Based on the analyses in the previous section and in the context of the two research issues, hypotheses were developed for the second-stage quantitative modelling, as shown in Table 4.14. In addition, a pre-structural equation model (Figure 4.6) is presented. The concepts relating to that model are incorporated into Table 4.14.
Table 4.14 Research issues: variable identification and hypotheses Research issue Qualitative protocol
questions
Construct-factors findings
Conclusions: hypotheses
RI1 How has the Internet altered the process of internationalisation for the firm?
Part B : Q4 Part C : Q1,2,3 Part D : Q1,2,3 Part E : Q1,2,3,4 Part F: Q3 Part G: Q 1,2,3,4,5,6 Internationalisation process Information available (f1) Information usage (f2) Interaction communication (f3) International mindset (f4) Business relationships (f5) Psychic Distance (f6) Internet intensity (f7)
H1. Information availability has a direct relationship with international market growth.
H2. The information availability of the firm is mediated by the Internet intensity of the firm.
H3. International information availability has a positive relationship with perceived information usage of the firm.
H4. The usage of information has a direct relationship with international market growth.
H5. International information usage is mediated by the Internet intensity of the firm.
H6. The information usage of the firm has a positive relationship with the interactive communication of the firm.
H7. Interactive communication has a direct relationship with international market growth
H8. Interactive communication is mediated by the Internet intensity of the firm.
H9. The perceived information availability of the firm has a positive relationship with the interactive communication of the firm.
H10. The international mindset of the firm has a direct positive relationship with international market growth.
H11. The international mindset of the firm is mediated by the Internet intensity of the firm.
H12. International mindset has a positive relationship with the use of business relationships.
H13. Business relationships have a direct relationship with international market growth.
H14. Business relationships are mediated by the Internet intensity of the firm.
H15. Psychic distance has a negative direct relationship with international market growth.
H16. The Internet intensity of the firm mediates the psychic distance of the firm.
H17. Psychic distance of the firm has a negative relationship with the usage of business networks for the firm.
H18. Psychic distance of the firm has a negative relationship with the international mindset of the firm.
RI 2 How has the Internet altered international market penetration and development of the firm? Part B Part C: Q2,3 Part D : Q1,2 Part E : Q3,4 Part F: Q1, 3, 4, 6 Part G: Q1 International growth International market growth (f8)
H19. Internet intensity has a positive relationship with international market growth of the firm.
Source: developed for this research
Information
Identifying information in the internationalisation process is a well-established concept (Johanson & Vahlne, 1977). A lack of information is assumed to be responsible for perceived risk in internationalisation (Cavusgil, 1980). Thus, the more a firm commits to internationalisation, the greater the international information search behaviour of the firm (Ogbuehi & Longfellow, 1994). These findings were corroborated in this research. As such ‘information availability has a direct relationship with international market growth’, Hypothesis 1 (H1) can be postulated, as presented in Figure 4.4.
In previous literature, the Internet‘s effects on international information has been established, but is referred to in general terms (for example, Hamill 1997, Gibbs & Kraemer 2004, Aspelund & Moen 2004, Berry & Brock 2004, Brock & Yu 2005). The Internet has diluted the former asymmetry of information traditionally experienced by firms in the internationalisation process (Samiee, 1998a)by creating a range of information sources for the firms. Thus, Hypothesis 2 (H2) can also be postulated. That is, ‘the information availability of the firm is mediated by the Internet intensity of the firm’.
Information usage
The concept of usage of international information in the literature supports information usage as a concept of knowledge theory of internationalisation, as firms accumulated information through learning by doing (Ethiraj, Kale, Krishnan & Singh, 2005). Therefore, Hypothesis 3 can be postulated: ‘International information availability has a positive relationship with perceived information usage of the firm’ (H3).
Acquiring foreign market knowledge or using international information to expand into foreign markets is well-established (Andersen, 1993; Inkpen & Beamish, 1997; Luo, 1997; Barkema & Vermeulen, 1998; Lord & Ranft, 2000; Zahra & Ireland, 2000), and was evident in this study. That is, firms need to not only have the capacity to access information, but also, more importantly, to analyse, evaluate and transfer information internally. Therefore, ‘the usage of information has a direct relationship with international market growth’, Hypothesis 4 (H4), can be postulated.
The Internet has made information retrieval, storage and analysis much easier for the firm, as discussed in RI1: information usage and knowledge transference within the firm (Section 4.3). Thus, the level of Internet intensity mediates information usage in the international market growth of the firm. Therefore, ‘International information usage is mediated by the Internet intensity of the firm’ (H5), Hypothesis 5 can be postulated.
