Internationalisation and digital: what relationship

What is the relationship between digital and business internationalisation? How can it standardise processes?

Digital and the internationalisation of companies: is it an end or a means?

Let us start with the concept of psychic distance. Perhaps it is a term you have already heard, as it is central to the literature of International Business. It is that tendency that leads companies expanding into new markets to choose countries that are "psychically" close, i.e. possess those key requirements (language, geographical proximity, historical-cultural ties, etc.) that lead to the assumption of "safer" success.

With the entry of digital into internationalisation strategies, the tables have turned a bit.

New markets, which previously seemed far away, now seem very close... almost a click away. This has triggered in companies the idea of being able to move in a uniform, borderless virtual market. Of course, this is partly true, because digital reduces geographical barriers. But there is also the risk of generalisation and oversimplification: Professor Diego Campagnolo, lecturer in Business Organisation & Strategy at UniPd and scientific director of MBA Entrepreneurs at CUOA, explains this very well in his article.

This risk is called the "virtuality trap" and is based precisely on the paradox of psychic distance  (Yamin&Sinkovics 2006–7). As distances are reduced through virtuality, organisations tend to believe that what worked in one country - the country in which they are based - will work identically when they enter a new market.

However, one must bear in mind that digital reduces geographical barriers but does not cancel cultural differences between markets.

La trasformazione digitale, infatti, offre nuove modalità per accelerare i processi di internazionalizzazione, approfondire la conoscenza del mercato e migliorare le relazioni con il target ma poi — come afferma Campagnolo — resta in capo all’impresa la capacità di analizzare e “sfruttare” tali differenze a proprio vantaggio.

Be International, Be digital research

Given the premise that digital should always be a means and never the end of internationalisation,let's see where it can have a significant impact .

They were analysed in detail by the  Be International, Be Digital research conducted by the  CUOA Business School in partnership with  Tonucci&Partners and  Bonucchi associati srl. From the interview of ten companies in the area with a strong international presence,  some evidences related to digital transformation emerged. Digital can:

● enable international scalability of the business model (e.g. automation can lead to longer product shelf-life)

● enable informed internationalisation processes (think of the role of digital and digital marketing in particular, in gathering information and adapting one's proposition to different targets)

● make the need for local adaptation objective, ensuring better integration along the supply chain with objective and shared data

● be complementary to direct presence (integration and mediation between channels increases intervention effectiveness)

● affect entry modes because it favours the sharing of information with customers and suppliers (e.g. the creation of virtual warehouses could make the opening of logistics branches unnecessary)

● foster collaborative relationships between branches and HQ because it facilitates limit-less sharing in project development.

On this last point, we share the account of our CTO, Francesco Clabot, on how digital facilitates limit-less sharing.

Digital and Project Management

The protagonist of this  digital transformation story is a  multinational company operating in the  chemical-pharmaceutical sector, with several coordination hubs spread across  Europe, Central America and Asia.

For them, projects have always been a monitoring tool to verify the achievement of corporate objectives. This is why they play a central role in the management of relations with the subsidiaries.

At the reviews that were organised on a regular basis, however, there was no uniformity. Each contact person used an information format (structures, KPIs, etc.) linked to his or her personal and cultural heritage and it was practically impossible to read the data unambiguously. To make comparisons or analyse deviations. What was lacking was an overview of how the budget and project-related operations were managed.

The management therefore pushed for a solution that would allow the relationship between HQ and branches to be managed without lapsing into discretion. Attempts to standardise processes had been made in the past (meetings, documentation, etc.), but the adoption of shared practices depended in each case on the sensitivity of individual contact persons, who could revise or apply them according to their own mind-set.

Come ha raccontato il nostro CTO nel corso del webinar di presentazione della ricerca “Be International, Be Digital”, il digitale in questo caso è stato determinante. La multinazionale ha adottato una piattaforma software condivisa che vincolava gli utenti responsabili della gestione del budget e dei progetti alla compilazione di campi precompilati, secondo processi ridisegnati e definiti a monte con il management.

I singoli referenti di progetto dovevano obbligatoriamente “seguire” il flusso imposto dal software, inserendo informazioni, step ed evoluzioni relativi ai progetti in modo univoco. In questo modo il management si è trovato ad avere un unico metodo di interlocuzione condivisibile a tutte le filiali che rendeva possibile comprendere in tempo reale l’andamento dei progetti.

Quello appena spiegato è un esempio di come la trasformazione digitale possa essere determinante nella definizione della strategia aziendale: tramite un’analisi globale e non più parcellizzata per singoli progetti locali, è possibile capire se un progetto è da considerarsi strategico o meno.

Non solo, il digitale può contribuire a fare una revisione dei processi: non si tratta semplicemente di trasportare online flussi che prima erano analogici, ma di rivederli secondo logiche di efficienza ed efficacia, eliminando quei colli di bottiglia e quei passaggi ridondanti che inevitabilmente avvenivano nella comunicazione tra filiali.