailer, talking directly to the consumer. Ehhm, ja what

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS can we say more. We see ourselves as more of a, how do you call it, eigenwijs, we think that we are the denim expert, we are the trendsetters, and yet we want to create a premium denim, which is accessible. So its not like, we’re kind off in a certain cost range, but yet its accessible. This means also that we have certain target audience, from 28-35, and the so called target audience is those who are game changers, and those are categorized as creaters and achievers, as in creators more looking into the environment and the sustainable side, but also more fond of new gadgets but also the achievers are more the people who are, ehm, ambitious, like to wear quality, clothing, not only clothing but quality in general. So ehm, 50/50 male female, and eh currently we see more male, but we’re focused to have it more balanced. And yeah, I think that's the biggest transition that we indeed have like 20, 25 years wholesale, and now transitioning into retail, and have an hold of communication differently.

Okay, and than also when I’m abroad I sometimes notice G-Star Raw as well, yeah, I was wondering, you’re relatively international already, yep that is true, is the company still, ehh, further expansion in the future? Ehm, current focus is ehh, as you said, we are indeed already globally active, ehh, I think we are around 70 looking at physical stores, and from e-commerce perspective we are now live in 53 countries. Ehmm, which is quite a lot already, so the big focus, the first focus is not perse having extra countries, eehhmm, not perse in that it will be excluded, but it is not our main focus for this year actually, yah.

Okay, ehm, what is your perception about experience in the internationalization process, so how do you see gaining experience from a previous international country to another one? Now, I think, from base indeed we learn, and, ehm, that's also what happened, I’m from the e- commerce department, and ehm, so I have more knowledge into e-commerce, but there’s also lots of localization over there, but ehm, if we look at e-commerce perspective, and when we look at going abroad or not, indeed we learn. In global, we have one platform that has the same features, the same workflow, we packed t-the items in the same way, however, we have also learned that there are cultural differences, and ehm, so copy paste is not sufficient anymore, which was the first step to have it, because we can also not have 53 countries to have the same base to have the same investigation, ehnm, but so we had first based on experience, set one country, than set the other countries live, than furtheron, we use what you’ve mentioned the internet and big data to localize it. Okay. Cause we’ve also, but that's based on experience, we’ve also learned that copy paste just does not work. Yeah. That's the learning.

So, as you already mentioned, as you just mentioned, the internet and maybe big data, do you make use of big data? Yes we do. Is used for the localization of the brand? Eh yeah, ehhmmm, I’ve worked here now for almost 5 years, I think when it started e-com was not that big yet, 53 countries, from physical perspective we are were already at 70. I don't think we’ve new countries added in stores, but looking at e-com, I think we’ve added a small 10 countries, during these past 5 years. Ehm, we used experience as in to open a new channel, if your question was whether we use big data for localization, ehm currently big data is mostly used not perse for localization, but for personalization. Okay, yeah. Ehm, within a country you still have lots of profiles, lots of needs, lots of behaviors, and that is where big data is coming handy to pinpoint each consumer in, and not only consumer profile but also what kind of need that person at that moment might have. And but internet, yeah that is one of the ehmm, biggest, but that is a big source for us, to also know how we should do localization, how should we target that specific country, how should we set it up, ehm, and another thing which is not mentioned as in big data or internet is using local people, okay, perhaps that can be called

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS experience, yeah, its more, its not experience, but yeah somewhat more in the direction of experience, yeah from someone else is what we lean on currently. Ehm, we have mostly everything worked out here, from HQ, and ehm, I think we started like 2 years ago, where we have US, the focus countries are US, Japan and Australia, where we have a localized customer service, localized fulfillment, and even now starting to have localized e-commerce teams, okay, so ehm, because mentioned now several times, purely based on copy-paste what we’ve done for other countries, we have experienced that it is not working everywhere as well as we would have thought it would be. So we have created local teams, for example for US, there’s a US e- com manager, and currently we also are figuring out what the balance should be, what should be at HQ what should be local, is it strategy from there, execution here, or should the strategy be here and execution there. So, or should it be somewhere midway, and that's also something we’re in transition, in finding out ourselves what is the best way. But for example for Japan there’s already, even though they’ve started later, compared to the US local team, they’ve really strict version, very concrete vision, how they want to see, how they want to do the Japanese market, so there its really established already that they’re doing the execution and strategy, and we’re just facilitating where needed. Okay, so that's already a very different business model compared to the US, so finding our way. Yeah, okay, cool.

So than, would you say the main, the main source used, is it still experience, or would it be the internet and big data? If you define experience now for local knowledge, than it would, for us now indeed where we lean on the most. Okay, ehm, internet ehm, but next to internet but next to internet also all kind of events you can go to or expert groups that we sometimes also have with professionals from other companies, and whether they are or not in the same branch, as fashion for example, ehm, yeah.. that's perhaps also experience. And that's for me.. yeah that's still mainly experience, ya, ehm, where you lean on indeed. What we do in internet is we really, we have lots of archived, we have also access to all kinds of researches, hmhm, all kinds of articles that have been written that kind of stuff, we use it, but I think that's under, ehm, if you look at preferences of priorities, it would be less high ranked. Ehm, big data.. we use data as in to determine whether the country would be interested in G-Star to open it. But, so its more in in investigating in front, and the execution itself we mainly still, now you’ve mentioned it, its also funny for me to realize, that we kind of rely on experience though yet, okay, yah yah.

Okay, that's okay. So do you, yeah do you think that in the future it will go towards more digital side, as you said now its still more experience? That depends what you mean by digitization, yeah so that at one point the experience you have is becoming less relevant as you can find all information online or via big data, or, just that the experience you’ve had in the past becomes less relevant. … its, ehm, yeah indeed it would ease, but ehm, because with the acces to the internet and big data it would be easier to localize and to segment your audiences, what you want, and but I’m thinking.. yeah it's a good question. I I have.., that's also fine, I think for me I’d say it would be easier. But would it be at some point that you have a switching to, that you indeed cut out experience, purely leaning on data, purely leaning on internet, I don’t think that we are the type of organization that will have it that fast. Yeah. Yeah, that's okay.

