Antecedents and outcomes of digital platform risk for international new ventures’ internationalization

Abstract

With the growing trend of using digital platforms for internationalization, the management of digital platform risks in international markets has become a critical issue. However, academic research in this area is sparse. This study develops and tests a theoretical framework of the drivers and outcomes of digital platform risk for international new ventures (INVs). Specifically, drawing on transaction cost theory, we identify sets of antecedents of digital platform risk including product specificity, foreign market uncertainty, foreign market competition, and home market institutional voids. We examine the effect of digital platform risk on the internationalization scope of INVs. Based on a unique sample of Chinese INVs, our empirical findings indicate that digital platform risk tends to reduce INVs’ internationalization scope. However, the negative effect is mitigated by INVs’ entrepreneurial orientation. Our proposed drivers of digital platform risk are supported. The paper ultimately discusses the theoretical and managerial implications.