An Explorative Study on the Effect of Digitization on Experiential Knowledge in the Internationalization Process By 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. 2 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. 3 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 4 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