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Ehm, and do you also believe that digitization, or the internet and big data, has increased the pace, so how fast the company expands? Yeah it, firstly visible, you have the visibility also. Okay, yeah. So ehm, it has fastened cause you have extra data, you have extra knowledge, but its also something which you can make it more measurable and more visible, which can absolutely increase the pace. Okay.

I think you’ve mentioned question 10 already if it maintains of importance, ehm, when talking about ehm entry-mode, is the previous experience, do you always use the same entry-mode when going abroad, so the experience you have with an entry-mode? Ehm.. but what do you mean by entry-mode? Either export, or a sales office, or M&A.. Nah, its ehm.. in some countries its due to all the legal network, the legal structure over there, that its.. per country it could be different, totally different sometimes, and sometimes its even not worth it to start with. But, I’m not sure whether that’s an answer to your question. Not its good but ehm, yeah so ehm, when when the company goes abroad, does it look at, well obviously it looks at how it went abroad the previous time, ehm, but is that of importance, so the way you went abroad is that of importance, or do you really look at the country and, for example, you look at the legal rules and if they’re of importance. From there we’re looking very specifically at the country where we want to go. And less leaning on. And than that the data or the internet what is also relevant for this, or what is country-specific things for this. Ehm.. yeah for me, I think its kind of a hard question. Yeah oh that's no problem, okay, I mean I have a bit of a feeling, so that's okay.

So ehm, I think you’ve answered that it will become increasingly important, but ehm, yeah, ehm, do you believe, that due, that over the past few years digitization, you say that experience is still the most important, but have you noticed it become less important over the past few years or? Hmmm, we have noticed that the setup is ehm, starting with knowledge, with experience. When you optimize, we ehh, we are using data, and ehm, so I think there’s a shift as in its not only talking by someone who says he has gone through the same process before, ehm, but that's, it gives us a framework, from the experience, but when you’re filling it in, you have to become more concrete, we need the internet, we need the big data, to make it also relevant. I think that's more how how how you see it. Ehm, the experience gives it a framework, and that's how you fill in is more relying on the details you get and the details are getting from the big data we ehm we have and, and the the available internet regarding that specific country. Okay, perfect.

Ehm, than the last one already, what do you expect the main future development within you internationalization process of g-star will be? Now we’re kind off in the middle of a discussion, like I said, trying to balance, as we have now multiple local teams set up, either it's a very pre early stage, till already a team that is further away. And we’re now in discussion across countries, and across levels, what should we do. Is it more here, is it more there, who should do what, and we are, it seems like every time that we are moving aware, that local is going to be the lead, okay, and we’re facilitating it. And ehm, we are facilitating by having, indeed the infrastructure, the IT, work make sure the reporting global that we have it, but the main activities that are relevant for that specific country will come from eh the countries itself. Okay. So that is the direction that we are, it seems that we’re heading that way. Okay, interesting to know.

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9.4 Case 4: Interview Vlisco

Could you shortly introduce Vlisco? Ja, ehh, Vlisco is a textile manufacturing company. So since 1846 we produce, ehh, high-end textile, that were initially mostly sold in the east, so in Indonesia, and than ever since 1900 we’ve been selling to Africa, mostly Western and Central Africa. Were our fabrics are used by women to create garments and a lot of the textiles are of the high-end profile, it's the premium segment. Okay, yeah very interesting!

So right now you are mainly operating in Africa, or in multiple countries in Africa, ehm, does Vlisco plan to expand even further in the future, or is there no focus on this? Ehm, well every organization always wants to expand even further, I think for us expansion does not necessarily mean going abroad, or going into new geographies, it can also go and be going into new industries, finding new consumer segments, new product ranges, etc. So, yes we want to expand, but it is not necessarily always about going a new country or we want to enter a geographical area. Okay.

And, could you explain the internationalization process of Vlisco? So how does the company expand abroad? On one hand we always look from our geography, which are Ivory Coast, Bukina Faso, Senegal, Mali, etc., than we start actively exploring these countries and try to find the right combination in product proposition, customers etc., and that's one. And secondly, that is quite nature responsive, cause we get a lot of demands from, ehm, all types of companies, so a lot of business enquiries, which can be wholesale requests, which can be collaborations, so that's more responsive, and than obviously we are trying to learn where does the demand come from and is there anything we can develop further. Okay, okay, that's clear, thank you.

So what is your perception about, when you’re expanding abroad do you mainly make use of previous experience, or for example the internet, or big data, what is your main source of information? Very, very hard to just give one answer to that, cause we continuously get indicated about markets, about market opportunities, about trends etc., so obviously we ourselves have methodologies among some of our teams where we include about foreign developments and opportunities, and that's in consumer usage, that's in design, fashion trends, and they can make the environment trends, so there’s always an indicate, and from there on we search further. Searching further can be through online, it can be slowel(?). For product proposition we also try to get some quantitative data, and than we work further from there. So, do we use previous experience? Yes of course, everybody does, cause you always have learned about previous entries or adapt where you failed etc., so we always take that into account. Ehh and we, we use internet and big data as a source to optimize our market entry or internationalization, how you want to name it.

Okay, so if I understand it correctly, than the experience is still like the first step you use, and than thereafter you use the internet and big data, yeah to optimize the process and to confirm the steps? But it depends! An example is East-Africa. That’s a region we’ve always wanted to enter so we’ve tried that numerous times, through wholesale agreements, through retailers, through collaborations with fashion partners, and than in the end you learn that your proposition is not completely right so you you, ehm, you you attract or find out how you can change your

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS proposition so it becomes more for the market, so that's continuous learning, and that can also go over time and take a few years before you come back and than found out what went wrong and learn about the entry we tried, and well than internet or data, it’s it's a source, or almost a tool, to to develop better insights for for a market, or a product. Okay, okay.

