INTERNATIONAL MARKET ENTRY STRATEGIES OF

DIGITAL PLATFORM BUSINESSES

Bachelor Thesis

May 18, 2020

Programme: B.Sc. in International Business

Authors: Morten Elmue Gregersen (s118443)
& Mikkel Østergaard Schrøder (s118745)
Supervisor: Philipp Hukal
Number of characters: 136.331
Number of pages: 60
 Executive summary

Alongside technological development, a new type of firm and business model has emerged and taken
many spots amongst the most valuable companies in the world. These so-called ‘digital platform
businesses’ are structured and create value in uniquely different ways than traditional pipeline
companies and thus a new academic field is evolving around them. The purpose of this thesis is to
explain the international market entry strategies of digital platform businesses and add both empirical
evidence and discussion to the emerging academic field.

By utilizing traditional theories of internationalization, specifically the OLI paradigm and the Uppsala
model of internationalization, this thesis seeks both to characterize the foreign market entry strategies
of digital platform businesses and to discuss the continued applicability of these theories in the face
of this new type of firm.

Secondary data sources form the background for a multiple-case study of digital platform giants
Amazon, Alibaba, Netflix, Spotify, Uber, and BlaBlaCar. Specifically, their international expansion
is explored and explained through a within-case and cross-case analysis that capture idiosyncrasies
from each case as well as form generalizable perspectives on the subject.

While the OLI paradigm and the Uppsala model are able to explain the internationalization to a certain
extent, some aspects need to be augmented in the face of digital platform businesses. Specifically, the
empirical data and analysis reveal that digital platforms in their foreign market entry strategies can
utilize ecosystem-specific advantages whose strength is interconnected with the network structure of
the platform ecosystem. The entry mode strategies seem driven by the search for users as a resource
in winner-takes-all markets with increasing returns to scale, which ultimately leads to aggressive
internationalization. This is characterized by high commitment entry modes in the form of
acquisitions to overcome the liability of outsidership, as well as entry modes uniquely available to
the digital platform businesses such as launching the platforms with minimal supporting activities,
and thus also much less exposure and risk. In this aggressive strategy, there is a general tendency to
skip the traditional incremental steps of internationalization, which is enabled by the shared learnings
of the platform ecosystem.

The empirical evidence and associated analysis add many new perspectives to the field of digital
platform businesses which future research can further extend and build on.
Table of Contents
1 INTRODUCTION ............................................................................................................................... 2
2 THEORY AND LITERATURE REVIEW ................................................................................................. 4
2.1 Theory of internationalization ................................................................................................ 4
2.2 Theory of digital platform businesses................................................................................... 11
2.3 Theory of internationalization of digital platform businesses .............................................. 16
3 METHODOLOGY ............................................................................................................................ 20
4 WITHIN-CASE ANALYSIS ............................................................................................................... 26
4.1 Amazon ................................................................................................................................. 26
4.2 Alibaba .................................................................................................................................. 29
4.3 Netflix ................................................................................................................................... 32
4.4 Spotify................................................................................................................................... 35
4.5 Uber ...................................................................................................................................... 37
4.6 BlaBlaCar ............................................................................................................................. 40
5 CROSS-CASE ANALYSIS ................................................................................................................. 42
6 IMPLICATIONS FOR THEORIES OF INTERNATIONALIZATION ........................................................... 52
6.1 Implications for the OLI paradigm ....................................................................................... 53
6.2 Implications for the Uppsala model ...................................................................................... 55
7 CONCLUSION ................................................................................................................................ 58
REFERENCES.................................................................................................................................... 61
APPENDIX 1 - SECONDARY DATA SOURCES FOR THE WITHIN-CASE ANALYSIS ................................. 66

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1 Introduction
For a long time, international business theories have been rooted in assumptions of tangible flows of
goods and services across borders and the transaction costs of these. The competitive environment
and internationalization strategies for large multinational organizations have been dictated by
physical barriers and issues concerning entry modes, location advantages, and knowledge transfers.
Renowned internationalization theories such as the Uppsala model (Johanson & Vahlne, 2009;
Vahlne & Johanson, 2017) and the OLI paradigm (ownership, location, and internalization
advantages) (Dunning, 1980, 1988) describe the internationalization on the basis on which tangible
and intangible assets the company possesses and how to best utilize these when going beyond borders.
Here the location and access to advantageous resources become the key driver for the international
market entry strategies of the organization.

In recent times, with new technological advances and ever-increasing access to these in a new
globalized world, a new type of companies has emerged. These businesses are less bound to the
physical assets that have been so essential to traditional brick and mortar businesses and can
seemingly expand their operations in a fraction of the time with much less risk than encountered by
their predecessors. These are known as digital platform businesses. In addition to their advantageous
agile nature, they also face many new challenges when acquiring and maintaining a competitive
advantage in a world less dictated by physical barriers. Many have failed, but those that succeeded
are now among the most valuable companies in the world. Due to the fundamentally different
organizational structure and business approach, the success of these companies begs the question of
whether traditional theories are still adequate in explaining their internationalization and foreign
market entry mode strategies.

A handful of scholars have already commenced the research within this field in recent years
(Brouthers et al., 2016; Chen et al., 2019; Nambisan et al., 2019; Zeng et al., 2019), and while taking
different perspectives they all conclude that there are significant implications for existing
internationalization theories in the context of digital platforms. A variety of different
internationalization theories have been examined, however, common for almost all the current studies
is that they address the implications for the OLI paradigm and the Uppsala model, two of the major
theories of internationalization. The current understanding is that while these theories are still
relevant, many of their underlying aspects need to be augmented to accommodate this new type of
business.

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Although these scholars have provided relevant insights and theoretical discussions to the field of
internationalization of digital platforms, the research is only just emerging and in much need of
additional empirical evidence to further elucidate the subject as suggested by the scholars themselves.
Specifically, the internationalization area of entry mode strategies of digital platform businesses has
only received limited attention and requires considerable additional research and development of
theoretical constructs.

With this academic state in mind, the research study of this thesis is founded in both the area of
internationalization theory and digital platform theory. It seeks to elucidate their intersection through
the utilization of theoretical constructs and theories both from previous literature but also derived and
developed from careful analysis of empirical evidence. Combined, these elements aim to answer the
following research question:

“What characterizes international market entry strategies of digital platform businesses?”

The study takes a multiple case study approach and examines the foreign market entry strategies of
six large and highly valuable digital platform businesses, namely Amazon, Alibaba, Netflix, Spotify,
Uber, and BlaBlaCar. Through a combined within-case and cross-case analysis, we develop
theoretical constructs and discuss them in relation to previous research findings within the field. This
is done to provide new insights to the current literature and contribute with not just rich empirical
data and analysis, but also concepts that future research can build on and develop from.

We found that the general characteristics of digital platform businesses alter the factors that
traditionally determine foreign market entry strategies. Specifically, their ability to build and
orchestrate ecosystems and utilize network effects to create increasing returns to scale in winner-
takes-all markets change the foundation for how this new type of business operates and expands
internationally. Digital platforms can utilize different resources than traditional businesses to
overcome the liability of foreignness and can use new low commitment entry strategies while also
pursuing a new type of resource: users.

These findings confirm, challenge, and expand many of the existing theoretical constructs within the
field of internationalization of digital platform businesses. Specifically, it subscribes to the idea that
the OLI paradigm and the Uppsala model are still useful tools in explaining the international market
entry strategies in the context of digital platforms albeit a few fundamental augmentations need to be
made to fully account for the inherent opportunities and challenges of this new business type.

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The remaining parts of this thesis are organized as follows: Firstly, we address and discuss the
theoretical background and existing literature relevant for internationalization and digital platforms
as well as their intersection. Secondly, we explain our methodological approach and the research
process. Finally, our analysis and empirical findings are presented and put into the perspective of
existing literature within the subject area.

2 Theory and literature review

The following section will present and discuss the most important current literature and theoretical
frameworks within our research field of internationalization of digital platform businesses, firstly by
separately examining the theories of internationalization.

2.1 Theory of internationalization

Internationalization is known as the process, and everything connected to it, by which firms expand
their operations beyond borders (Johanson & Vahlne, 1977). It is a well-elucidated phenomenon with
numerous empirical studies within the community of international business academia (Johanson &
Vahlne, 1990). From a general perspective, firms internationalize in the pursuit of new market
demand, the potential for cost advantages, or as a response to competitor moves (Johnson et al., 2016).
The ultimate goal is to create customer value and enable the firm to earn profit distinctively and thus
also sustainably through unique resources only available in the global marketplace (Tallman et al.,
2018).

Engagement in international operations can be seen through a variety of different initiatives including
the establishment of foreign subsidiaries, licensing agreements, international joint ventures,
international advertising campaigns, international trade, exhibitions, and more (Johanson & Vahlne,
1990). The choice of entry mode is of great importance to the success of the venture since different
initiatives require different amounts of both financial and organizational commitment and each comes
with unique opportunities, risks, and exposures.

From a strategic perspective the determinant of how and whether to internationalize rests on the
concept of competitive advantage. Barney (1991) defines competitive advantage as “implementing a
value creating strategy not simultaneously being implemented by any current or potential
competitors” (p. 102). Depending on firms’ current advantages and the potential advantages they

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seek to acquire through internationalization, different entry modes will be appropriate and necessary
to overcome the challenges of competing as an outsider in a foreign country (Vahlne & Johanson,
2017). Advantages can stem from many sources including the firms’ assets and organizational
structure as well as specific locations, workforce, and technology that only they have access to
(Barney, 1986, 1991). Here, access to and command over international resources can play a key role
in enabling a greater competitive advantage. Therefore, internationalization and the entry mode
choices that come with it can be essential in ensuring the survivability, growth, and success of firms.
In this context, the OLI paradigm and the Uppsala model of internationalization can help analyze the
strategic choices of internationalizing firms. These theories are some of the most well-known theories
within the academic community of international business and have been the research subject of
previous scholars within the field of internationalization of digital platform businesses (Brouthers et
al., 2016; Chen et al., 2019; Nambisan et al., 2019; Yonatany, 2017; Zeng et al., 2019). While there
are many other theories of internationalization, to build on the findings of previous researchers and
expand on their research, this study will examine the subject of international entry mode strategies of
digital platform businesses mainly in relation to the OLI paradigm and the Uppsala model.

2.1.1 Explaining internationalization using the OLI paradigm

The OLI paradigm (the eclectic paradigm) by Dunning (1980, 1988) is an accredited theory within
international business academia that seeks to analyze the factors influencing the strategic
internationalization patterns of firms. Dunning proposes that internationalization is driven by three
main advantages: ownership advantages, location advantages, and internalization advantages. Only
if all three are present should the firm engage in foreign direct investment (FDI) (Dunning, 1980,
1988).

Ownership-specific advantages are closely related to the concept of competitive advantages and are
key enablers of successful international business engagement. During the process of
internationalization, the firm will be a foreigner in every country it enters and suffers the disadvantage
of having to compete with local firms that have greater knowledge about the local business
environment (Hymer, 1976). Due to the differences between countries in culture, norms, customer
preferences, legal environment, political setting, currencies, and more, operating as a foreigner
presents a significant challenge. To overcome this challenge firms must possess ownership specific
advantages. These refer to certain valuable, rare, and hard-to-imitate resources embedded in the

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organization of the firm that it can utilize in a value creating strategy. Only if the firm’s ownership-
specific advantages outweigh the liability of being a foreigner in a certain country should the firm
engage in foreign direct investment (Dunning, 1980). Otherwise, it might be strategically more
appropriate for the firm not to enter the country.

Location-specific advantages relate to the unique opportunities that come with doing business in a
certain foreign country (Dunning, 1980). These include both direct and indirect advantages: the
country might possess certain raw materials that due to transaction costs is not easily exploitable from
afar (Dunning, 1988) or the country might be geographically located in a strategic position that allows
access to other important markets or modes of transportation like the sea. Again, the liability of
foreignness must not outweigh the benefits that come with a specific location. If ownership
advantages are present, but the location offers few advantages, it might be strategically more
appropriate to engage in exports conditioned that demand for the goods or services exists.

Internalization advantages are closely related to keeping the firm’s ownership endowments in-house
rather than licensing them. Dunning (1980) argues that firms will want to internalize production when
market imperfections are present which leads to high transaction costs in the form of controlling
processes, protecting the brand value, and enforcing intellectual property rights. If the firm possesses
ownership-specific advantages and the country that it wishes to enter is endowed with location-
specific advantages but there are few market imperfections, the firm should, according to Dunning
(1980), arguably engage in licensing. However, if internalizing also presents significant advantages
to the firm, it should engage in foreign direct investment.

The general arguments of the paradigm are summarized in figure 1, which provides a framework for
market entry strategies.

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2.1.2 Explaining internationalization using the Uppsala model

The internationalization and market entry strategies of firms have also been elucidated through the
internationalization process theory in which the most accredited one is the Uppsala Model. Since its
inception in 1977, the model has been revisited and developed several times but most recently in 2017
(Johanson & Vahlne, 1977, 2009; Vahlne & Johanson, 2017). The model is a micro-level analytical
tool the seeks to explain the evolution of the multinational business enterprise and its
internationalization based on the processes of knowledge development and resource commitment.

As part of the internationalization process, the firm is faced with risk, uncertainty, and partial
ignorance which it must overcome (Vahlne & Johanson, 2017). Specifically, the firm faces psychic
distance, the liability of foreignness, and the liability of outsidership. Psychic distance is defined as
the “factors that make it difficult to understand foreign environment” (Johanson & Vahlne, 2009, p.
1412). It is closely related to the liability of foreignness, which indicates that there are costs of doing
business abroad that can result in competitive disadvantages for the firm entering a foreign market
(Hymer, 1976; Zaheer, 1995). Hence, Johanson & Vahlne (2009) claims that the larger the psychic
distance a firm has to a foreign market, the larger the liability of foreignness. Additionally, the hurdle
of liability of outsidership is adopted as the Uppsala model is put into the context of the business
network view. When markets are seen as networks of relationships where firms are linked to each
other in various and complex ways, the internationalization process will be affected by the focal

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firm’s inter-organizational relationships both in the home country and the foreign country.
Consequently, the internationalizing firm could face liability of outsidership if it does not have a
position in a relevant network in the foreign market, which will severely complicate the
internationalization process (Johanson & Vahlne, 2009).