Further, the perception of information usage has a correlating effect on the interaction of the firm. That is, firms that have a propensity to use information, also have a propensity to use interactive communication. Thus, Hypothesis 6 (H6) can be postulate: ‘the information usage of the firm has a positive relationship with the interactive communication of the firm’.
Interaction
Beyond information usage, the interactive communication with stakeholders is pivotal in the process of internationalisation. This was evident in the importance of usage of interactive communications with key stakeholders highlighted in Section 4.3, Chapter 4. On this foundation, Hypothesis 7 (H7) ‘interactive communication has a direct relationship with international market growth’ can be postulated.
This study re-affirms the argument that the Internet influences the firm‘s ability to enhance the interactions between company and customer, and company and stakeholders. The interactive capabilities of the Internet have been established in the literature as affecting business and marketing (for example, Rayport & Sviokla, 1994; Hoffman & Novak, 1996; Sparkes & Thomas, 2001; Arnott & Bridgewater, 2002; Jaworski & Jocz, 2002). That is, interactive communication is mediated by the firm‘s Internet intensity in the internationalisation process. Therefore, Hypothesis 8 can be postulated, ‘interactive communication is mediated by the Internet Intensity of the firm’ (H8).
Further, the propensity of the firm to perceive information availability is positively correlated to the propensity to use interactive communication Thus, Hypothesis 9 can also be postulated: ‘the perceived information availability of the firm has a positive relationship with the communication interaction of the firm.’(H9), as illustrated in Figure 4.4.
Figure 4.4 Proposed model: information, knowledge and interaction components Internationalisation Components H3 H1 Information H9 Knowledge H2 H4 H6 H5 H7 H8
Source: developed for this research
International mindset
A well-established area of research in internationalisation, international mindset can either have a positive or negative impact on the firm‘s internationalisation process (Nummela, Saarenketo & Puumalainen, 2004) a fact confirmed in Stage 1 of this research (refer Section 4.3). Thus, Hypothesis 10 can also be postulated: ‘the international mindset of the firm has a direct positive relationship with international market growth’ (H10).
In an Internet context, the firm‘s international commitment, vision and overall attitude towards international customers has a bearing on the firm‘s propensity to expand or not expand into international markets and the speed at which a firm will internationalise (Aspelund & Moen, 2004). It was evident in this study that firms that were positively orientated towards internationalisation were driven toward international expansion or growth. Further, Hamill & Gregory (1997) proposed that Internet orientation has a positive effect on the international orientation of the firm. Researchers have found that the Internet orientation of the international decision maker has a positive relationship with the number of international markets in which a firm operates (Moen, 2002b). The greater the Internet intensity the higher the international mindset of the firm (Moen, 2002b; Aspelund & Moen, 2004). International mindset is positively correlated with Internet intensity (Moen, 2002b, p.36). Therefore, the greater the Internet intensity, the greater the international mindset. Thus, Hypothesis 11 (H11), ‘the international mindset of the firm is
mediated by the Internet intensity of the firm’ can be postulated. F1 Information availability F2 Information usage F8 International market growth F7 Internet intensity F3 Communication interactivity
Networks
An international network perspective highlights the role of cooperative activities in internationalisation (Young, et al., 2003). As previously discussed the international mindset of the firm affects international market growth positively. Therefore, as the international mindset of the firm is a positive influence on the internationalisation process, Hypothesis 12 (H12), ‘international mindset has a positive relationship
with the use of business relationships’, can be postulated.
It is evident that firms use multiple paths to achieve international market growth, as illustrated in Table 4.11. However, in Stage I of this study 11 of the 12 firms acknowledged the use of traditional networks or business relationships to foster international market growth, as outlined in Section 4.3. That is, all firms saw the importance of networks through business relationships as an important element in driving international market growth. Further, the study also showed that the Internet was seen to assist in the development of these networks. Thus, Hypothesis 13 (H13),
‘business relationships have a direct relationship with international market growth’, can be postulated.
All firms saw the Internet as a direct or indirect way to develop international growth, as relationships with networks in international markets were perceived to be the vital element in the path towards internationalisation. More specifically, elements such as business relationship maintenance, strength and longevity were identified as key items (Wu, Mahajin & Balasubramania, 2003). That is, the greater the Internet intensity, the greater the effects on international business relationships usage in the internationalisation process. Thus, Hypothesis 14 (H14) ‗business relationships are mediated by the Internet intensity of the firm’, can also be postulated.