Ehm, than I was wondering whether you see the internet and/or big data as a tool, has it increased the pace of the expansion process, so does the company, due to the use of internet and/or big data expand faster than maybe back in the days? Ehhm. Yeah for sure, internet has ehm, really accelerated the, the opportunities to expand your market, but also the accessibility of your brand, of your product, of potential customers, so today we can be found, and we can describe our full proposition immediately online, with online assortments and value propositions etc., and back in the days, this was, people really had to physically visit our premises, you had to visit the market. Yeah.

Ehm, eh, and than, ehm, oh yeah, when considering the entry-mode, is the internet and/or big data used when really considering what way to enter the country? So either through export, or through a distributor, etc. Yes, for sure. Yeah. Ehm, because markets differ, the combination between your consumer and your product can differ across markets, so that also determines your entry strategy. So for example, we learned that in East Africa retail is becoming a very relevant channel for any consumer brand that wants to enter Africa. Substantially more than in West or Central Africa, where the channel of open markets is more dominant and more relevant, so ehm, there you learn that retail is an important channel where you need to be present, where you want to present your brand in that market, ehm, so that's how we use knowledge, or learning from the past to define the right entry-mode for a product, or a market, or whatsoever.

So than you would actually say that, ehm, experiential knowledge is more used than the internet or big data? Ehm, I would not necessary label it as we would use one over another, but well maybe to define your exact entry strategy, I think that still strongly relates to previous experience, market knowledge, but also business knowledge, and business intelligence which we have built. We’ve also partly built that through the internet, through big data. Big data is always there to support. If we want to, ehm, enter a particular segment with a new product we always use big data to understand consumer preferences, consumer, UNA attitude, pricing landscapes, these kind of things, so that is mostly dealt with, with bit data. So that is always there to support. Ehm, yeah, so I would not necessarily that one prevails over another, ehm, its both, and it really depends on the opportunity. Okay, yeah so more or less equal? Yeah, I would say so.

Than I was wondering whether you believe, so right now you see it as an equal digital information and previous experience, but do you believe that maybe in the future digital information will become more important or that experience remains a very important part within international expansion? Yeah I think to find us, so to become a partner of Vlisco, digitization will become more dominant, because normally if we increase the awareness of our brand and the places where we want to increase them, so amongst African consumers, African diaspora, designers that like African prints, etc., people should start finding us and also digitization can strongly help to be found more easily and to facilitate, lets say, relatively small customers, and to give them a good purchasing experience. Ehm, I think it will become more important, yeah yeah, for sure. But do you believe that it will at one point even replace the importance of experiential knowledge? I

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS don't know. No no, for me its really related to, if we say I want to enter Africa, online is a tool, but we depend strongly on knowledge, on visiting the market, on looking around, building an entry strategy, for which we use a lot of inputs, amongst them big data and internet, that's one, and for expansion. And on the other hand we also expand a lot because people find us, yeah, and for that part internet is more dominant, for sure, and for the other part, presently, ehm, I’d say that, ehm, experience, etc. is more important. But over time, I could argue that one takes over another. Cause if you expand a lot into markets, you also learn from, from patterns and from online where you are successful through analysis. So than the data etc. will become more and more important. So probably at one point in time digitization will takeover. Okay! But still that’s very general.

And ehm, what, and than mainly for Vlisco, do you expect to be the future development within the internationalization process? You have an idea what, or maybe the company is currently changing some things? Hmm, not really changing, funny thing about our product is that its really a so called touch- and-feel product, so its not something that you very easily buy online for example. The feeling and the touch of the fabric is very important, the exact colors are very important, and quite difficult to translate online, but that's a challenge for every fashion brand. Ehhm, so we, we don't have any ambition to go fully online, but we have a lot of operational elements, and service elements with our customers, like ordering products, developing color combinations, which can be strongly facilitated as well by digitization. So, the ambition would be, well to use modern tools to improve our value proposition, but yeah, I must say I think that's very general, as every company tries to do that. Ehm, but so its more lets say service oriented, than as a sales tool, that we don’t believe yet. We don't believe that our full sales process, business development processes will go online only. Okay. That's not the direction. Okay, no that's understandable what you said as the product is partly the way it feels, so you cant experience that online. Yeah, yeah true.

9.5 Case 5: Interview Pretty Wild Lingerie

Could you shortly introduce the company? Of course. So pretty wild lingerie is a a high end lingerie brand, pretty wild lingerie is a dutch brand ehh the dna of the brand is based on ehm the lace heritage. Not a lot of people know that in Holland we have a beautiful, beautiful lace heritage ehmmm ehh from way back. So I think what, what if I would describe pretty wild lingerie in three words its sexy, sophisticated very feminine very elegant, and what we’re trying to do with the brand ehm is basically to tell the woman to feel proud of herself. I think lingerie should not be something of ehh being prudent. So a lot of times people when they see lingerie, I don't think the the ehm the timeframe that we live in nowadays is not of the people feeling prudent cause its very normal to have lingerie and to think about it etc. but what we are really are trying to do with the brand is focus on that lace heritage DNA and push the brand forward as the go to brand for women to feel empowered. Yeah. Lets say if you have an important business meeting or its your wedding day or ehh you know eh you girls wanna go and shop something that's gonna make you feel very sexy and beautiful than pretty wild is the brand to go to basically. Okay geat, sounds really nice. Yes.