Given the challenges of psychic distance, the liability of foreignness, and the liability of outsidership,
the Uppsala model explains the internationalization process with two types of variables: state and
change (see figure 2). State variables are the firm’s capabilities and performance, while change
variables are the firm’s commitment and knowledge development process. In the model, the
internationalization is seen as dynamic, and thus, the right-hand side change variables affect the left-
hand side state variables and vice versa. Furthermore, the change variables are said to be the crucial
ones due to the dynamic nature of the model (Vahlne & Johanson, 2017).

The knowledge development processes refer to learning, creating, and trust-building, which occur
continuously either inter- or intra-organizationally. As the firm acquires knowledge, for example
about a foreign market, the psychic distance or liability of outsidership might decrease. Hence, the
knowledge that the firm develops will affect its commitment processes, which refer to the
coordination and configuration of resources, such as opportunity development of foreign market entry
commitments. Likewise, the commitment processes will result in new learnings and knowledge
development, thus these are intertwined (Johanson & Vahlne, 2009; Vahlne & Johanson, 2017).

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The change variables will also affect the state variables, which are grouped in “capabilities” and
“commitments/ performance”. The state variables are not only a result of the change variables, but
they also affect them as illustrated with the arrows in the figure. The conceptualization of (dynamic)
capabilities adopts the characterization by Teece et al. (1997). Teece et al. (1997) emphasize that
capabilities resemble “the key role of strategic management in appropriately adapting, integrating,
and reconfiguring internal and external organizational skills, resources, and functional
competences” (p. 515). In the Uppsala model, capabilities are categorized as either operational or
dynamic but most importantly capabilities reflect the firm-specific advantages that enable
internationalizing companies to establish a sustainable business in a foreign market and overcome the
liabilities of foreignness and outsidership. Finally, the state variables of commitments/performance
resemble the current state of commitments of resources across the firm, such as foreign country
activities whereas performance refers to what has been achieved already (Vahlne & Johanson, 2017).

In sum, the Uppsala model emphasizes that firms will internationalize given their state and change
variables, and in ways that reduce exposures to the risks and uncertainties of psychic distance, and
liabilities of foreignness and outsidership. Thus, a way to avoid potentially substantial losses is to
proceed incrementally rather than making quantum leaps (Johanson & Vahlne, 1977)”. The studies
led to the identification of “the establishment chain”. The chain originally compromised “a firm
starting its internationalization by receiving orders from foreign markets; then as exports grow to
forming a relationship with a distributor or an agent; after which it establishes its own sales
organization, often followed by local manufacturing” (Vahlne & Johanson, 2017, p. 1096). Despite
much criticism and a declining validity of “the establishment chain” (Johanson & Vahlne, 2009), the
main argument that internationalization progresses from low commitment entry modes to gradually
higher commitment entry modes, is still stressed by Vahlne & Johanson (2017). However, in their
most recently reviewed version of the model, they do indicate that determining the degree of
commitment of an entry mode is very much firm-specific due to its network relationships, knowledge
development processes, and commitment processes along with the already acquired capabilities, and
commitments/performance (Johanson & Vahlne, 2009; Vahlne & Johanson, 2017).

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2.1.3 Knowledge as a resource in determining market entry strategies

In close connection to the Uppsala model’s emphasis on knowledge development in the

internationalization process, Meyer et al. (2009) have constructed a framework for categorizing entry
modes from a resource-based view based on knowledge as a resource (see figure 3).

Analyzing knowledge as a resource and a source of competitive advantage, Meyer et al. (2009) argue
that depending on whether the firm’s existing resources are sufficient for a specific international
market entry or need to be augmented to fit the local market’s competitive landscape, different entry
modes are appropriate. They deduce that if a firm’s resources are geographically fungible, the need
for resource augmentation will be low and thus entry modes like licensing and greenfield investments
will be more prominent depending on the desired level of control. Meanwhile, if resources are locally
bound, high levels of resource augmentation will be needed and thus entry modes like acquisitions
will be more appropriate.

Meyer et al.’s (2009) line of thought arguably bridges the resource and competitive advantage focus
of Dunning’s OLI paradigm (1980, 1988) with the knowledge development focus of the Uppsala
model by Johanson & Vahlne (1977, 2009, 2017).

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2.1.4 Internationalization literature: status and key take-aways

The literature and research on internationalization appear very well-developed and exhaustive,
covering most major industries and perspectives. The most prominent theoretical frameworks seem
to base the strategic, international market entry choices of firms on their current and potential
resources’ ability to overcome the liability of foreignness and outsidership, with a specific focus of
some on knowledge and knowledge development as key resources in determining and ensuring a
successful market entry.

Most important to this paper will be the findings of Dunning (1980, 1988), Johanson and Vahlne
(1977, 2009, 2017) and Meyer et al. (2009) which will not only serve as a general understanding of
internationalization strategies but also as a subject of research in assessing whether the theories can
sufficiently explain the internationalization and strategic choices associated to this process of digital
platform firms.

To understand why digital platform firms might be inherently different, the following section will
explore the ideas and current state of research related to it.

2.2 Theory of digital platform businesses

The notion of platforms is generally a wide concept and can take many forms and perspectives within
numerous business areas including marketing, software engineering, information systems, and more
(Tiwana et al., 2010). Taking an industrial economics perspective, platforms can be conceptualized
as a type of marketplace that facilitates interactions between two (or more) distinct groups of actors
by providing the architectures and rules needed to mediate these (Cusumano, 2010; Eisenmann et al.,
2006; Rochet & Tirole, 2003, 2006). Many of the biggest firms are increasingly organizing activities
and competing through platforms (Gawer & Cusumano, 2002).

Digital platforms are a unique type of platform whose emergence has been fueled by recent years’
technological advancements (Yoo et al., 2010). Closely related to Brouthers et al.’s (2016) notion of
the ‘ibusiness firm’, digital platform firms utilize the internet and associated technologies to create
purely digital, internet-based platforms which allow users to interact with each other with reduced
need for physical resources (Van Alstyne et al., 2016). De Reuver et al. (2018) emphasize that while
platform research has been a common research agenda for many years, digital platform research and
its associated terminology are only just emerging.

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2.2.1 How digital platforms differ from traditional businesses

Digital platform firms create value in uniquely different ways than the traditional “pipeline” mentality
that has dominated industries for decades (Van Alstyne et al., 2016). Eisenmann et al. (2006)
emphasize that for platform firms, rather than having cost and revenue separated as in traditional
firms (Porter, 1985), both costs and revenue are associated with serving each market-side – though
revenue is often strategically only collected from one side. Rochet and Tirole (2003, 2006) emphasize
that building the right price structure of the platform is a key determinant in building a userbase and
thus the platform “ecosystem”.

For digital platform firms to create value they must focus their efforts on building the platform and
fostering the ecosystem connected to it (Cusumano, 2010; Van Alstyne et al., 2016). The ecosystem
refers to the community built around the platform consisting of all its participants. While some of
these participants, so-called “complementors” (Cusumano, 2010) or “producers” (Van Alstyne et al.,
2016), create content and add functionality to the ecosystem, others consume the content giving the
complementors incentive to provide more.

Administrating a digital platform changes what it means to be a firm. From a resource-based view,
digital platform businesses do not derive their main competitive advantage from certain tangible or
intangible resources they possess. Their key resource, the ecosystem they foster, is constituted by
their entire userbase and the resources the individual participants own (Van Alstyne et al., 2016). If
anything, the ecosystem can be seen as an intangible asset that is shared among the digital platform
firm and its participants. Thus, because the most important asset of the digital platform firms is one
that they do not own and thus do not control fully, their attention shifts from the typical optimization
of a chain of activities, to attracting new participants to the ecosystem and performing its governance
and orchestration (Van Alstyne et al., 2016). Rather than maximizing the value of individual
customers, focus shifts to maximizing the value of the ecosystem as a whole. From these perspectives,
the value creation process of digital platform firms is vastly different from that of traditional pipeline
companies.

It is important to notice that while the goals and thus also operations of digital platform businesses
differ significantly, many companies have either transitioned to or from a platform-based business
model, and firms can operate as a hybrid between the two (Hagiu & Wright, 2015).

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2.2.2 Network effects and winner-takes-all dynamics

An important characteristic of platform businesses, in general, is that these operate in the presence of
network effects between the groups that participate on the platform (Eisenmann et al., 2006; Hagiu
& Wright, 2015; Rochet & Tirole, 2003). The theoretical concept of network effects is central to the
literature on multi-sided platforms, and it is seen as one of the key drivers of platform competition
(Gawer, 2014). Network effects or network externalities imply that a platform’s usefulness increases,
as the userbase increases (Armstrong, 2006; Katz & Shapiro, 1985).

The network effects are often categorized as either same-side network effects (direct) or cross-side
network effects (indirect). Positive same-side network effects arise when the benefit of the platform
depends positively on the number of users on the same side of the platform (Gawer, 2014). Same-
side network effects can also be negative if the platform becomes less valuable as the number of users
on the same side increases (Eisenmann et al., 2006). Cross-side network effects arise if the benefit to
one user-side depends on the number of users on the other user-side. If cross-side effects exist for
both user-sides, the effects are also indirect since the users on one side depends indirectly on the users
on that given side (Hagiu & Wright, 2015). Consequently, the cross-side network effects reflect a
pre-existing underlying interdependency between the multiple sides of the platform and the demands
of these sides (Gawer, 2014). Typically, these cross-side network effects are positive, as indicated in
the definition, but they can be negative (Eisenmann et al., 2006).

A consequence of the presence of network effects is that successful platforms enjoy increasing returns
to scale. This implies that users will pay a premium to access bigger networks, which improves the
platforms’ margins as they grow (Eisenmann et al., 2006, 2011). The traditional types of businesses
will typically experience diminishing returns to scale after a certain point of growth. At this point,
acquiring new customers becomes increasingly challenging as fewer people, not more, find the firm’s
value proposition appealing (Eisenmann et al., 2006).

The promise of increasing returns to scale results in two-sided markets where competition between
platform providers can be fierce and often characterized by winner-takes-all dynamics. The platform
market leaders have incentives to leverage their high margins and invest heavily in R&D or lower
their prices to outcompete weaker rivals. Consequently, the mature two-sided markets for platform
businesses are usually dominated by one or a handful of large platforms (Eisenmann et al., 2006).

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These winner-takes-all situations are more likely to occur if certain conditions are present in
networked markets. Eisenmann et al. (2006, 2011) present some of these conditions. Firstly, it is
emphasized that high multi-homing cost for at least one user-side is a condition for winner-takes-all
dynamics. Multi-homing costs refer to the users’ costs of being affiliated with multiple, similar
platforms at the same time. If the costs of multi-homing and switching are high, users are less prone
to be affiliated with multiple platforms, and one or few might dominate the market.

Secondly, it is emphasized that strong and positive network effects are a condition for winner-takes-
all dynamics. In the case of strong and positive network effects, the users will tend to converge
towards one platform due to the higher value of that platform (Eisenmann et al., 2006, 2011).

Thirdly, it is emphasized that if neither side’s users have strong preferences for special features then
there is no need for multi-homing or deciding between different platforms. Thereby, one or a few
platforms are likely to be market leaders. In sum, if these three conditions are fulfilled then the
networked market will likely be served by a single platform due to these winner-takes-all dynamics.

2.2.3 The strategic challenges of platform businesses

The central characteristics for two-sided network markets and platform businesses, which included
network effects and winner-takes-all-dynamics, result in strategic consideration for platform
providers that are different from those of traditional pipeline firms. Hence, conceptualizing these
strategic considerations and challenges will provide a foundation for understanding the motivation
behind the strategic choices made for international market entry strategies of digital platform
businesses.

The intriguing increasing returns to scale and the benefits of network effects can lead platform
providers to make strategic decisions aimed at reaching exponential growth as fast as possible.
Consequently, it is critical for digital platforms to have the ability to sustain scale as they experience
growth (Hagiu & Rothman, 2016). Zhu and Iansti (2019) found that the structure of the digital
platform’s network affects this ability. Specifically, they point to the platform ecosystem’s network
clustering. The platform’s network can either be fragmented into local clusters where only some users
can interact with each other. This could be due to geographical barriers. Contrarily, other networks
can be global and connect the users despite geographical boards. A global network is to some degree
less vulnerable to new rivals entering the market due to the global scale whereas a fragmented network

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of local clusters, which might be isolated from one another, will be more vulnerable to business
challenges (Zhu & Iansiti, 2019, p. 122).

2.2.4 Risk of envelopment and changing regulation

Besides the consideration of the growth and structure of their networks, digital platforms face the
threat of envelopment (Eisenmann et al., 2006, 2011). Similar to acquisitions, platform envelopment
comprises a situation where a platform provider in one market can enter another market by combining
its users and functionality with those of the target. As platforms frequently have overlapping
userbases, there are incentives to acquire additional users to leverage shared relationships and
network effects. Hereby, the ‘attacking’ platform expands its userbase or its platform functionality
by creating a multiplatform bundle. Platform envelopment can be seen as a risk but also an
opportunity to expand (Eisenmann et al., 2006, 2011).

Furthermore, digital platforms face challenges with regulation in new markets due to the new types
of transactions they provide, and the relatively new type of business model. As the digital platforms
expand into new markets, they could face regulatory gaps such that current regulation does not cover
their business model. This might result in a continuously changing regulatory environment that
creates much uncertainty for digital platforms. Platform providers risk getting banned in a market,
but they might also be in a situation where they can help shape new regulation (Hagiu & Rothman,
2016).