Psychic distance
Psychological barriers in the form of psychic distance or aversion to foreignness can impede international growth. There was evidence in this study as psychic distance was mediating internationalisation. More specifically, language, culture, economic and education differences are well established components of psychic distance (Johanson & Vahlne, 1977; O'Grady & Lane, 1996; Torre & Moxon, 2001; Hallen & Wiedersheim-Paul, 2004). The decision maker (respondent) within the firm acquires
knowledge and confidence in countries psychically close to the home country, the firm moves to countries, which have greater psychic distance (Johanson & Weidersheim-Paul, 1975). For simplicity, in this PhD research, the decision-maker is referred to as the firm (as explained in Section 5.2; unit of analysis and key informant). Thus, Hypothesis 15 (H15) ‘psychic distance has a negative direct relationship with international market growth’, can be postulated.
Petersen et al. (2002) postulate that psychic distance remains evident even in an Internet context. This conceptualisation confirms research investigating the impediment of psychic distance on exporting firms in the UK (Bennett, 1997). Further, as highlighted in Stage I of this study and presented in Chapter 4 (Section 4.3-Table 4.8) psychic distance was evident for many firms. That is, even though firms had customers in psychically distance countries the firm did not have multi- lingual websites. Thus, Hypothesis 16 (H16), ‘the Internet intensity of the firm is mediated by the psychic distance of the firm’, can be postulated.
Moreover, there is a negative relationship between psychic distance and the internationalisation process (O'Grady & Lane, 1996). Further, the psychic distance of the firm leads to a negative impact on the usage of networks in the endeavours of international market growth. Therefore, Hypotheses 17 (17) ‘psychic distance of the firm has a negative relationship with the usage of business networks for the firm’, can be postulated.
Further, psychic distance also has a negative impact on the mindset of the firm toward international market growth. As demonstrated in Chapter 4 (Section 4.3-Table 4.8) out of the eleven firms that transact in non-English country markets, only two alter their marketing online to include a multi-lingual website. Further, firms also commented that English was only language needed for business. Thus, Hypothesis 18 (H18) ‗psychic distance of the firm has a negative relationship with the international mindset of the firm’, can be postulated, as illustrated in Figure 4.5.
Figure 4.5 Proposed model: international entrepreneurship Internationalisation Components International H11 H10 Entrepreneurship H12 H14 H13 H18 H16 H17 H15
Source: developed for this research
International market growth
Because of the Internet, firms can increase the yield from existing customers in international markets. Therefore, the creation of value-adding to retain existing clientele was seen to be both efficient and prudent. Further, international market development was perceived to be one of the greatest benefits of the Internet for these firms. This finding confirms recent results by researchers that the firms perceived the Internet‘s greatest perceived benefit as business and market growth (Gibbs & Kraemer, 2004). Thus, as the Internet intensity of the firm mediates the international market growth of the firm, Hypothesis 19 (H19), ‘Internet intensity has a positive relationship with international market growth of the firm’, can be postulated, as seen in Figure 4.6. F4 International mindset F7 Internet intensity F5 International networks F6 Psychic distance F8 International market growth
Figure 4.6 Proposed model: Internetalisation
Internationalisation components
H3 H1
Information H9
Knowledge H2 H4 Mediating Performance outcome
H6 H5 H7 H8 H19 H11 H10 International H12 entrepreneurship H14 H13 H18 H16 H17 H15
Source: developed for this research
Conclusion
The analysis process was conducted systematically, in order to manage and present the large amount of data in an easily understandable manner (Chetty 1996; Perry 1998). The process of within-case analysis was performed, so that each individual case could be viewed as a stand-alone independent entity prior to the cross-case analysis, seen in Section 4.2 (Perry 1998; Amaratunga & Baldry 2001; Amaratunga, Baldry, Sarshar & Newton 2002). Furthermore, the cross-case analysis identified subsequent issues, themes and patterns that were pertinent and frequent across the multiple cases discussed in 4.3.3 (Stake 1995; Perry 1998; Amaratunga & Baldry 2001; Amaratunga, Baldry, Sarshar & Newton 2002).
There was clear evidence from the research that internationalisation was accelerated for firms due to the Internet, clarifying the conceptual prediction by Petersen, Welch and Liesch (2002) that this may be the case. However, it was also evident that the Internet-intensity capabilities of the firm enhance internationalisation and hence international market growth, with psychic distance negatively affecting international market growth—as illustrated in Figure 4.6.
F1 Information availability F2 Information usage F8 International market growth F4 International mindset F7 Internet intensity F3 Communication interactivity F5 International networks F6 Psychic distance
Further, to evaluate the model, 19 hypotheses that test the interrelationships between factors were developed, as seen in Table 4.14. That is, a set of hypotheses was developed to assess linear relationships between main constructs pertinent to the components of internationalisation identified: Internet intensity and international market growth. Now that the data has been presented, analysed and evaluated; the proposed model developed; and hypotheses and measures established, an assessment of the quantitative approach was presented in Chapter 5.