If I’m correct I saw on the website that there’s already some shops in China right now, or brand stores. We we have, so, this is what we’re gonna do with the brand. PR is done by me and my company and our company is called concept 84. The showroom part is done by our partner

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS agency ehmm and the reason why I choose this agency specific a) its very central, b) people know it, and c) it's a beautiful location and space and I think its very close of what we wanna exude as a brand ehh the brand focus and the brand stores that we wanna open the brand stores will be almost 50 worldwide. Oh wauw. Yes so the stores will be something that's gonna be happening in the upcoming years. We have a new store at the Atlantis. And it's a beautiful store I can show you a few pictures so you can get an idea of what we’re trying to do … [picture showing]. So the first store is located in Shanghai. Yeah. Ehmm our main focus after opening this store is opening hopefully a store-in-store in the Bijenkorf. Because it's a Dutch brand, so what we’re aiming for and why we’re so attached to the Dutch heritage, is so we look into brands such as tommy Hilfiger and scotch and soda, so we really have a clear DNA and we wanna stay close to that DNA basically. So after opening the first store in Shanghai, ehm, hopefully this year at the end, or the beginning of next year we’re gonna open a store-in-store in the Bijenkorf, ehh eventually what we’re gonna do ehm is branch out worldwide. That could be in the middle east, could be Kuwait, that can be in dubai, ehh that can be in all of these different places basically. Ehm it can be in Russia as well, I think what I’m trying to push with the brand is not only to be that luxury lingerie brand for people, ehm for women to go and shop, but even for a younger generation, our generation, my generation and your generation, we, ehh, to really exute and feel that vibe to go and shop for yourself lingerie and I think when it comes to the branding and upcoming shoots with the stylists I would say it is very important for us to push that as well to be younger and not only the high end brand were women go and shop basically. Yeah. Okay really nice.

And regarding the, so you wanna expand internationally and open stores international, what’s your process to approach this? I think because ehh, the the ehh the company behind it so ehh you can read that on the website as well basically. The company behind it really has a history in ehm, already ehh store developments. And a clear perspective in what they want when it comes to a store experience basically. I think we have a very clear tradition because we, the company behind pretty wild lingerie does not only handle and managers pretty wild they have several brands, ehm and not only in Shanghai but in Canada as well. So I think the way of our approach is eh has a very clear frame. Which is of course a beautiful store location, a very clear ehh ehm communication in the DNA. If you look into the photos that I just showed you of pretty wild its very important for our first store to have that luxurious ehmm sexy but at the same time very soft, that's why we choose the pink. So to answer your question if there’s a very clear way for us to open stores internationally. Yes we do look into what is the brand, what is the DNA, what is the experience that we wanna give the customer that comes into our store. And I think its quite unique because in a time where everybody wants to close stores, we’re opening up stores yeah yeah so we’re quite unique. We’re a very healthy company and ehm I think ehm even if you look in the other brands that we manage that we handle its just that unique experience when you come into our store you really get an experience of not only shopping the product but you know like you saw the store the soft pink cushions the marble so yeah that's the way we approach opening up stores and branches basically. So staying close to our DNA, making sure that the customer gets the life experience that they are paying for. So lets be honest our product is pricewise its not cheap. I mean a thong is not gonna be 10 euros. We have products at a lower price point, we have products that are 30 or 40 euros. But we have products going up to 7 8 9 to a 1000 euros depending on what ehh line you choose basically when it comes to lingerie. Cause for instance the classical line is gonna be cheaper than the atelier line. Yeah. And ehm in the far future we really want to work on the experience of the women coming into the stores. I cant give you too

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS much details but that's gonna have to do with making things more personal, making things more.. because I feel again the timeframe that we live in now stores are closing and everything is fast, you know we have social media, ehh email everybody is living in a fast pace. I think its just important for us for women that go to our store that they come for the experience and we’re gonna work on that for the women to feel emancipated, sexy, sophisticated.

Ehm and what is your perception ehm of the use of previous expansion experience when internationalizing? Like do you make use of experience you've gathered in previous ehh.. Yes for sure. I think following is very important. I think locationwise it is very important where you are located. And eh what the consumer is that's coming there. I want to give you an example so the first store we’ve opened was in a mall. Okay. It was a smaller store, but that did not really work because the mall wasn't that busy. So I think, so that was not our first store or we do not see that as our first store is really the store we opened actually opposite of our competitor La Perla on the Atlantis. And what we’ve learned, and even with other brands that we manage and that we handle ehm is the situation of a) having a following. So being in the spot where people shop the product. So lets say you are located in a mall where 80 or 90 percent are kidsstores or h&ms and stuff like that its not gonna work no so for us for our product its really important to be located ehm a little bit on the higher end but still but so if we do a shop-in-shop at the Bijenkorf you still have the higher end brands but you have other brands as well you have sweetwere brands you have the daily paper of course on another level but I think its important for us to be on the high end but still be accessible to everyone so ehm but when it comes to you know our experience and learning what we’ve done in the past I think its extremely important to stay close to the DNA and always being on the far high end cause that's the product that we are. We don't want to be a victorias secret, we’re not victorias secret and we’ll never be victorias secret cause that's mass, we’re not mass, we’re pretty exclusive, like people know us yeah ehm but we will never have 250 stores. That’s not something we’re aiming for. We really want to be that go to brand which is a little bit different than the lower hand ehh a brand such as victorias secret, such as hunkemoller, and to give you an example walking cause I live in the pijp and because the weather is so beautiful I walk from the pijp to the office I left my bike so than walking here I saw the hunkemoller and when you see that store it's a totally different concept. Yeah its very triggering, a lot is going on. Yeah so a lot is going on and eh its very fast pace even when you look on the outside its very different perspective in aim to target group and ehm to give you an example as well the other day I saw a groupon coming by with a hunkemoller. So for us its always important to stay exclusive to stay unique and at the same time being there as I said for the younger generation in price perspective but at the same time still be true and loyal to the fact that we are a higher end brand lets be honest if we look at other brands why do people go to Christian laboutain or lets say another shoe brand that's on the higher end is because they wanna shop for that product. If they want to go to van Haren they’ll go to a van haren winkel, so that's a bit of the perspective regarding the branding and regarding the shop and how we open brandstores worldwide. Nice, interesting.