2.2.5 Digital platform theory: status and key take-aways

Despite digital platform business theory being a relatively new phenomenon, it has sparked the
interest of many scholars, and the literature seems to be rapidly developing. The current state of
thinking is somewhat dispersed with different definitions of similar concepts (De Reuver et al., 2018).
Despite scholars exploring digital platform theory in different contexts, many seek to establish an
understanding of the economic dynamics of two-sided markets (Armstrong, 2006; Hagiu & Wright,
2015; Katz & Shapiro, 1985; Rochet & Tirole, 2003, 2006), whereas other scholars study the
characteristics of platform businesses and their business environment along with how they are
different from traditional firms (Brouthers et al., 2016; Eisenmann et al., 2006; Van Alstyne et al.,
2016; Zhu & Iansiti, 2019).

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Specifically, to this study, the theories of digital platforms provide the foundation for understanding
not just what characterizes digital platforms but also how they internationalize. Given the differences
from traditional businesses, digital platforms will possibly choose entry modes and internationalize
differently due to their inherent characteristics and ways of creating value. To elucidate the
intersection between internationalization and digital platforms better, the next section will focus on
exploring the current literature related to this research field.

2.3 Theory of internationalization of digital platform businesses

As the academic literature associated with platforms, and digital platforms in particular, has been
developing and maturing, its intersection with international business theories has sparked the interest
of a handful of scholars in recent years (Brouthers et al., 2016; Chen et al., 2019; Nambisan et al.,
2019; Yonatany, 2017; Zeng et al., 2019). Particularly, the platforms and associated ecosystems
redefine resources as well as knowledge development of the firm, which allows for new opportunities
in internationalization (Nambisan et al., 2019; Yonatany, 2017). The asset-light structure combined
with the potential for knowledge generation and innovation from an extensive network of
interconnected users has strong implications for existing internationalization theories (Nambisan et
al., 2019).

It is important to notice that while these scholars emphasize the need for reassessing current
internationalization theories, they do not imply the insufficiency of these. More so, they express an
overarching necessity to re-examine and possibly augment the fundamental concepts of international
business theories in light of this new type of business that has emerged alongside technological
advancements (Nambisan et al., 2019). Rather than casting internationalization theories aside, these
should be enriched and developed to also account for the characteristics of digital platform firms
going forward.

2.3.1 Implications for the OLI paradigm

In the handful of journal articles currently developed concerning the internationalization of digital
platforms, there is a recurring tendency to discuss and emphasize the implications for Dunning’s OLI
paradigm (1980, 1988).

16
Nambisan et al. (2019) and Zeng et al. (2019) argue that the change in how the firm creates value,
from internal optimization to external resource orchestration, changes the definition and nature of
ownership-specific advantages and internalization advantages. Because the role of the firm changes
towards the governance of the ecosystem, internalizing processes to avoid transaction costs becomes
less important to the firm (Zeng et al., 2019). In addition, rather than weighing liability of foreignness
against ownership-specific advantages, this should be weighed against “ecosystem-specific
advantages” (Nambisan et al., 2019). Ecosystem-specific advantages stem from competitive
advantages related to the ecosystem as a whole and as a shared resource, rather than being firm-
specific. Chen et al. (2019) argue that this shift allows new ways of internationalization that contrary
to the traditional internal manager-led process, utilizes the external community in the ecosystem to
expand into new markets. Specifically, by employing ecosystem-specific advantages firms that would
traditionally be too small or lacking ownership-specific advantages can now also internationalize
(Nambisan et al., 2019).

The importance and nature of the ecosystem also have important implications for location-specific
advantages. Nambisan et al. (2019) stress that the non-physical nature of ecosystems reduces the
importance of geographical borders. Rather, the choice of entering new markets with respect to user-
groups and industries becomes a more pressing issue. Because platforms are less physically bound
and thus can transcend borders more easily, the emphasis on location-specific advantages fades and
increasingly “context-specific advantages” (Nambisan et al., 2019) related to the industry and market
become the main strategic concern of digital platform businesses. Here, context-specific advantages
are the strategic opportunities associated with operating within certain business areas, industries, and
market segments.

In sum, scholars consider significant implications for the underlying O, L, and I advantages of the
eclectic paradigm by Dunning in the context of digital platform firms.

2.3.2 Implications for the Uppsala model

In addition to the implications for Dunning’s OLI paradigm, the limited number of studies that have
focused on the internationalization of digital platforms have also regularly considered the
implications for the Uppsala model (Brouthers et al., 2016; Chen et al., 2019; Nambisan et al., 2019;
Yonatany, 2017).

17
Brouthers et al. (2016) studied digital platforms based on the notion of the ‘ibusiness’ firm referred
to as a type of E-business company that provides an internet-based platform, which allows users to
interact with each other. They suggest that digital platforms internationalize and enter foreign markets
differently than other E-business companies. Specifically, since the core offering of user interaction
is facilitated via a digital platform, the cost of transferring the platform from one country to another
is relatively small. Thus, digital platform firms are influenced by the liability of foreignness to a lesser
extent than firms with physical products (Brouthers et al., 2016). Yonatany (2017) shares this view
based on the argument that a platform provider can share some of the market entry costs and risks
with the affiliated third parties of the platform because they provide the investment in complementary
offerings. Additionally, the foreign affiliates that create complements for the platform will be familiar
with their home market, thus lowering the liability of foreignness for the digital platform. This leads
to a proposition by Yonatany (2017, p. 4) that platform-ecosystem firms will internationalize faster
than traditional firms.

On the other hand, Brouthers et al. (2016) along with Chen et al. (2019) suggest that ‘ibusinesses’ or
digital platforms face greater liability of outsidership when entering foreign markets because they
might not be able to transfer the users, which generate the value of using the platform, from the home
country to the new foreign country. Therefore, Brouthers et al. (2016) extent the concept by Johanson
& Vahlne (2009) such that liability of outsidership for digital platforms compromises “the lack of
direct ties to potential platform users in the target foreign market” (Brouthers et al., 2016, p. 515).
This lack of embeddedness in the foreign market user-network arises because the entering platform
often has no immediate direct contact with local users. Thus, as the platform enters the foreign market,
users might perceive uncertainty about joining the platform due to the lack of information about
whether the future size of the platform will be attractive (Schilling, 2003). However, if the platform
provides interaction across geographical borders it might be able to leverage international network
effects based on its userbase in the home country (Chen et al., 2019). If the platform enters a foreign
market and invites foreign users to participate in a network with a globally installed userbase where
they can interact with already established users in another country, then the liability of outsidership
could be reduced and have a positive effect on the platform’s penetration in the target countries
(Brouthers et al., 2016; Chen et al., 2019).

The internationalization of digital platforms does not only have implications for liabilities of
foreignness and outsidership but also the incremental commitment rationality of the Uppsala model
(Johanson & Vahlne, 1977, 1990; Vahlne & Johanson, 2017). Nambisan et al. (2019) emphasize that

18
global experience still matters for the market entry strategies of digital platforms but the traditionally
defined incremental FDI experience is not a prerequisite anymore. Due to the characteristics of digital
platforms, their ecosystems, and the transferability of the platform’s software, some young and
inexperienced small platforms internationalize faster and become mini-multinational enterprises
(Coviello et al., 2017; Nambisan et al., 2019). Moreover, digital platforms challenge the incremental
commitment rationality because of the opportunity to share risks and costs with the user-sides and
complementors. Hence, if there are fewer costs and risks related to market entry, then an incremental
approach becomes less valid (Nambisan et al., 2019).

Furthermore, Nambisan et al. (2019) stress that knowledge development related to

internationalization differs for digital platforms. The direct experiential knowledge that the Uppsala
model underlines can be extended to also include the vicarious learning, which some digital platforms
benefit from. The platform can experience shared learnings from the diverse members’ knowledge
and experiences, and the complementors’ inputs. These indirect learnings can spark ecosystem-wide
innovation and entrepreneurial activities leading to new platform features and increased or new
market entry commitments. Given the indirect knowledge development process multinational digital
platforms are able to adapt and potentially enter markets in different ways compared to traditional
strategies (Nambisan et al., 2019).

2.3.3 Theory of internationalization of digital platforms: status and key take-aways

The literature on the internationalization of digital platforms is still somewhat limited but it has been
steadily developing during the most recent years while sparking the interest of internationalization
scholars (Nambisan et al., 2019). As scholars try to explain the phenomenon, they reach to the most
well-established theories of internationalization to make sense of digital platforms in an international
context. Iconic internationalization theories such as the OLI paradigm and the Uppsala model of
internationalization process theory are being put to the test and either scrutinized, criticized, or
extended to explain how digital platforms internationalize. In this phase of research, scholars are still
discussing the implications and formulating hypotheses to suggest research agendas and potential
empirical studies to further elucidate the phenomenon (Brouthers et al., 2016; Chen et al., 2019;
Nambisan et al., 2019). Some have explored empirical evidence through case study approaches
(Brouthers et al., 2016; Chen et al., 2019) but there is still room for further empirical development.

19
Therefore, this study will contribute to the research field with new, and much needed, empirical
evidence to further build on the academic discussion of internationalizing digital platforms.
Specifically, the ideas of implications for the OLI paradigm and the Uppsala model will be explored
drawing on the suggested important new aspects for market entry modes. These include ecosystem-
and context-specific advantages, the liability of (user-network) outsidership, the different, potentially
non-existing, incremental commitment rationale, and the suggested different knowledge development
processes.

3 Methodology

3.1 Research method

To investigate the phenomenon of internationalization, and more specifically, market entry strategies
of digital platform businesses we adopted an explanatory case study research method with a positivist
perspective (Dubé & Paré, 2003; Easterby-Smith et al., 2018). Our cases were individual firms that
met all the case selection criteria that we describe in detail in the next section. This method is
particularly useful when no theoretical foundation is currently established to explain the phenomenon
(Eisenhardt, 1989; Yin, 2003). While the theoretical foundation of internationalization is well-
developed, it is still in an early development stage in the context of digital platforms. Thus, it could
not function as a complete basis on which we could perform our research and analysis. While we
were able to draw on concepts and ideas from previous research and literature, we had to also develop
some during our research.

We took a multiple case study approach (Dubé & Paré, 2003; Yin, 2003) which allowed us to gain
knowledge about the internationalization process of digital platform firms, both capturing the
idiosyncrasies of the individual cases and enabling us to draw more generalized conclusions and
hypotheses from data comparison across cases (Eisenhardt, 1989; Yin, 2003). In addition, by
analyzing multiple cases, rather than an individual case, we deepened our understanding of the
phenomenon and were able to draw on empirical data from different settings and perspectives. This
method has proven useful in previous recent studies within the internationalization of digital platform
and has been able to reveal relevant insights in understanding the complexities of digital platforms,
their technology, and business structures (Brouthers et al., 2016; Kazan & Damsgaard, 2016; Zeng et
al., 2019).

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3.2 Case selection

De Reuver et al. (2018) argue that many pitfalls exist when researching digital platforms, one of
which is conceptual ambiguity. Following their recommendations to mitigate this risk, the next
paragraph will seek to clearly delimit and define our unit of observation before specifying how we
arrived at the case companies for this research.

Similar to the focus of the literature review in the previous section, our research took an industrial
economics perspective, in which we analyzed platforms as a specific type of marketplace that
facilitates interactions between two (or more) distinct groups of actors by providing the architectures
and rules needed to mediate these. Following this perspective and to emphasize our focus on digital
platform businesses, we defined these as: “Firms whose main business is rooted in an open internet-
based platform that facilitates interactions between two (or more) groups of actors”. Here ‘open’
refers to the idea that anyone can potentially become a member of the platform, and thus we exclude
internal digital platforms within firms.

Apart from having to meet the definition, we selected cases based on three main criteria:

Firstly, the firms we investigated should already have internationalized, since our study took a historic
perspective in analyzing and characterizing the international market entries that had already
happened. In doing so, we were also able to comment on the degree of success of the strategic entry
modes in each case as we could find evidence of the outcomes of the choices.

Secondly, we adopted a convenience sampling procedure in which we selected cases based on how
accessible they were in terms of data (Easterby-Smith et al., 2018). Due to the natural limitations in
time and resources of a bachelor thesis, it was important for our study that we were able to access
enough data within the limited timeframe to reach relevant conclusions. Thus, selecting large, well-
known, and not least well-documented cases was a priority.

Thirdly and finally, to reach a more generalizable conclusion and avoid possible biases, we selected
cases based on a matrix structure to cover a wide range of examples meanwhile allowing room for
comparisons between industries and geographic regions in which the firms were based (see figure 4).
We identified three overall “industry clusters” within digital platform firms: content providers,
transaction providers, and service providers. We defined these as follows:

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 • Transaction providers connect sellers and buyers of physical products either within retail or
B2B transactions, allowing buyers to easily browse a large variety of products and compare
them.
• Content providers base their business on connecting entertainment producers with consumers,
often by bundling the entertainment into a package-deal where the consumers gain access to
limitless consumption through a subscription.
• Service providers connect consumers willing to provide a service with consumers in need of
a service such as temporary accommodation, transport, or others.

Our initial research revealed an overweight in the number of US-based digital platform giants, and
thus we chose to split the geographic dimension into US and non-US-based digital platform firms.

Once the matrix was constructed, we identified multiple potential case companies for each category
and employed a purposive sampling procedure (Easterby-Smith et al., 2018) in which we from our
initial research detected cases that could potentially provide the most interesting insights and
perspectives as well as relevant data to the overarching phenomenon of internationalization of digital
platform firms.

3.3 Data collection

The purpose of this section is to describe our data collection process with the concept of replicability
in mind.