Then I was wondering how is the internet and big data? Is it incorporated, is it used widely? Yeah for sure. I think when it comes to Instagram we’re gonna be one of the you can really already see brand incorporating Instagram in their shopping pages that's something we’re.. that the nice thing of pretty wild it's a dutch brand but we have, I think that's why you choose us, an international perspective, yeah, and because our sister our main company is based in Shanghai and Singapore are ahead of the game when it comes to data, social media etc. so what we’re gonna incorporate right now hopefully the new website will be up in a few days. Instagram will start with a new slate from 0 and than every campaign shoot, or no lets say every beautiful

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS photo that has been in a magazine ehm we’re gonna link that to a shopping page okay, lets say the flower bomb has been used recently [answers phone]. So we were speaking about data and how we incorporate data. So listen ehm eh I think with I love fashion that's why I work in this field but at the same time I think companies are more and more aware of the business side of fashion I think whats very interesting for you do you know the business of fashion do you know that website? No no. I think that could be very useful for your research to look into. So the business of fashion is basically a platform, actually started by … and he used to be a consultant and for EY or PWC. It started as a blog, and at this point it's the most influential even more influential that vogue or any kind of publication. What they do is that they actually describe the business side of fashion and that's what a lot of people and designers forget is that fashion and making a piece of clothing there’s a whole marketing and branding and eh strategy and business side to it as well. So when it comes to data, I think more and more fashion companies are very keen on incorporating data. Like we sad what we’re doing with Instagram, and using Instagram to shop the product basically. Ehm I think I think tracking our consumers, knowing where our consumers are from, what products our consumers are ehh buying. Lets say if a certain bra or thong or brief is being ordered a lot that's gonna be the type of product we’re gonna focus on. So yes we are incorporating data and yes we are using data to grow even further. And I think when you look into experiences of fashion brands that's what they’re doing as well. Lets say ehh when you see the collection on the catwalk and you can buy it, what is it called see now buy now, yes see now buy now, a lot of fashion brands are doing that at this point. So they’re showing a collection and than its immediately available for the consumer to buy themselves. I think a lot of the fashion brands, what they’re doing right now is combining men and womens collections. That all comes from ehh information and data. Ehh of course its more cost effective as well. So for us as a company its always important to see what our customers are doing and you know a concrete example is Instagram. We have a few other things we’re working on right now, ehm and when you look into fashion a lot is happening on the futuristic side as well. A lot of fashion brands are using 360 videos eh to showcase fashion shows etc. and that's something I’m pushing for as well. Cause I think the timeframe what we live in nowadays is not only ehm the product, it's the experience. So for you to go on an Instagram page and view the beautiful tutorial and you wanna shop it that should be possible for people. Yeah, yeah I agree.

Ehm, so when you so you’ve planned to open quite a lot of stores in the next few years. Yes. So when you target a specific market do you also really make us of the internet to find information about which market to target? Ehmmm.. ehh, yes of course. But I think, ehm, data is important. But I think its important to ehm strategically think in which pace you wanna open stores. Its not only about opening stores, its about whats working. Like the first store that we opened on the Atlantis you know the the.. amounts that are being made omzetwise are amazing. So that's, that's something that's really working for us. So for future ways ehm and for future store openings ehm we’re always gonna look into whats working for us. Here in Holland for example we have the funds to open a store. Ehm, im not gonna do that. I wanna have a first store-in-store at the Bijenkorf it has a lot of following. And I think its important, I think what a lot of fashion brands should be keen on is its not how fast you move, its how intelligently you move. And I think its better, of course we have a goal of opening between 25 and 50 stores. Ehm but maybe there’s just gonna be 25, if those 25 stores work really well. And than I think that it's a combination of. I mean the website is going to be live, and its going to be live with ehhm basically a webshop and people can shop worldwide and so lets say you shop here in Holland its gonna be shipped from our warehouse. You can get it in the States you can get it in the Middle East you can get it anywhere possible

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS basically. So ehm, long story short it all depends on what works. And using that data for sure. Ehm we have a team actually specially studying the data and seeing what’s working. We have focus teams that study what works and what doesn't work. Okay, great. Yeah.

And so, I already kinda found out in your story but you do believe that the internet and big data has probably eased the whole process of going abroad nowadays? Yeah for sure Like the brand knowingness and stuff like that. I think nowadays I think you should take data as something positive. I think though we live in a timeframe where they look at facebook and what they do with privacy and stuff like that. Ehm I think its still very important to keep data to what it is and not to overanalyze it. There are certain companies such as google and the big ones, facebook, they do a lot with data and they sell data to other companies. There’s there’s a lot that you can do with data. But if you don't know your consumer you can have all the data in the world that you want. I think its very important when it comes to developing your product to have a product in the here and the now and something that appeals to people. Ehm so yeah, yeah.

And so, yeah, do you also think that the amount of years it takes to go abroad has decreased? So for example, do you go abroad faster nowadays or? For us as a brand? Yeah. I think for us as a brand its quite different because pretty wild is a Dutch brand located in the Netherlands and than our first store is in Shanghai. Yeah. but that has to do with the fact that we have an international perspective. Ehmm so we so I think when it comes to going abroad it all ehh has to do with your client and consumer. It doesn't necessarily mean. Like I’m going to give you an example: the I did PR for a very beautiful jewelry brand. They’re all shaped in hearts and its called see me. The jewelry is made by women, in Tunisia who have a violent background. So who are divorced and looked down on, so the see me brand is based here in Holland at the haarlemmerstraat as well. But when you look to their international ehh international outlook they have collaborations with Missomi, Karl Lagerfeld, with Tommy Hilfiger, etc. They have one store on the haarlemmerstraat and they have a webshop, but they’re doing amazingly. Why? Because they have such a strong story and such a strong DNA. So that's what I’m trying to explain. I think nowadays especially, because everything is moving so fast, and is like get it now, buy it now do it now respond now send me an email everything is now now now. I think and in the further future if I can analyze it by myself we’re going back to the core. Like who are you, what is your DNA what is the brand perspective, and because she has that strong DNA that strong story. Cause at the end of the day what I feel fashion as well is telling a beautiful story. Data is important, its important to know your consumer, but if you don't have the strong story telling and the strong DNA you don't know how to expand internationally. And it doesn't necessarily mean that you have to do that, you can be a Dutch brand in Holland having a client tell only in Holland, or not even having a store and doing everything through a webshop basically. I don't know it's a give and take basically on on ehh on on having a clear perspective of what your target group is and how you want to reach that target group basically. Okay.

Ehm and than regarding the importance of the sources you use, so experience and digital information, what do you think is most important. Sorry again your question? So you have experience on the one hand and than digital information such as data and the internet on the other which one do you think is at the moment still the most important for your company? Ehm, I think both. I think Instagram is a digital website I think its very important for your social media. I think you should make choices ehh in social media, for instance, for personally I’ve killed twitter, I don't use twitter, I never used twitter to be very honest with you. Most of the

S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS people that I know don't use twitter so I choose for facebook and Instagram ehm I think its important for your social media to be aligned and I think its important to not overpost, I think a lot of times people over post. Ehhm you should always keep something to the imagination. When it comes to the experience for instance the reason why we choose to link our Instagram page to ehh a shopping page is for that experience. Because I’ve seen it on different pages even with smaller brands and its, its very cool. I mean you see a product and like hey you know a lot of times when you see something on somebody’s facebook, or for you you see your girlfriend having a certain outfit you ask where is the product from, where do you buy the product. So, that's a way for us to interact with our audience as well. I think besides ehm you know website Instagram social media or whatever, ehm for us whats important as well ehm is is being close to our audience and to to ehm when it comes to branding so what we’re planning for September is a very big launch event here in Holland, and eh I’ll invite you for the event of course, oh that would be cool, hehe. Ehm, so so that’s experience 200% hands down. Cause I feel that there’s only so much you can do through social media through being in publications and being visible and whatever. So, ehm, long story short I think its just very important at this point to not only be very active on the social media site but to be a brand that's very close to their audience as well. Cause I feel that especially this timeframe, ehm, you know its important to interact with people, its important to have real conversations, and its important lets say for us, for our branding, for people to come to and see it and feel it and even come to the event I was speaking to. My colleague Rebecca was the brand manager that you know what we are focusing on is that brand experience. We want people to come to the event and do something at the event. And you know, be present, and do something interactive.

And ehm, regarding your international expansion, than what is for you most important, your own experience, or the data you have on a specific country or.. I think both. So. I think both, I think for our expansion its important just to ehm have a possibility to be present in different regions, I think its important for us to have a representation in every and each region, not only in Holland, but asia, middle east, the states, LA, ehh and data is important but at the same time, its research and ehm I mean how do you say that in dutch we say gevoel yeah yeah a feeling I think a lot of the times what we do aside from numbers as we’re a business, its not gevoel its business, if we don't have numbers and we don't make money, we cant move forward. But at the same time I think its very important to listen to your gevoel as well so here in an example. We were speaking, me and Ricci actually, who wrote you back, regarding ehm what we’re gonna do in the future regarding expansion of the stores. So for us between now and 2 years its not really important to have 10 stores. Its important to have stores in the right locations, and its important to have stores in a location that works you know. For instance for us if we even open a store at this point, its not even going to be a store, its gonna be a store-in-store in the Bijenkorf. The risk is quite low, you know you already have a following of people that are going into the Bijenkorf, and ehhm yeah that's it basically.

And than the de.. ehm for the way you enter the country, so the specific store-in-store or opening a store do you believe that is still mainly based on experience? Or what you know about the country? Or … Experience, data, but definitely, definitely research. We do our research very well, we have focus groups that search the country that will search anything before we make any kind of move. Opening a store has to have any kind of uniqueness as well you know. Like for instance, okay we’re a high-end brand so lets go and have a store at the PC Hooftstraat. Yeah. Well like I don't know, on the one hand we would say because you have Chanel, Doir, Laboutain, La Perla, one of our main competitors, but for me I’m like no, not because it's the PC Hoofstraat

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S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS and the higher-end, its good to have a store there. Ehm, so and and especially for us having that focus of being close to the younger generation as well I think its important to have a store location that's gonna be more accessible, but time will tell. Everything is is I think in a certain eh timeframe and everything has to work a certain way for us to move forward. So I think at this point having the first store in Shanghai, doing the store-in-store, those are the first few things we’re gonna work on and than take it from there. Of course having the website live and the webshop that's very important, and there are really a lot of exciting things happening. Ehm we’re looking into possibilities in France, in Paris, in Milan, ehm London of course, so the future is bright, I think, as a brand you should always be hesitant in what works and just be cautious in what this brand is doing so and so so you’re gonna do so and so. Yeah for sure.