The data collected to support the documentation and investigation of the cases was limited to
secondary data from publicly available sources. All available and relevant sources were taken into
account with the criteria of credibility kept in mind. We searched for data from both academic and

22
non-academic sources. The academic data sources consisted of peer-reviewed journal articles and
publications that had relevant information about one or more of the selected case companies. To
search for the academic literature, we used compiled databases such as Business Source Complete,
Scopus, and Google Scholar. The non-academic data sources were company press releases and
reports, online and printed news articles, and consultancy and industry reports. These were found
using Business Source Complete and other general search engines.

The crucial information to identify from the data was information on case company market entries in
foreign countries. Therefore, the keywords used to search in databases and search engines were
typically a combination of the case company name and keywords such as “internationalization”,
“internationalizing”, “market entry”, “entry mode”, “foreign expansion”, “international expansion”,
“business expansion”, and “new markets”. Occasionally we came across data that while not strictly
related to the companies’ foreign market entry provided relevant insights about their business models
or context that in turn aided in understanding the motivation for certain international market entries.
These were also included in our data set. An overview of the data sources is provided in table 1.

The motivation to limit data collection to secondary data was primarily due to the limited time frame
and scope of the thesis. By utilizing secondary data, the data collection process was less time
consuming and complex than by gathering primary data (Easterby-Smith et al., 2018). Thus, it

23
allowed the study to delve into more cases and get a more representative sample of the population.
Thus, the more cases that were included, the more robust was the basis for the results compared to
single case studies (Yin, 2003). Generally, Kazan and Damsgaard (2016, p. 771) make the point that
due to the accessibility of secondary data, the study becomes verifiable through replication studies.
Secondary data was also beneficial because it avoids potential biases between interviewers and
interviewees as they mutually construct data (Silverman, 2006).

Nevertheless, secondary data provided some potential biases and disadvantages. When gathering
secondary data, one should beware that the data is often biased and purposely created, thus the intent
of the creator was to be kept in mind as the data was collected and analyzed. To exemplify, in the
case of company press releases and reports, it is likely the intention to portray the company in a certain
way, and potentially leave out certain details (Easterby-Smith et al., 2018). Therefore, this data might
not be a critical reflection of the given company’s market entry success. Another disadvantage of
secondary sources is that the data does not necessarily fit into the research objective (Easterby-Smith
et al., 2018). Therefore, it is critical to let the research question guide and frame the data – and not
the other way around (Ghauri & Grønhaug, 2010). Lastly, secondary data does not allow for a more
in-depth exploration of each case if some specific information is not available in the sources. This
would have been possible if primary data were gathered through data sources such as interviews.

However, in sum, the advantages of secondary data concerning time, resources, and potentially a
wider range of cases outweighed the challenges of also including primary data.

3.4 Method of analysis

Inspired by the methodology of Zeng et al. (2019), and following the recommendations for multiple
case theory building (Eisenhardt, 1989; Eisenhardt & Graebner, 2007), the analysis of cases used in
this study took a dual approach of within-case and cross-case analysis. The analysis of cases was
performed without predetermined hypotheses. Nevertheless, we did approach the analysis with the
relevant literature in mind. The current literature on the internationalization of digital platforms does
contain some empirical evidence and defined hypotheses (Brouthers et al., 2016; Chen et al., 2019;
Yonatany, 2017). These were taken into account when looking for patterns and evidence on case
company international market entries.

The within-case analysis was performed utilizing a triangulation approach. To better understand and
analyze the data, we aimed at triangulating different data sources to better depict certain international

24
market entry strategies. Analyzing based on triangulation enabled increased confidence with respect
to the accuracy of the observations in addition to reduced observer bias (Easterby-Smith et al., 2018).

The individual cases were analyzed by identifying textual descriptions and quotes that indicated or
explicitly described the international market entry strategies. Specifically, the within-case analysis of
data was performed using coding (Saldaña, 2009). Each data source was coded using a pre-defined
coding scheme with categories inspired by existing literature and theories, but also categories to
provide general description such as what market entry the data was concerning. To exemplify, one of
these categories was ‘entry mode’, which had the following codes: ‘acquisitions’, ‘partnerships’,
‘greenfield investment’, ‘joint venture’, ‘export’, and ‘licensing’. However, we also allowed for some
flexibility in our coding practice that enabled us to capture prominent and noteworthy information
and incidents, which were outside of the predefined coding scheme.

From the coding, we detected specific “events” of foreign entry, where the events were isolated
incidents where the case firms entered a foreign market utilizing a specific strategic entry mode. From
these events, we were able to evaluate the degree of success and outcome of certain strategies in
different contexts. Additionally, we looked for evidence of the strategic motivation behind the entry
mode choices. Based on our findings, we formed basic constructs and ideas about the international
market entry strategy of each firm related to the respective country.

After each case was analyzed, we performed a cross-case analysis. To preserve replication logic
integrity across cases (Eisenhardt, 1989; Yin, 2003), we aimed at completing most data collection
and perform individual case analysis before beginning cross-case analysis. Inspired by the methods
suggested by Eisenhardt (1989), we compared our findings across the cases, to identify commonalities
and differences regarding the constructs and ideas of foreign country entries. Based on the
comparisons, we formed constructs and ideas that were generalizable across the findings of the cases.
Finally, as our theoretical frame became more clear, we expanded our analysis by comparing our
emergent, general, cross-case findings with the existing literature to highlight similarities and
differences, strengthen the validity of our findings, sharpen our constructs and ideas, and evaluate the
generalizability of our findings.

Therefore, our logic behind the findings and results of the case studies is a blend of arguments from
single case evidence, cross-case evidence, validation of or oppositions to existing research, and stand-
alone logic (Eisenhardt & Graebner, 2007).

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4 Within-case analysis
The following sections will present our findings and analysis of the individual case companies. This
presentation is aimed to be analytical in the sense that it captures and synthesizes relevant foreign
market entry events across a range of data sources, however without enforcing the theoretical
constructs discussed beforehand. These constructs will be applied and discussed in the cross-case
analysis. To summarize each within-case analysis, models of the case companies’ international
expansion have been constructed and included after each section (see figure 5 to 10). These models
seek to capture the general internationalization strategies and are thus delimited to not account for
every single nuance of the expansion. An overview of sources for each within-case analysis (on
average 27 secondary data sources) can be found in appendix 1. In the following sections, in-text
references are only made when direct quotes or paraphrasing are used.

4.1 Amazon

Amazon was founded in the US in 1994 by Jeffrey Bezos initially as an online bookstore but has
since then expanded into almost all types of consumer goods. Though Amazon has integrated into
several business areas over time, including cloud computing, streaming services, and consumer
electronics, it is first and foremost an online marketplace. It is thus the international expansion, and
market entry strategies of the marketplace amazon.com that has been the main research focus of this
paper and will be covered throughout the following section. It should be noted that while Amazon
started as an online retailer and not a digital platform that allowed directed interactions between user
groups, it has progressively evolved towards a hybrid model. Today it is both selling its own products
as well as allowing third-party sellers to interact directly with customers on its website. Thus, it can
be considered a digital platform in its current state.

4.1.1 Business model

Amazon has built its business model around connecting sellers and buyers in the B2C segment. It
provides the infrastructure, architecture, and rules that govern the online marketplace. Sellers are
charged a percentage fee for every transaction and in exchange, Amazon offers access to a large
consumer base and handles delivery logistics, including warehousing for popular products. Through
its strategic placement of ‘fulfillment centers’ (warehouses), it is able to offer delivery within both a

26
1-day and even a 2-hour timeframe for many of its common products among the more than 12 million
different products available.

4.1.2 International expansion

Amazon was from an early stage offering shipping to 150 countries through third-party logistics
providers, however, it had little control over the parcels, both with respect to the delivery time and
security, after they left the US. In addition, its marketplace was limited to the products offered by US
sellers. To strengthen its competitive position, it opened and managed local subsidiaries with local
staff in several strategic locations around the world. These subsidiaries were set up either through
acquisitions of local competitors or through greenfield investments.

4.1.3 Acquisitions

To strengthen its European position, in 1998 Amazon acquired three internet companies in Germany
and the UK, two of which it re-launched shortly after under the Amazon brand with the same
technology, look, and feel as its US website. The following year both websites reached and have since
kept a position as the top e-commerce sites in their respective countries. Through several strategically
located fulfillment centers and local subsidiaries built in Germany and England, Amazon serves the
European market. An example of how this strategy works in practice is that while Amazon has
designed a locally adapted website for the Austrian market, amazon.at, it is the German distribution
center that handles the logistics of all Austrian orders. By doing so, Amazon can offer 1-day delivery
to the Austrian market as well as allowing sellers from this market to enter its platform, while not
having any physical assets located there.

Amazon also tried to enter China through acquisitions. In 2004 it bought the leading online books-
and-media retailer joyo.com. Over 3 years it gradually changed the website of joyo.com and finally
re-launched it under its own brand. Today, amazon.cn has but a fraction of the Chinese e-commerce
market and has little hope of becoming a local market leader against its dominating local competitors.
A decade later, Piacentini, who at that time led Amazon’s international operations, stated that Amazon
lost the battle for the Chinese market because it invested too little and was not aggressive enough
(Walt, 2016).

27
Amazon’s entry into developing countries has been uniquely different from that of entry into
developed countries. In 2013, Amazon launched its platform in India, however, old fashion industry
regulations and staling technological advancements made it difficult for Amazon to employ the same
methods that it had enjoyed massive success from in the European market. Meanwhile, Amazon
feared repeating the failure in the Chinese market. Thus, an initial investment of $2 billion was made
into advancing the e-commerce industry in India upon Amazon’s entry. Over the following 5 years,
it invested another $3 billion in setting up 56 fulfillment centers spread out over the country as well
as acquiring and investing in payment platforms to accelerate India’s development away from
physical payment (cash) and into digital payment solutions. Amazon currently holds a position as the
second-largest e-commerce company in India beaten by the local competitor Flipkart.com, in which
Amazon’s US competitor Walmart holds a majority stake, making acquisition difficult.

4.1.5 Greenfield investments and partnerships

Amazon has not only entered foreign markets using acquisitions. In 2000, Amazon entered Japan
through a launch of a locally adapted webpage, amazon.jp, with a wholly owned subsidiary as well
as partnerships with a handful of local companies. Among these were domestic parcel delivery service
company Nippon Express Co, and Japanese publishing company Media Factory that would supply
book reviews for amazon.com’s book section. Since then, Amazon has grown to be the biggest e-
commerce company in Japan, however, it still faces close competition from several local rivals.

In Canada, Amazon initially entered the e-commerce market in 2002 using neither acquisitions nor
greenfield investments due to regulations. At this time, books were still a big part of Amazon’s sales,
however, these were viewed as cultural products in Canada and due to regulation could only be sold
and distributed by local Canadians. Thus, Amazon launched amazon.ca but partnered with local
publishers and wholesalers who would directly supply the customers through third-party distributors
without Amazon ever being in physical contact with any products. In this case, Amazon entered the
Canadian market as an external orchestrator utilizing its platform and brand.

In all international expansions, Amazon entered marketing partnerships, where popular websites
would advertise and link to Amazon’s website.

In sum, Amazon’s international expansion has been a massive success. Through partnerships and
acquisitions, Amazon has established itself as the current market leader within e-commerce in most
of its markets.

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4.2 Alibaba

The Chinese company Alibaba was founded in 1999 by Jack Ma and 17 other people in his apartment
in Hangzhou, China. Their initial business endeavor was Alibaba.com, an English-language website
set up as a global B2B wholesale marketplace that aimed at connecting international buyers with
Chinese sellers. Buyers on Alibaba.com are typically trade agents, wholesalers, retailers,
manufacturers, and SMEs engaged in the import and export business. Initially, sellers were Chinese
small businesses such as suppliers, manufactures, and distributors but the platform is currently
available to international sellers as well.

With the success of the Alibaba.com platform, the company has expanded its digital platform
portfolio in e-commerce and is now known as the Alibaba Group. Today, the Alibaba Group includes
digital platforms within e-commerce such as Alibaba.com (B2B), Taobao.com (C2C), Tmall.com
(B2C), AliExpress.com (B2C), and Lazada.com (B2C/C2C). The company has also expanded into
digital payment with its Alipay platform, and into logistics by acquiring Cainiao Network. The digital
platforms that have the most international activity are Alibaba.com, AliExpress, Alipay, and
Lazada.com (Anwar, 2017; CB Insights, 2018; Jung et al., 2015). Therefore, the findings are based
on the activities of these companies and actions taken by the Alibaba Group company (henceforth
Alibaba).

29
4.2.1 Initial international expansion

The Alibaba.com platform has had massive success in establishing itself as a global B2B marketplace.
As of March 31, 2019, its buyer-side users were located in more than 190 different countries. Since
it was established as an English-language website in 1999, one could argue that Alibaba.com entered
a global arena rather than a single country. However, even though the platform was available to
international buyers, the challenge was to get international users aboard.

The initial international market entry of Alibaba started already in 2000 where the company received
a $20 million investment from Softbank. With the investment, Alibaba recruited managers and
developers from advanced economies, invested in technological infrastructure in Silicon Valley, and
opened branches and operations in the United States, Europe, and South Korea. This initial aggressive
market entry strategy failed quickly since Alibaba could not attract a critical mass of users onto its
platform. Consequently, Alibaba closed its overseas operations and withdrew from these markets to
focus on its domestic market, China.

4.2.2 Strategy to re-enter European Market

Despite the initial unsuccessful international market entries, Alibaba went on to initiate another
expansion round after it had firmly established in China.

As of 2009, the US, India, and the UK were the largest overseas markets for Alibaba. In the UK,
Alibaba.com had 400.000 registered users and was signing up approximately 2.000 each week. To
increase the presence in the UK and Europe, Alibaba opened a UK office to serve as the European
headquarters, and to provide better service for European companies. Additionally, Alibaba.com had
invested in a $30m advertising campaign to increase its global reach. This was part of a three-stage
strategy of increasing awareness, finding the right partners, and growing revenue.