Ehm and ehm this is more a bit of a futuristic question.. [interviewee has to blow its nose at the toilet]. So in this age of the increasing digitization, do you believe that your business will mainly come from digital side or since you’re opening the stores probably experience will be remain of big importance, or? I think to be very honest with you, I’m of a digital generation, we both are, even though there’s an age difference, what is your age? 23. Well I’m 33, that's 10 years, that's an age difference, me personally, I was no I was not a late adaptor of Facebook cause at that time I lived in Dubai and my friends were already using Facebook there. And when I came back at that time you had Hyves, and than people went off Hyves and went to Facebook. But Instagram I am a late adaptor. Very late adaptor, and did it change something crucially in my life? No. is it easy, yes. Ehm, I feel nowadays especially with everything that's happening with data with the whole scandal with Facebook. I think people are more and more going back to ehm real conversations, real experiences, yes its very cool to go into a store and see a 360 video of a fashion show, or to have a 360 experience on Instagram or whatever. But ehm, at the end of the day its always the human connection that makes us connect to each other. And I think an experience in a store as well, stores are always gonna be there, you know people shop online yes, when you look into major players such as netaporte, farfetched, farfetched is huge, yes people shop a lot online, but people still like to go to stores as well, its always gonna be a combination of. So ehm, I mean it depends. I cant give you a clear answer, but I I am a very big supporter and fan of the human connector in us and ehm stores are always gonna be there, people always gonna be looking for something new, having a conversation with a person, etc. so I’m a little bit in between. Okay.

And than I have one last question, what do you think the main future development within your international process will be? The main future development, well the future looks really bright, I’m really excited about the brand yeah great. Ehm Im really very blessed to be the person whos gonna be managing and handling the PR and moving forward on that, I think mainly becoming one of the biggest players regarding lingerie, we are very ambitious, yeah, we have a very hardworking team, ehm they’re Asians, haha yeah that works, yeah that works, eh so and and I think you know we’re a brand that's very young in the beginning, but I think our main unique selling point is that we have the experience of as an investment company backing us, and ehm basically sophie having the ambition like I said in making a difference of how people experience lingerie. And having the backing to that, a lot of brand you would have a beautiful product, eh but they just need that financial push to go further, we don't have that issue, ehm I think I think internationally what we would like to do is realization of the 25 to 50 stores worldwide, ehm and and I hope when people look and here of pretty wild I hope they think of an amazing beautifully made product ehm, something that people, especially women feel proud of. You know ehm, my experience so far when I gift something to somebody from the press, you know lets say a stylist or

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S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS somebody who works for magazine, vogue or whatever, their first you know you can see the smile on their face its something really personal. So what we would like to do is be that go to lingerie brand that’s going to be represented internationally worldwide in stores, but in brand experience as well. You know, we wanna be the brand that the younger girls think of when she makes her first salary to go and buy herself a beautiful set of lingerie ehm but even the business women who wants to be sophisticated and strong and dress to that part as well. Ehm, so our ambition is to be the next big player on the field of lingerie basically. Perfect, thank you very much.

9.6 Case 6: Interview Pretty Wild Lingerie II

Could you shortly introduce Pretty Wild? Pretty Wild Lingerie is a subsidiary of INFRA-APPAREL GROUPE PTE LTD (“IN/FRA”)., a Singapore based company centered on evocative brands within the intimate, fragrance, bath and body markets. IN/FRA is a Consumer Centric Boutique Brand House at the Cynosure of Aspiration Luxury Innovation. We Hold Vested Interests in Businesses Poised to Drive Dynamic Growth in Emerging Markets. We Curate Style that Bridges the Intimate & Personal and the Social & Public Realms. We believe that the intimate space is a reflection of our intimate desires to reflect our individuality, taste, and style into the world, and the internet and social media platforms are a vehicle that blurs the line between what was once personal, and intimate and what is now social.

Does Pretty Wild plan to further expand operations abroad in the future? Pretty Wild lingerie is the pinnacle brand in our portfolio that forms our internationalization strategy. IN/FRA acquired Pretty Wild Lingerie a mere two years ago with the specific intent of expanding the brand beyond its Amsterdam and European borders. We launched in Korea and Mainland China this year, with both digital and brick retail stores. In Korea the brand has seen substantial growth online, which has informed our go to market strategies over the coming years. We’ve been able to learn, though our retail partnerships, products ranges that are conducive for the market as well as size and fit specifications that allow us to refine our product offering. More important is what we’ve learnt about our consumer base that allows us to begin building a more consumer centric presence in the market that is based on retaining a growing base of loyal consumers. In Mainland China, we launched our flagship Pretty Wild retail store in Atlantis Resorts Sanya. Atlantis is a world class resort, having locations in Dubai and Bahamas. At Atlantis Sanya, Pretty Wild has planted its Southern China flag, with a stunning boutique that is a representation of our mono-retail strategy globally. Shortly in early 2019, we will launch our TMALL flagship internet store, catering to Chinese consumers, and meeting them at their own digital realm in terms of consumerism. We will continue our expansion with 2 Flagship stores in Shanghai, with additional retail in Thailand, Singapore, South Africa, Portugal and Indonesia through Q2 of 2019.

Could you explain the internationalization process of Pretty Wild? Retail globally has seen a significant shift in terms of the power and choice of consumers. Retailers are increasingly less the merchandiser, or trend developer, but rather consumers, bloggers and KOL’s have seized the power to dictate the future of a brand by a mere internet

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S.G.M. NIJENHUIS 17-8-18 AN EXPLORATIVE STUDY ON THE EFFECT OF DIGITIZATION ON EXPERIENTIAL KNOWLEDGE IN THE INTERNATIONALIZATION PROCESS keystroke. This means that brands have to adapt to a more digitized strategy that meets consumers at their own terms. Our core foundation is built on the following premise: “there are certain elements inherent in Style that become expressive as part of the personal to public exchange”…. inspired by the book INFRA-APPAREL (the foundation of our company). Our business model drives our internationalization strategy, build on three pillars including 1) UPSTREAM BRAND VALUE SPECIALIZATION, 2) BRAND ACQUISITIONS (vertical and horizontally), and 3) INTREPRENEURSHIP. The first aspect affects our market expansions, where specifically: Our Selective Distribution Model is “Asset Right”, designed on a premise that Upstream Brand Value Specialization is consumer centric and impactful. Investing in Brand Value is our optimal competition policy towards restrictive distribution. We curtailed operating risks by forging direct synergies between our upstream suppliers and downstream distributors, keeping IN/FRA asset light with optimum monetization of Brand Value through licensing. Vertical Restraints in our licensing agreements ensures deeper consumer insight, influencing product quality, touch-points, and consumer experience.

What is your perception about the use of previous expansion experience in the internationalization process of Pretty Wild? We believe that brands no longer have the comfort to simply focus on distribution partnerships, with a hands off approach to international markets. Todays market demands that closer partnerships with distribution partners, which we prefer Joint Ventures, is the most optimal way a company can remain asset right, and balance its core competencies while the partners focus on their local strengths. Vertical restraints in our agreements allow us to control our brands tightly, giving us a more seamless brand to consumer experience. We recognize that our model is unique unto us, in the manner to which we use vertical restraints and selective distribution strategies.

What is your perception about the use of the internet and/or big data in the internationalization process of Pretty Wild? We are at a junction that brands need and feed on data constantly to inform our management decisions. Big data and the internet are an integral part of our online to offline retail strategy, as much as our business strategies. This is our most heavily invested operating (as well as R&D) expenditure. Its harder to follow and keep up with our millennial consumer target, but harnessing and interacting with them both digitally and physically at retail has presented us with unique capabilities of building our business. Internationally, though all our expansions, strategic data from third party sources as well as our on ground research and conversing, allows us to decipher how we approach each market. There are however limitations to this, which specifically are cultural nuances, legal and geo-political forces that data might not accurately capture (all of which can change emotionally, and unpredictably).

Does Pretty Wild make us of the internet and/or big data when researching a target market? We look at the market from two aspects, 1) Opportunistic and first hand data market data (either captured through market research leaders (McKinsey, PWC etc.. and data we might capture first hand), and the latter covered in the point above which are political and cultural data that harnessed the same.

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However, we are very cautious to rely on just internet and big data as there are parts of the international market where that data might not be reliable, or the sources are inconsistent. We therefore believe that cultural nuances, legal and geo-political forces can, to the greater extent, only be capture first hand and on the ground. This is an area we spend a significant amount of time learning and appreciating.

Is information provided online used as the main source of information that is used when expanding abroad? If yes, why? If not, why? Absolutely not, the business of fashion and local business at large is far more complicated, in ways that online sources cannot capture. We believe that data is improving, but we are not quite tater yet where that data replaces the first hand (on ground) perspective.

Do you believe that digitization, or more specifically the internet and/or big data, has eased the internationalization process of [company]? If yes, how? To the greater extent, the mass dissemination of global fashion trends happens instantaneously, thanks to the internet. Likewise, widely available and reliable sources of data from market trends to consumer tastes is available and has eased internationalization. However, it has yet to replace the aspects we discussed above, where local and legal norms (as well as financial or currency restrictions) can make internationalization a burdensome process.

Has digitization/the internet/big data increased the pace of the expansion process of Pretty Wild? Thus, has the decision-making time when expanding abroad decreased? To the greater extent, we see trends on a year to year basis in which data has improved our responsiveness and decisiveness to enter a market. We’ve likewise found that certain countries are more conducive due to there more digitalized approach to easing market entrance, while in some markets the opposite is true (a lack to embrace technology, or a state sponsored act to suppress social media and technology, makes the process more or less lengthy).

Do you believe that previous experience of expanding abroad is of importance in the subsequent expansions abroad of Pretty Wild? If yes, why? At the end of the day, information (big-data), resources and disciplined strategy execution is likely to give a less experienced company an equalizing chance of success than an experienced market leader. Information in this day and age can make the difference in success or failure. However, as much as insight counts, experience is perhaps more important to counter cultural nuances, legal and geo-political forces (specifically, relationships) that can open doors.

Is previous experience of expanding abroad of importance in the selection of an entry-mode for Pretty Wild? If yes, why? A clear market entrance strategy drives all you do. Past experience matters in some countries (such as China) where business norms are quit opposite to the west. It is far more important to know and develop longterm relationships with your external partners, such as governmental authorities. New entrants into a market with lack of expertise and relationships, might flounder despite all the digital data and resources they yield. A good example is Google, which dominates data globally, but has no impact and no presence in China (due to inadequacies to build legal and political relationships). Despite being technologically savvy, its dominance can be relinquished by a smaller, more cultural savvy player.

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Do you believe that digitization will become increasingly important within the expansion process of Pretty WIld? In the context of capturing consumer commercialistic behavior, market trends and sales trends, or every touchpoint that informs a managements decision making, digitalization is everything.

Do you believe that digitization to some extent has weakened the importance of previous expansion experience? Not weakened it, it has strengthened the decision making with sound and viable data.

Do you believe that digitization to some extent has replaced the importance of previous expansion experience? When looking at the entirety of the global market, in both emerging and developed markets, digitalization is a great equalizer, but not a replacement. As discussed previously, internationalization of a brand and business is far more complex and there is still work to be done to bridge the cultural, legal and political divide that threatens any digitally predictable market expansion. Case in point, the current trade war between the United States and China.

What do you expect the main future development within the internationalization process will be? We keep our eyes open to new technologies that might simplify internationalization, or eliminate the physicality of a brand in a country entirely, yet have presence digitally. We believe that in the very soon and near future, ecommerce will change to a more third dimension, driven by artificial intelligence and big-data. Consumers can experience the brand in new realms, that wont require a physical presence, and brands can likewise exist without physical goods in certain markets. Theres much to do in terms of technological advancements that make the physical touch, or emotional connection, realistic. But we are on the cusp of a great change in the feel, look and internet landscape that will shape shopping Pretty Wild lingerie a wild experience.

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