Moreover, in 2009, Alibaba made efforts to expand its international user-network by offering its
international suppliers Gold Supplier Membership. The Gold Supplier Membership is a paid premium
membership on Alibaba.com that provides members with “comprehensive ways to promote their
products, maximizing product exposure and increasing return-on-investment.” (The Alibaba Group,
2020). Since 2001, Alibaba had offered international suppliers TrustPass membership, which
provided a lesser level of service and exposure. With the option to acquire the paid membership and
qualify as Gold Suppliers, international sellers would have an increased incentive to join the platform.

30
4.2.3 Alibaba in India

Besides the international expansion of its Gold Supplier membership, Alibaba also focused on entry
strategies for specific markets. In 2015, following competitive moves from Amazon, Alibaba was
seeking to increase its presence in the Indian market. Alibaba and its subsidiary Ant Financial
invested in a 40% stake in the Indian company Paytm over a year to pave the way into the Indian
market. Paytm was India’s largest mobile payments company and had amassed 200 million users
since its launch in 2010. During this, Alibaba also made investments in the India company Snapdeal,
which became the third most popular e-commerce retailer in India measured by app downloads in
2018.

After Alibaba experienced some success of the Paytm investment, the company went on to be part of
the Series A funding of Paytm Mall, an online retail branch of the Paytm Group. The substantial
investments in India continued as Alibaba and subsidiary Ant Financial invested in Indian e-
commerce logistics firm, Xpressbees, in 2018.

4.2.4 Alibaba in Southeast Asia

Alibaba also made efforts to secure the Southeast Asian e-commerce market. In 2016, Alibaba
purchased a majority stake in the Singapore-based, B2C/C2C e-commerce platform Lazada, a stake
that it increased further to 83% the following year. At that time, the Lazada platform operated a digital
marketplace in six major Southeast Asian countries which Alibaba entered simultaneously through
the acquisition.

In sum, Alibaba’s internationalization strategy has been focused on launching its platform and aiming
at a global userbase. Towards this end, it has made investments in marketing, minority investments,
and acquisitions to expand its userbase and gain access to knowledge about its markets.

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4.3 Netflix

Netflix was founded in the US in 1997 by Reed Hastings and Marc Randolph and though it initially
operated as an online DVD rental service it quickly moved into online streaming content from which
it has derived most of its revenue since. In practice, Netflix joins content creators and content
consumers. However, instead of the creators selling individual products to consumers, Netflix uses
its platform to bundle them into one large library of streaming content which consumers get unlimited
access to through a monthly subscription fee. These subscriptions, minus a share for Netflix, go to
content creators through licensing agreements. Though Netflix has been a digital platform connecting
content providers and consumers for the majority of its existence, in recent years Netflix has
increasingly also been backward integrating and creating content itself to become less dependent on
the content creators.

4.3.1 International exponential expansion

Netflix was operating solely in the US until 2010, but as the market became increasingly saturated,
Netflix started its international expansion. The internationalization strategy involved first making its
platform available in adjacent markets such as Canada, Latin America, and the Caribbean and then

32
expand increasingly further away. In the beginning, Netflix would enter one market at a time and
ensure profitability before expanding further, however as it built experience it would enter more
markets simultaneously. By 2014, Netflix launched its platform in 6 European countries
simultaneously, and by 2017 Netflix had launched its platform in 130 countries in one year. This
exponential curve of expansion was made possible in large parts by the limited need for physical
presence in the foreign markets it entered. Netflix has by current date only set up offices in 13 of its
190 foreign markets.

4.3.2 Localization strategies

To ensure successful entry, Netflix utilized several different localization strategies that would aid in
bridging its globally standardized platform with the local environment. While its website has an
identical interface and layout around the world, Netflix has added 26 languages for the user to choose
between which affect both platform language as well as subtitles and dubbing on the streaming
content offered. Another strategy utilized by Netflix was in terms of local marketing. Netflix entered
partnerships with local electronic consumer goods producers to make its platform an integrated part
of screen-based devices. To exemplify, in Ireland and Japan Netflix entered through partnerships with
respectively Vodaphone and Sharp Corporation that would produce a series of TVs whose remotes
included a dedicated Netflix button. In addition, when entering Japan Netflix partnered with film and
tv series producer Yoshimoto Kogyo, where Netflix paid for part of the production in exchange for
time-limited exclusive licensing rights. This ensured that local content was available on Netflix’s
platform upon its entry into the Japanese market.

4.3.3 Netflix in developing countries

In some countries Netflix met natural barriers to entry in terms of low technological development.
This was the case in 2016 when Netflix entered India. India was characterized by low internet speed,
old-fashioned payment solutions, and most people owning a smartphone rather than a tv or computer.
To overcome this barrier Netflix invested in payment providers to accommodate local payment
solutions. In addition, Netflix focused its resources on research and development of its application
version of the platform as well as compromising the data size of the content to allow for streaming
even at lower internet bandwidths.

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4.3.4 Regulatory challenges

Netflix’s entry mode has in some parts of the world been affected by regulatory requirements in the
form of censorship of sex, political statements, and other subjects that make the content available on
its platform illegal to stream in certain countries. It is due to this that Netflix has had trouble entering
Indonesia, Vietnam, and Malaysia, and still has not succeeded in entering China. Netflix initially tried
to enter China through a partnership with Chinese streaming giant iQiyi in 2017, however, due to
difficulties in adapting the content to adhere to regulatory requirements the partnership was ended.

Netflix has enjoyed huge success with its platform and is currently the number one provider of
streaming content in the world. Partnerships and localization strategies have been essential to expand
quickly and overcome the hurdles of foreignness. However, though successful in most countries some
still pose a challenge and might be missed opportunities as competition grows.

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4.4 Spotify

Spotify Technology S.A. is a digital platform company founded in Sweden in 2006 by Daniel Ek and
Martin Lorentzon. It was officially launched in 2008 as a digital music and audio streaming service
called Spotify, which is today available on smartphones, tablets, laptops, and consoles. The digital
streaming platform connects consumers with the work of music artists but also with advertisers.
Spotify operates a freemium business model where consumers can listen to music either for free but
with restrictions and ads, or through a paid premium subscription with no restrictions or ads. In the
full-year 2019 earnings report, Spotify reports that it has 271 million monthly active users of which
124 million are premium subscribers. With the most recent entry into India in 2019, it is available in
79 countries, with offices in 25 of these.

4.4.1 Initial international expansion

The international market entry strategy of Spotify began at the official launch of the platform in 2008.
After testing its beta-version on a limited group of users in 2006-2008, Spotify officially launched its
platform not just in Sweden but in 7 major European countries simultaneously. The premium version
of the platform was available in all 7 countries, but the free version was limited through invitation-
only sign-up. With the invitation-only access, users could invite up to 5 friends to join the free version
of the platform, which had restricted use and ads. This invitation-only element helped Spotify grow
its userbase at a controllable rate while suggesting users to attract more users.

4.4.2 Negotiations and partnerships

Spotify’s initial market entry strategy in multiple European countries was made possible due to the
preparational work before the launch. To successfully launch the music streaming platform, Spotify
needed agreements with major record labels to provide a wide selection of music. Despite a long and
complicated negotiation process due to the record labels’ unfamiliarity with streaming platforms,
Spotify secured deals prior to its European launch with major labels such as Universal, Sony, EMI,
Warner, Merlin, and The Orchard. The second important row of partnerships to establish was with
companies that wished to use the platform for advertising. The advertising revenue that Spotify would
receive was significant to the company along with the premium subscription fees. Spotify secured
advertising partnerships with several companies including Ford, T-Mobile, and Xbox.

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Nevertheless, the launch in Europe was not without challenges. The German market had to be put on
a temporary hold as Spotify experienced a licensing deadlock with the collection society GEMA, who
required licensing fees that Spotify could not live up to.

In 2011 Spotify entered the US after 2 years of challenging negotiations with Warner Music Group
and Universal Music Group. The US market entry also included a partnership with Facebook, where
an integrated music-streaming function provided by Spotify was made available on the Facebook
platform. Facebook users would see a Spotify icon appear on the left side of the newsfeed that would
enable them to use Spotify directly through Facebook. Hereby Spotify could tap into the massive
userbase of Facebook.

4.4.3 Spotify in Asia

Spotify’s global expansion continued with entries into Asia in 2013. The first countries that Spotify
entered and used as steppingstones into the Asian region were Singapore, Hong Kong, and Malaysia.
So far, Spotify has been quite successful in Singapore with a reach equivalent of being the third-
largest radio station in the country. Nonetheless, Spotify recognized that these markets were very
different from the western markets of Europe and the US, and thus, the company was focused on
making its market entry fit the Asian countries. The launch in Asia was primarily focused on
providing the digital platform on smartphones and tablets. Spotify identified that regions like
Southeast Asia were predominantly mobile-first markets were users have high mobile adoption.
Consequently, to gain traction as outsiders, Spotify partnered with local telecom companies in Asian
countries such as Maxis in Malaysia. The idea behind telecom partnerships was that users would be
offered a bundled package of streaming service along with the phone contract. In this way, users
would get a deal on the Spotify premium subscription, and Spotify would acquire new users. This
partnership strategy was a way to overcome outsidership and tap into the country’s networks of users.
Furthermore, Spotify put great effort into the localization of its digital platform to suit the markets it
entered with localized marketing and high-quality translation of the platform.

In sum, Spotify’s international market entry strategy has been heavily influenced by the company’s
ability to cooperate with its different platform user-sides. The internationalization has relied greatly
on negotiations and licensing deals that it obtained with major record labels to secure the music on
its platform. Moreover, Spotify leveraged strategic partnerships with companies such as advertisers

36
as well as telecommunication companies to ensure sufficient userbases – both in terms of consumers
and advertisers.

4.5 Uber

Founded by Travis Kalanick and Garrett Camp in 2008 in San Francisco, Uber initially provided
transportation services through expensive cars with professional drivers that could be hailed and paid
for automatically through their digital platform app UberBlack. Since then Uber has expanded its
services with UberRush, UberPool, UberEats, UberSUV, and more. Their most well-known service,
which also constitutes the greatest part of their revenue, is UberX (or UberPop in Europe), a platform
that connects people in need of transportation with normal people that owns a car and has signed up
as a driver. Uber facilitates the transaction in exchange for a small share. This enables ordinary people
with a car to earn money, as well as giving the users an often cheaper and faster mode of transportation
compared to taxis. It is mainly the internationalization of UberX/UberPop (henceforth Uber) that will
be the focus of the following section. Due to its business model, Uber’s expansion was based on city-
entry rather than country-entry. Yet, cross-city conditions were somewhat similar within the same
countries and thus the foreign market entries will still be discussed based on specific countries.

37
4.5.1 Aggressive international expansion

Uber initiated its international expansion in 2011 when it entered Paris in France by launching its
mobile app locally with a local language interface. In the following months Uber entered an
increasing number of countries and cities. By the end of 2014 it was entering a new city nearly every
day which meant that by 2019 it was present in more than 900 cities across 69 countries. Its
internationalization strategy was characterized by aggressive expansion, which often collided with
local regulatory authorities despite Uber utilizing several dozens of lobbying firms and lobbyists
within parliaments when entering new markets. This strategy was fueled by the idea that there could
only be one transportation network provider and thus whoever grew big first would succeed. Fueled
by massive external funding, Uber has expanded with a higher emphasis on breadth than profitability
and has thus been operating at a loss for multiple years, closing books with an $8.5 billion loss in
2019.

4.5.2 Uber in Europe

Though Uber’s aggressive expansions strategy has payed-off in terms of spreading its platform
worldwide, it has also been the source of many regulatory bumps on its way, especially in Europe.
Combined with difficulties in even determining which regulations should apply to Uber’s business
model this has led to expensive hurdles for Uber. In France where Uber initially entered Europe, taxi
driver protests and arrests of Uber local executives strained its operations for years. In addition,
troubles with regulations in the UK ultimately led to court proceedings in 2017 with the Court of
Justice of the European Union, another costly process for Uber. By the end, Uber was banned partially
from several EU countries including Germany, the Netherlands, and Belgium, while having
suspended its operations in others like Spain.

4.5.3 Uber in China

In 2014, Uber made its attempt to enter the Chinese market. Like most other markets it entered quickly
by launching its platform from one day to another while investing massively in marketing to attract
users. However, fierce competition from its Chinese rival Didi Chuxing Technology Co. led to many
years of unprofitable competition and investments. By 2016, after Didi received financial backing
from investing behemoths Tencent Holding and Alibaba Group Holding, Uber sold its Chinese

38
operations to Didi in hopes to free resources in preparation for its upcoming IPO. Thus, Uber lost the
battle for the Chinese market.

4.5.4 Uber in India and the middle east

Uber’s entries into India and the Middle East were somewhat different from those of its other markets.
Initially, Uber negotiated with India’s Federal Ministry of Road Transport to offer its app-based
services without regulatory issues. In addition, Uber developed its payment system to accommodate
physical cash payments, which was the predominant payment solution in the country. However,
despite its efforts regulatory disputes soon emerged and in a combination with Uber’s inability to
guarantee the credibility of its drivers and thus the safety of the users, Uber was banned from large
parts of India. In the Middle East in 2020, Uber entered for the first time directly through acquisition.
It acquired Careem who had a similar concept to Uber’s and was operating in 120 cities across 15
countries.

Despite the prevailing regulatory issues due to Uber’s disruption of the transportation industry, Uber
has enjoyed massive success in entering every continent across the globe (except for Antarctica)
meanwhile building its userbase. It is thus currently the biggest transportation network provider and
with the hope of winner-takes-all dynamics it could also be a profitable one in the future.

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4.6 BlaBlaCar

BlaBlaCar is a French digital platform business founded in 2006 by Frédéric Mazzella, Francis
Nappez, and Nicolas Brusson. BlaBlaCar is a digital service provider and the world’s leading long-
distance carpooling platform. The platform connects passengers looking to travel long distances,
typically between cities, with drivers heading the same direction. They benefit by sharing the costs
of driving. The BlaBlaCar userbase consists of 90 million people including drivers and passengers
spread across 22 countries. BlaBlaCar’s primary markets are within Europe including Russia.

The international market entry strategy of BlaBlaCar has been fueled by large venture capital
injections, and it has been characterized by rapid expansion into 19 countries between 2011 and 2016
topping with 5 new countries added to the platform in 2015.

4.6.1 International entry strategies

The international market entry strategy of BlaBlaCar is characterized by two modes of entry. Firstly,
the company entered some markets by simply launching its platform locally with limited supporting
activities. Secondly, the company acquired existing competitors in foreign markets. The acquisition
strategy has been the most prominent for BlaBlaCar with a focus on eliminating competition and
increasing coverage while integrating and absorbing the acquired companies when possible. This has
been labeled “acqui-hiring” (Casprini et al., 2019).

The first strategy of launching the platform without acquisition was the approach BlaBlaCar took as
it entered countries such as Spain and India. BlaBlaCar opened its platform in Spain in 2009 and India
in 2015. These launches were done by building a presence from scratch. As part of the launch in
India, the company set up an office in New Delhi. However, due to challenges in India and lack of
growth, the Indian office was later closed. The motivation for entering these markets from scratch
was that carpooling was not yet mainstream in these markets, thus there were no obvious acquisition
targets.

4.6.2 Acqui-hiring entry strategy

The second and most common entry strategy of BlaBlaCar was acqui-hiring. One of the first
companies that BlaBlaCar acquired was Italian PostoinAuto.it, which was the largest car-sharing
website in Italy. The acquisition was described by co-founder Nicolas Brusson as “an ideal fit, in

40
terms of culture, attitude, and vision” (Butcher, 2012). Hence, BlaBlaCar could integrate the existing
team of locals who had great market knowledge and acquire the platform’s userbase. This was
generally the philosophy that drove the acqui-hiring strategy.

BlaBlaCar also acqui-hired as it entered Russia and Ukraine in 2014. In this case, the local platform
Podorozhniki was acquired and BlaBlaCar gained new talent with a strong three-person team behind
the platform who had market insights. BlaBlaCar grew with success in Russia and became the largest
carpooling service in the country. Nevertheless, to maintain its dominant position in the country,
BlaBlaCar entered a partnership with Russia’s largest internet business, Mail.Ru Group, in 2018. As
part of the partnership deal, BlaBlaCar acquired Beepcar, which was a Russian carpooling platform
launched in 2017 by Mail.Ru Group.

Over the years, acqui-hiring was the preferred entry strategy of BlaBlaCar. The company teamed up
with Superdojazd in Poland, Rides in Mexico, Autohop in Croatia, Hungary, Romania, and Serbia,
and Jizdomat in the Czech Republic and Slovakia. Generally, the company has looked for markets to
enter where public transport within cities was good and intercity options were ‘broken’. Well-
functioning public transport enables drivers to drop off passengers at public transport options within
the city. This is a reason why BlaBlaCar has avoided the US market, which has poor public transport
and cheaper fuel and car prices. Furthermore, BlaBlaCar has not yet faced issues with regulation since
its drivers do not make a profit but only cover their cost, hence there are often no issues with tax or
insurance.

In sum, BlaBlaCar has expanded rapidly across Europe and its neighboring countries while also
exploring overseas markets. It has primarily used an international acqui-hiring entry strategy but also
built a presence in some markets from scratch.

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5 Cross-case analysis
The within-case analysis of the six digital platform businesses reveals that they all pursued several
strategies for international market entries. Meanwhile, some companies experienced challenges that
resulted in a limited userbase creation or a market exit. The findings of the within-case analysis are
summarized in Table 2 below. The first column from the left includes each of the six examined case
companies. The second column summarizes the observed international market entry modes of the
company. The entry modes are given different labels but generally, no matter the label, all digital
platforms entered a foreign market by at least making their digital platform available to the user-sides.
Thus, the labels indicate a combination of a platform launch with another strategy. Thereby,
‘acquisitions’ imply that the company entered a country by launching its platform in combination
with an acquisition of a competing start-up or company. ‘Greenfield investments’ imply an entry
where the case company invested in physical assets in the foreign country while also launching the
platform. ‘Partnerships’ cover an entry mode where the company launched its platform with support
from a partnership with another company. ‘External orchestration’ implies a platform launch where
business activities within the market are performed by third-party companies that are externally
orchestrated by the digital platform, in this case Amazon. For this to be possible, it implies that the
company has business activities directly related to the interaction between the market-sides of its

42
platform and that these activities can be performed by third parties. To exemplify, Amazon delivers
the goods between the user-sides of its platform, an activity that can be performed by a third party,
meanwhile Uber connects drivers and passengers, but has no activity other than its platform that
facilitates the interaction. ‘Minority investments’ cover an entry where the platform launch is
supported by making minority ownership investments in companies that would support the platform
ecosystem. This entry mode was utilized by Alibaba. Lastly, the entry mode labeled ‘launch platform’
only covers entering a country by launching the digital platform with limited supporting activities
such as marketing and translations of the platform and no other investments in physical assets,
extensive partnerships, or other foreign direct investments.

The column ‘Most common entry mode’ includes the one entry mode that was preferred/most
frequent for each case company. This is based on all gathered data and not only the within-case
analysis presented directly in this paper. Entry into each country counted once, however, when a case
company had entered a market multiple times due to unsuccessful initial entry, this counted as
multiple entries. We defined entry as the situation where the case companies actively took action to
access a certain foreign market and its population through strategic initiatives. In relation to this, it
should be noted that we only considered the entries that our data presented evidence for. Thus, the
‘most common entry mode’ does not account for all entries that each company has conducted, and
hence there exists a small margin of uncertainty here.

The ‘challenges’ column includes examples from each company that illustrate troubles that made
some of the entries challenging or unsuccessful occasionally leading to a market exit.

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44
5.1 Typical entry modes of digital platforms

The empirical evidence reveals that acquisition of competitors in foreign markets and launch of a
more or less locally adapted version of the digital platform are among the most common foreign
market entry modes utilized by the digital platform businesses. While acquisition as an entry mode
strategy has received ample attention within the field of internationalization and also specifically with
respect to digital platform businesses in the form of ‘envelopment’ (Eisenmann et al., 2011), the
significance of the phenomena of entering a foreign market by launching the platform locally seems
somewhat overlooked. This entry mode is uniquely available to digital platform businesses, as it is
the digitality and orchestration of an ecosystem inherent to their business model that enables it. Its
closest entry mode relative would be ‘exports’, however, rather than providing a service or good from
afar, the launch of the platform locally implies that the products or services are also sourced locally,
while the company does not need to be physically present. This is uniquely possible due to the
ecosystem that these companies orchestrate where two (sometimes local) market-sides are connected
and their interactions are facilitated. The foreign market launch of a platform thus provides a new
entry mode that has emerged alongside the new type of business of digital platforms. Common
amongst nearly all the cases in this research is that this new entry mode involves a globally
standardized platform that draws upon the strengths of the brand and its interconnected ecosystem,
meanwhile being locally adapted in terms of interface language and content to accommodate cultural
differences. To support the launch, marketing efforts were essential in acquiring the first users and
building the local branch of the platform ecosystem.

In general, the digital platforms have both utilized high and low commitment entry modes. Launching
the platform by itself without major supporting investments such as local partnerships and greenfield
investments is arguably a low commitment entry strategy. By utilizing this, the digital platforms were
able to enter markets with few resources and relatively low financial exposure which allowed them
to gain knowledge about the foreign market before expanding further. A similar level of commitment
is seen through the deployment of minority investments and external orchestration as foreign market
entry modes. However, all cases also illustrate examples of high commitment entry strategies in the
form of partnerships, acquisitions, and/or greenfield investments. Specifically, Amazon and
BlaBlaCar entered most of their markets by acquiring similar foreign companies and relaunching
them under their own brand. This required extensive financial resources as well as organizational
resources in integrating the acquired companies and thus made their commitment very high. The
international expansion would also often be accompanied by greenfield investments in the form of

45
national offices and/or, in the case of Amazon, warehouses to support the platform and ecosystem.
Entry through these strategies represents a relatively higher commitment compared to that of
launching the platform with minimal supporting activities. Lastly, it is also evident that the high
commitment entry mode ‘partnership’ was a prevailing strategy. Through partnerships, the digital
platform businesses supported the international market entry by attracting and securing the
participation of one or more market-sides. To exemplify, Netflix both secured viewers through
marketing partnerships with producers of electronic devices, as well as ensuring streaming content
through partnerships with local content creators that would exclusively supply the Netflix platform
upon entry. Meanwhile, Amazon supported its general platform and business model by entering
partnerships with local logistics providers. In sum, an intermix of low and high commitment strategies
was utilized throughout all cases.

It is highly relevant to note that the empirical data did not show evidence of licensing or joint venture
as a foreign market entry mode strategy. Though it is difficult to conclude the exact cause of this, it
is perhaps relevant to look at the commonality between the cases in how the companies derive their
value. Alongside the ecosystem, the intellectual property rights of the platform and related
technologies are in all cases the main value drivers for the company. Safeguarding this would drive
up transaction costs in licensing and joint ventures and expose the companies to risks related to copy-
cat rivals. In addition, orchestrating the platform ecosystem is the main value-adding activity for all
case companies. Having to collaborate with other companies on this would mean losing control. This
could explain why digital platform businesses seem to internalize processes through acquisitions,
greenfield investments, and partnerships limited to regulating the different market-sides of the
platform.

5.2 Network effects as a determinant of international market entry

The observed entry modes and strategies for internationalization reveal the digital platforms had
incentives to expand their userbases and maximize the network effects of their ecosystem through
market entries. As network effects are a key driver of what makes a platform valuable (Eisenmann et
al., 2006; Gawer, 2014; Hagiu & Wright, 2015), the expansion into new markets to grow the userbase
was a desirable strategy for the digital platforms. Thereby, the entry mode decisions of the six
companies were arguably in part determined by what would increase the user-network most

46
efficiently and what entry mode would help the platform succeed in becoming the orchestrator of the
user-network ecosystem in the foreign market.

With these incentives in mind, the reasoning behind launching through acquisitions or partnerships
seemed to be the possibility to acquire an already established network of users or gain access to the
users through a partner. As the digital platforms acquired a platform in the foreign market, they also
acquired the userbase and thus boosted their own network effects. However, acquisition strategies
were only effective if the target markets had readily organized and accessible networks of users that
could be acquired. When the companies launched in combination with a partnership, they were able
to indirectly access the users of the partner. To exemplify, Spotify was able to expose its platform to
the users of the telecom company Maxis. Furthermore, a partnership focused on marketing could help
the entering digital platform create general exposure also when no group of users was easily
accessible. Nonetheless, the decision to launch the platform without an acquisition or partnership,
and to build the network of users from scratch seemed like the preferred option when no network of
users was already established or easily accessible. Across all case companies, some of the countries
they entered did not have a digital platform provider present, thus they had no option but to build
from scratch. In other target countries, a competitor and a userbase were present but for a variety of
reasons these were not desirable or possible to acquire. Therefore, despite the attractive option to
acquire a platform’s userbase, it was not always the strategy that the six digital platforms executed.

5.3 Aggressive internationalization motivated by winner-takes-all dynamics

Across the case companies an observed commonality is the desire to grow and expand into multiple
markets relatively quickly. All case companies had years where they entered multiple markets. To
exemplify, Netflix entered 130 countries in 2016, Uber entered 60 countries between 2011-2014, and
BlaBlaCar entered five new countries in 2015. However, Amazon’s expansion was not as extreme
since the biggest expansion was into three new countries in a year. Amazon was likely restricted by
a partial dependency on physical assets such as warehouses. Nevertheless, in several of the examined
cases, international expansion was so aggressive that it led to the digital platforms being unprofitable
at least in the short run. The motivation that led to the forceful market expansions was likely the
promise of increasing returns to scale and winner-takes-all dynamics. Thus, the digital platforms
entered new markets aggressively to gain new users. The urge to become the winner of the market
motivated them to either become the first-mover digital platform to enter a foreign market or to be

47
part of the competition for market leader position in a foreign market where platforms were starting
to establish.

In terms of the winner-takes-all market conditions presented by Eisenmann et al. (2006, 2011), the
case companies’ markets do more or less fulfill these. For all six companies, the markets have strong
and positive network effects – especially cross-side network effects. Amazon’s and Alibaba’s
platforms are more valuable if many buyers have a large selection of sellers. The platforms of Netflix
and Spotify are more valuable to users if there is a great amount of content available, and the content
creators will prefer a larger audience of consumers. For Uber and BlaBlaCar, drivers prefer more
passengers, and passengers prefer the convenience of many available drivers.

In terms of multi-homing costs, the consumers of the content of Netflix and Spotify have high multi-
homing costs. The users that pay the subscription fee are unlikely to be willing to pay for using an
additional platform if the content is similar. Likewise, the sellers on Amazon and Alibaba who pay
to use the platform have lower incentives to switch or multi-home. Lastly, the condition of no strong
preferences for special features is a bit harder to determine since many of the platforms do try to
differentiate by offering additional features on the platforms.

Consequently, the promise of increasing returns to scale and the likelihood that markets would
develop into winner-takes-all markets most likely incentivized hasty international market expansion
and entry strategies of the six case companies.

5.4 Risks and challenges of internationalizing as a digital platform

It is evident from the empirical data that digital platforms face several risks and challenges when
entering new foreign markets. Many of these are unique to their business models and competitive
environment. All the cases showed evidence of utilizing network effects in their international
expansion, however, the dependency on these also became a challenge for several of them.
Specifically, Alibaba and BlaBlaCar had difficulties acquiring a critical mass of users in some
markets which ultimately lead to (partial) market exits. Thus, if the digital platform does not reach a
number of users that allow the network effects to attract more users, than the number of users leaving
the platform for whatever reason, the business model arguably becomes unsustainable and the market
entry fails. Several factors affect this process. The cases of Amazon and Netflix emphasized that
especially differences in culture and technological advancement between the home market and target
market can further complicate the entry and halt the development of the platform ecosystem. In

48
addition, the case of Netflix also stressed the difficulties of dealing with varying regulations across
markets, which were further emphasized through the case of Uber that was entirely banned from some
countries due to its business model. In sum, the empirical data showed that the entry mode challenges
of digital platforms both had characteristics from traditional internationalization challenges, such as
having to overcome cultural differences but also challenges specific to their business model related
to network effects and platform ecosystem.

5.5 Ecosystem-specific advantages across network structure

While the general business model of digital platforms evidently presents new challenges in foreign
market entry strategies, it also presents new opportunities and ways to overcome some of them.
Specifically, their ecosystem of users can be utilized to reduce the effects of liability of foreignness
and outsidership. The extent to which this is possible seems to be interconnected with the notion of a
global network and fragmented network clusters (Zhu & Iansiti, 2019). Within the industry clusters
of transaction providers, content providers, and service providers, the case companies had similar
characteristics with respect to this concept.

Amazon was able to leverage its existing userbase when entering new countries and thus was able to
offer value to new local users both from the seller side and buyer side. New foreign market sellers
had the opportunity to sell internationally to Amazon’s global network of buyers. Meanwhile, new
customers could enjoy a wide selection of products available from Amazon’s existing sellers in other
countries. In this way, Amazon could utilize its global network of users to create value propositions,
attract new users, and overcome the hurdles of foreignness. It should be noted, however, that its ability
to utilize its ecosystem was in part limited by geographic distance which increased delivery times and
thus lowered the overall value proposition. The same arguments also applied to Alibaba.

Much like the transaction providers, Netflix and Spotify were also able to utilize their existing users
and content throughout their internationalization, although rather than being limited by physical
distance in the utilization of their ecosystem, it was the contractual terms of the licensing deals that
presented a legal barrier as to how much they could leverage their userbase of content producers.
While some music and streaming content was available on their platform worldwide, much was also
limited to a geographic region or even a specific country. Thus, the content providers had an intermix
of a global network and a network of local clusters.

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Contrary to both Amazon and Alibaba’s interconnected global network of users, the service
providers’ ecosystems were by their nature locally bound and thus the creation of local ecosystem
clusters was inherent to their foreign market entry strategies. For Uber, having additional drivers in
one country did not provide any value to the passengers in another and neither did having more
passengers in one country to the drivers of another. Even though BlaBlaCar often dealt with
transportation over slightly further distances than Uber, the same locally bound conditions were
apparent here.

In sum, it is evident from the empirical data that the individual business models of the case companies
form natural structures of ecosystems that can be used to different extends in the international
expansion of the digital platforms. There seems to be a pattern that transaction providers have global
networks that are useful in market entries, service providers have local clusters that are less useful in
foreign markets, while content providers are somewhat intermixed between the two.

It is relevant to note here that these ecosystem-specific advantages do not stem from resources owned
by the digital platform business. Rather, the ecosystem is shared among all its users whom all derive
value from its growth, and thus it is perhaps more relevant to see it as a shared resource. While the
digital platform business orchestrates the platform and thus indirectly controls it, it does not employ
the sellers, drivers, or content providers, nor does it have ownership over their assets.

5.6 Liability of foreignness and commitment processes

The ecosystem specific advantages, global network structures, and limited need for physical assets
when entering foreign markets could indicate that considerations of incremental expansion and
psychic distance become irrelevant. However, when analyzing the six digital platform case
companies, these considerations still seem to be guiding the international market entry strategies. For
the US-based companies, Amazon, Netflix, and Uber, the initial targeted markets were mostly
countries that had relatively low psychic distance and low liability of foreignness. These countries
were primarily western countries such as European countries and Canada in some instances.
Likewise, the European based platforms, Spotify and BlaBlaCar, initially focused on the countries
within Europe before expanding outside of their region. Finally, the case of Alibaba stands out since
the company initially launched a platform that focused on a global reach and made greenfield
investments in the US – a country with high psychic distance relative to Alibaba in China. Yet, the
investments in the US were withdrawn and were to some degree unsuccessful. Nevertheless, in most

50
of the cases, entering countries with low psychic distance and low liability of foreignness first still
mattered when choosing an internationalization strategy.

The country selection and the expansion into low psychic distance markets indicate that the digital
platform firms sometimes followed commitment processes that were incremental by region rather
than by country. To exemplify, as Amazon entered Europe, it did it through expansions into the UK
and Germany. When Spotify entered Asia, it did it through Singapore, Hong Kong, and Malaysia.
Initially, Netflix entered one market at a time and ensured profitability and learnings before moving
on to enter new countries. Additionally, BlaBlaCar focused on the major European countries of Spain
and the UK before conquering other markets, and it has entered middle America through Mexico and
South America through Brazil. These market entry paths do indicate an incremental commitment
process to different regions. However, Alibaba and Uber stand out with their different approaches.
Alibaba’s initial vision was to launch a global platform and not limit itself to any particular region.
Likewise, Uber committed to an aggressive internationalization strategy by accelerating quickly
towards entering a new city, often in a new country, almost every day, and thus arguably not being
as incremental in their internationalization approach.

5.7 Knowledge development processes of the digital platforms

The strategies of entering regions incrementally through specific countries further suggest that the
digital platforms were seeking to develop their knowledge and experience before expanding their
presence into different markets. Thus, as the platform companies acquired knowledge about the
markets they entered, they were able to leverage that knowledge as they entered new countries.
Amazon was able to learn about the European market from its presence in the UK and Germany, and
Alibaba could acquire knowledge through its European headquarters in the UK. Spotify used
Singapore, Hong Kong, and Malaysia to learn about the Asian region. Netflix went through an
exponential expansion process where it initially learned from Canada and countries in Latin America
and the Caribbean, and then expanded into several countries likely influenced by the initial knowledge
it had developed from its initial markets.

The empirical evidence shows that the digital platforms might also have considered how different
entry modes allowed for different knowledge development processes, which in turn could aid in
overcoming the liability of foreignness and outsidership. Launching the platform from scratch in a
new country provided the platform companies with crucial learnings about building user-networks

51
from scratch in foreign countries. Through acquisitions, such as the acqui-hiring strategy of
BlaBlaCar or the Alibaba acquisition of Lazada, the platforms acquired inside knowledge about the
market and its users, given that the acquired company could be integrated and share its knowledge as
well. The platforms might also have gained valuable knowledge about marketing and the business
conduct in the target country as they engaged in partnerships with companies that had operations in
the country they were trying to enter. Alibaba specifically pursued a knowledge developing entry
strategy with its minority investments in many different companies around the world and especially
in India. Through its investments in Paytm and other ecosystem supporting companies, the company
could gain knowledge about the Indian markets directly from insiders and to some extent overcome
the liability of foreignness and outsidership.

As a final note on knowledge development of the digital platform companies, it seems interesting
how these companies have new ways of developing knowledge in their internationalization
endeavors. Specifically, the digital platforms were able to acquire knowledge through their ecosystem
and the different user-sides. As the platforms actively engaged with the user-sides, knowledge might
have developed as a consequence of the platforms’ efforts to orchestrate the network. Both buyer and
seller, content producers and consumers, and drivers and passengers might provide feedback and
insights that the respective platform can use as it enters other markets or when it develops the platform
features. Thus, the knowledge development process might become an outcome of the interaction
between the user-sides and the digital platform business.

6 Implications for theories of internationalization

The cross-case analysis applied relevant concepts and theories to the general perspective of our
findings within internationalization of digital platforms. A number of theoretical constructs were
arrived at with respect to digital platform businesses’ entry modes strategies and these constructs will
in the following sections be related to the two major theories of internationalization discussed earlier,
namely the Uppsala model and the OLI paradigm. The aim is to examine the implications of our
findings for these theories as well as discuss how these compare to previous research findings within
digital platform businesses.

52
6.1 Implications for the OLI paradigm

The findings and constructs derived from the empirical data suggest implications for not only the
entry modes available to digital platforms, but also for the very factors underlying the choice of entry
mode. While some concepts are in line with previous research, others present new perspectives and
possible additions specifically in relation to the OLI paradigm.

6.1.1 From ownership-specific advantages to ecosystem-specific advantages

According to the OLI paradigm, ownership-specific advantages are the main determinant of whether
the company in question can overcome the liability of foreignness and should make an attempt to
enter a foreign market. In the context of digital platforms this still seems relevant, however, the digital
platforms can also utilize ecosystem-specific advantages in the internationalization process. These
are different from ownership advantages since they do not stem from resources owned by the
company, but rather from the shared resources that ecosystems constitute. These findings are in line
with those of Nambisan et al. (2019) as well as Zeng et al. (2019). Adding to these, the findings of
our research suggest a connection of ecosystem-specific advantages to network clusters and business
models of digital platforms determined by their industry. The extent to which ecosystem-specific
advantages can be utilized in the foreign market entry depends on how fragmented their network
structure is, which in turn is determined by their business model. Elements, whether contractual of
physical, that bind the network’s resources locally create fragmented network clusters which lower
the applicability of the ecosystem in foreign market entries. Meanwhile, if the ecosystem structure is
associated with elements that can more easily transcend borders, the digital platform business will be
able to overcome greater degrees of liability of foreignness and outsidership by utilizing its
ecosystem. Thus, digital platform businesses do not rely only on ownership-specific advantages when
entering foreign markets, but now also on ecosystem-specific advantages.

6.1.2 New entry mode and resources in determining location-specific advantages

The OLI paradigm implies that location-specific advantages determine the choice between exporting
to a foreign market or entering it through more high commitment strategies. Our research indicated
that rather than choosing exports as a low commitment entry mode, digital platform businesses are
able to enter by launching their platform locally. This new mode of entry allows for a low commitment

53
entry strategy with minimal physical presence and thus also minimum risk, while still reaping all the
benefits of the platform business model and allowing the company to access foreign resources.

Nambisan et al. (2019) argued that the importance of location-advantages fades in the context of
digital platforms due to their ability to easily transcend borders. However, our study found that rather
than fading, it is the nature of the location-specific resources that changes. Traditional determinants
of location-specific advantages such as access to raw material, technology, and human talent does
seem to fade, but only in the face of a new resource: users. These are valuable to the digital platforms
for reasons that transcend the simple notion of more paying customers. Each new user adds value and
strengthens the competitive position of the platform ecosystem, which, if structured as a global
network, adds value to the entire platform. While there are users to be found in almost all countries,
it is the structure of this resource that seems to determine whether the platform should utilize low or
high commitment entry strategies. In cases where users were already structured into networks either
by a foreign competitor or through the customer base of other companies, the digital platforms utilized
high commitment entry strategies such as partnerships and acquisitions to support the launch of the
platform. Meanwhile, if the users were dispersed the digital platforms would enter through only
launching the platform, or, if the market was strategically important for a certain region, through
supporting greenfield investments. Consequently, location-advantages in the form of structured user
availability are arguably still relevant when explaining internationalization in the context of digital
platforms.

6.1.3 Internalization advantages are still relevant - albeit a new perspective

Having chosen to enter a foreign market, the internalization advantages determine whether the entry
should be through foreign direct investment or licensing. The deciding factor here for the company
is whether the transaction costs of licensing would outweigh the costs of engaging in foreign direct
investment itself. In the context of digital platforms, as the value creation is moved partially away
from the company and into the ecosystem, Zeng et al. (2019) argue that the importance of this decision
fades. The focus on ecosystem orchestration rather than optimizing internal processes becomes the
priority. Our study, however, shows evidence that would suggest that internalization advantages are
still relevant. Arguably, due to the heavy transaction costs of protecting intellectual property rights in
licensing, especially with respect to technology, there was no evidence of digital platform businesses
utilizing licensing as a foreign market entry strategy. In addition, several of the case companies were

54
vertically integrating into either a market-side as was the case with Netflix increasingly producing its
own content, or into services inherent to their business model such as Alibaba and Amazon investing
in payment providers. Although not directly related to their market entries, this does demonstrate a
concern for reducing transaction costs and taking control. Combined with the active choice of not
using licensing as a market entry strategy, this suggests that internalization advantages are still a
determining factor in the internationalization decisions of digital platform businesses. Particularly,
our findings indicate that internalizing to keep control and protect intellectual property rights is a
preferred foreign market entry strategy.

In sum, the OLI paradigm by Dunning (1980, 1988) seems to still be applicable in the context of
digital platform businesses. However, certain elements with respect to ownership and location
advantages should arguably be augmented to better accommodate the inherent differences in the
business model and strategic opportunities and challenges of digital platforms entering foreign
markets.

6.2 Implications for the Uppsala model

The following section discusses the implications for the Uppsala model of internationalization related
to this study’s analysis and findings. It puts the analysis and findings into the perspective of the
Uppsala theory while also including the newer perspectives from the theories of internationalization
of digital platforms.

6.2.1 Relevance of liability of foreignness, psychic distance, and liability of outsidership

The empirical data and the related analysis revealed that most of the case companies initially entered
countries with low psychic distance and hence low liability of foreignness relative to the home-base
of the platforms. Thereby, the validity of these theoretical elements of the Uppsala Model (Johanson
& Vahlne, 2009; Vahlne & Johanson, 2017) still seems to be present even for modern companies
such as the digital platform businesses. However, the findings of the analysis do support the growing
importance of liability of outsidership and especially the expansion of this concept concerning the
user-network as presented by Brouthers et al. (2016). A central characteristic of the international
market entry strategies of the observed digital platforms was the strive towards overcoming the
liability of outsidership upon entering a country. The case companies were trying to overcome this
through launching the platform, acquisitions of and investments in companies, and partnerships.

55
Particularly, entering through acquisition seemed to be an effective way of overcoming the liability
of outsidership.

Adding to the concept of liability of outsidership in the context of digital platforms, we find that the
characteristics of the digital platform network structure seem to be a relevant factor in how a given
digital platform will face the liability of outsidership as it enters a foreign market. Hence, putting Zhu
and Iansti’s (2019) distinction between having a global network structure or a network fragmented
into local clusters into the perspective of liability of outsidership helps develop an increasingly
nuanced understanding of digital platforms and their internationalization. This observation is very
much in line with the thoughts of Chen et al. (2019) who studied whether the size of a globally
installed userbase had a positive effect on an “ibusiness” platform’s penetration in target countries.
Therefore, as the empirical evidence of this study also points to the importance of the platform’s
network structure, it will be highly relevant to conduct further research within this specific field.

6.2.2 Commitment processes change in the context of digital platforms

In the Uppsala model, the state variable of commitment processes is used to explain and characterize
the general internationalization process for multinational firms. The model suggests that
internationalizing firms tend to follow a somewhat incremental commitment strategy to limit
exposure to the liability of outsidership (Johanson & Vahlne, 2009; Vahlne & Johanson, 2017). In
this study, we have integrated the theoretical logic of the commitment process to characterize the
international market entry strategies of digital platform businesses. The empirical observations imply
different commitment strategies and not necessarily a dominant incremental commitment process
across the companies. The promise of increasing returns and the winner-takes-all dynamics
sometimes resulted in companies skipping the incremental entry steps and instead choosing high
commitment strategies such as acquisitions for entry. On the other hand, some entry strategies were
performed with more caution and did resemble an incremental approach such as launching the
platform with minimal supporting activities or Alibaba’s minority investment strategy. Thereby, the
findings of this study do not indicate a trend or a dominant commitment process, which challenges
the suggestions of the Uppsala Model theory when applied in the context of digital platform
businesses entering foreign countries.

This supports the suggestion by Nambisan et al. (2019) that the characteristics of digital platforms
and their ecosystems reduce the incremental commitment rationality. Specifically, we find it relevant

56
to further develop their argument based on the findings related to the importance of network effects
when determining a foreign market entry strategy. As the analysis revealed, digital platforms were
motivated to enter a country using a strategy that would most effectively increase network effects.

Is should be noted that while this study does not find evidence in the context of digital platforms to
support the Uppsala model’s incremental commitment by country, there are signs of a regional
incremental commitment process. Our findings revealed that the digital platforms gradually entered
regions by first entering a few strategic countries before expanding further.

6.2.3 Knowledge development processes still matter when digital platforms internationalize

The incremental expansion into geographical regions does not just exemplify the digital platforms’
commitment processes, it also illustrates a knowledge development process. The evidence does
suggest that the digital platforms used particular countries in different regions as steppingstones to
further expand, and also to understand the business conduct of the given region. Furthermore, the
discussed entry modes all unlocked different kinds of knowledge sources for the company to leverage.
To reiterate, launching the platform by itself yielded learnings of how to build networks from scratch
while acquisitions unlocked local knowledge through the acquired businesses. Thereby, this study
does subscribe to the ideas of knowledge development processes of the Uppsala model, and it seems
applicable in the context of internationalization of digital platforms.

Additionally, the insights of the case companies provide some empirical basis for the arguments by
Nambisan et al. (2019) that knowledge development in digital platforms is to some extent also
influenced by indirect learning. Due to the nature of the ecosystem, shared knowledge and
experiences could develop based on the interaction between the platform provider and its different
user-sides. This indirect learning was prevalent for most case companies, including Alibaba,
BlaBlaCar, and Amazon.

In sum, this study adds to the academic discussion on the relevance of the Uppsala model concerning
the internationalization of digital platforms. Most importantly it adds new and much needed empirical
evidence of internationalization of digital platforms, and it scrutinizes the theory in line with the
limited literature already established on internationalization of digital platforms.

57
7 Conclusion
The strategies and choices in international market entry of digital platforms can to some extent be
characterized using the OLI paradigm and the Uppsala model of internationalization, however, certain
aspects need to be augmented to accommodate the differences between traditional pipeline businesses
and digital platforms.

Firstly, as digital platforms enter foreign markets, they can leverage ecosystem-specific advantages
to overcome business challenges related to foreign market entry. Specifically, digital platform
businesses can utilize the shared resources that their platform ecosystem constitutes. Furthermore, the
ecosystem network structure seems to play an important role when determining the strength of the
ecosystem-specific advantage. This study finds that a global network structure or a network
fragmented into local clusters will yield different implications for the internationalization of digital
platform business.

Secondly, international market entries appear to be driven by the search for user-networks that can
be absorbed by the digital platform to strengthen its network effects, and thus the competitive position
and value of its overall ecosystem. Thereby, the nature of the location-specific advantages, which
characterize internationalization, changes in the context of digital platforms. This results in two
prominent entry modes among the observed cases. Namely, launching the platform in a foreign
market with limited supporting activities, and acquisitions of other platforms and their existing user-
networks.

Thirdly, digital platform businesses’ market entry strategies can be characterized using the concept
of liability of outsidership. This liability is a central hurdle to overcome for digital platforms as they
enter foreign markets. Once again, the ecosystem network structure seems to be an important factor
in determining the extent to which the digital platform is vulnerable to the liability of outsidership.
Moreover, digital platform businesses seek to utilize specific entry strategies that most efficiently
enable them to overcome the liability of outsidership.

Additionally, the promise of increasing returns to scale due to positive network effects incentivizes
the expansion of the digital platform’s userbase. Likewise, the winner-takes-all dynamics that
characterize most digital platform industries further incentivize digital platforms to quickly establish
a dominant position in new foreign markets. The empirical evidence suggests that these two factors
in combination appear to motivate aggressive entry strategies and commitment processes to foreign

58
markets. Despite these incentives, some of the observed platforms chose to enter regions
incrementally through specific strategic countries, which indicates a distinction between country-
specific commitment processes and region-specific commitment processes.

Finally, the incremental regional commitment processes reveal that the international market entry
strategies can be characterized using the concept of knowledge development processes. The
incremental commitment into regions indicates that the digital platforms were seeking to build
knowledge that can be used in further market entries. In some cases, learning from a few countries
led to expansion into several others. Additionally, the different entry mode strategies utilized by the
digital platforms led to different knowledge development processes related to internationalization.
Moreover, the digital platforms were exposed to knowledge development that was specific to digital
platform businesses. This showed evidence that suggests that these businesses can acquire knowledge
and experience through interaction with the platform user-sides. Thereby, the knowledge and
learnings become a shared process as the digital platform acquires knowledge about international
market entry strategies.

7.1 Limitations

Despite the rich findings of this thesis, the results do have limitations. The findings run the risk of
being idiosyncratic and not generalizable due to the relatively small size of the sample (Eisenhardt,
1989). Although the sample covers different geographical regions in combination with three different
digital platform industry clusters, it still only provides a few cases to represent each geography and
industry cluster. Moreover, the selection of cases was to some extent biased since only large,
multinational, and well-established digital platforms were included in the sample. Hence, the thesis
might miss certain perspectives from small and medium-size digital platform businesses and their
international market entry strategies. Furthermore, as the data collection was limited to secondary
sources, it reduces the richness of the information and provides limitations. Generally, the secondary
data was not directly created for this research. Thus, we had to perform extensive coding and
sometimes interpret the data, which leaves room for biases and lowered the accuracy of the findings.
In particular, evidence to support the exact motives that led to choosing a given entry mode was often
limited. However, the objective of the thesis was to observe, describe, and characterize rather than
justify entry mode choices. Nevertheless, the thesis does add valuable insights and empirical data to
the relatively new field of internationalization of digital platform businesses.

59
7.2 Future research

For future research, we suggest three main directions:

First, our study implied a direct relation between the platform user-network structure and the extent
to which ecosystem-specific advantages could be utilized in the international expansion of the
platform. This subject needs further research and though we were able to draw connections to
business model and industry clusters, our sample was too limited to arrive at reliable conclusions.

Second, the implications of the new entry mode available to digital platform businesses of launching
the platform with minimal supporting activities have been analyzed and discussed, however, these
were only the initial theoretical constructs. To fully grasp the opportunities and challenges that are
inherent to this entry mode, it needs to be further explored and compared to other entry modes with
respect to benefits and risks.

Third, there is a considerable task in augmenting the OLI paradigm and the Uppsala model to
accommodate the unique workings of digital platforms. Initial constructs have been discussed in this
study; however, they still require much empirical elucidation before they can be adequately
incorporated into internationalization theories.

General for all three directions is a need for more targeted research-based first-hand data. This is both
true for large platform businesses such as the ones examined here, but also for small and medium-
size enterprises, where the findings of this paper might have to be altered.

60
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Appendix 1 - Secondary data sources for the within-case analysis
The following table presents all secondary data sources for the within-case analysis. The sources are
ordered by case company as indicated by the first column, then by type of source as indicated by the
fifth column, and finally by year as indicated by the third column. The type codes refer to the
following:

A: Academic journal articles and academic books.

C: Company press releases and reports.

O: Online and printed news articles.

R: Reports from consultancies as well as industry reports.

Case Author Year Title Type

company
Alibaba Wu, X., & 2018 Amazon and Alibaba: Internet Governance, A
Gereffi, G. Business Models, and Internationalization
Strategies
Alibaba Jia, K., Keny, M., 2018 Global Competitors? Mapping the A
& Zysman, J. Internationalization Strategies of Chinese
Digital Platform Firms
Alibaba Anwar, S. T. 2017 Alibaba: Entrepreneurial Growth and Global A
Expansion in B2B/B2C markets
Alibaba Jung, J. C., 2015 Does Alibaba's Magic Work outside China? A
Ugboma, M. A.,
& Klow, A. K.
Alibaba Alibaba Group 2020 What is Gold Supplier? C
Alibaba Alibaba Group 2020 History and milestones C
Alibaba Brennan, T. 2019 Alibaba.com opens platform to US sellers C
Alibaba Wang, S. 2016 Alibaba CEO Outlines his 2016 Expansion C
strategy
Alibaba The Alibaba 2015 Alibaba Group Announces Expansion of Cross- C
Group Border E-commerce Initiatives
Alibaba Alibaba Group 2015 Alibaba Group Expands European Presence C
Alibaba Erickson, J., & 2015 Alibaba CEO Zhang tells employees: “we must C
Najberg, A. absolutely globalize”
Alibaba Najberg 2015 Alibaba goes Dutch in European Expansion C
Drive

66
Alibaba Alibaba Group 2010 Alibaba.com Strengthens Position as Go-To C
Supply Source for U.S. E-commerce
Entrepreneurs with Acquisition of Auctiva
Alibaba Alibaba Group 2009 Alibaba.com Gives International Suppliers a C
New Gateway to Global Trade
Alibaba Milnes, H. 2019 Breaking down Alibaba's global ambitions O
Alibaba Dai, S. 2019 Alibaba ramps up global e-commerce O
expansion with launch of English Tmall portal
Alibaba Kynge, J. 2019 Alibaba steps up competition with Amazon in O
global ecommerce market
Alibaba Zeng, M. 2018 Alibaba and the Future of Business O
Alibaba Kodaka, N. W. 2017 Alibaba beefs up services while eyeing O
overseas users
Alibaba The Economist 2017 Alibaba and Amazon look to go global O
Alibaba The Economist 2017 Three kingdoms, two empires - China's Internet O
Giants Go Global
Alibaba Arnold, M., & 2016 Alipay seals Europe deals for China Payments O
Murgia, M.
Alibaba Edgecliffe- 2014 Alibaba sales pitch defines global ambitions O
Johnson, A., &
Bullock, N.
Alibaba Palmer, M. 2009 Alibaba focuses on global expansion O
Alibaba Hille, K. 2009 Alibaba prepares for global expansion O
Alibaba CB Insights 2018 Alibaba Vs. Amazon: How The E-Commerce R
Giants Stack Up In The Fight To Go Global
Alibaba CB Insights 2018 China's Internet Giants Go Global R
Amazon Benmamoun, M., 2019 Internationalization of e-commerce A
& Singh, N. corporations (ECCs) - Advanced vs emerging
markets ECCs
Amazon Wu, X., & 2018 Amazon and Alibaba Internet governance, A
Gereffi, G. business models, and internationalization
strategies
Amazon Liu, F., & Zhu, Q. 2018 Competing with complementors: An empirical A
look at Amazon com
Amazon Walt, V. 2016 Amazon invades India A
Amazon Padmanabh, B. 2013 Flipkart.com's strategy on amazon.com's entry A
into India: A case study
Amazon Singh, N. 2011 Localization Strategies for Global E-Business A
Amazon Le, K. D., & 2008 Foreign market entry of e-business companies A
Rothlauf, F. and implications for theories of
internationalization

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Amazon Becker, S. A. 2002 An exploratory study on web usability and the A
internationalization of US E-businesses
Amazon Kotha, S. 1998 Competing on the internet: The case of A
Amazon.com
Amazon Amazon n.d. Sell on Amazon C
Amazon Amazon n.d. Overview of Categories C
Amazon Amazon n.d. About Amazon C
Amazon Amazon 2013 Amazon Launches In India C
Amazon Amazon 2004 Annual Report C
Amazon Amazon 2002 Annual Report C
Amazon Amazon 2000 Annual Report C
Amazon Amazon 1999 Annual Report C
Amazon Amazon 1998 Annual Report C
Amazon Johnson, T. 2020 How To Sell on Amazon in 2020: Setup, Fees, O
& Strategy
Amazon Lim, S. 2019 Amazon boosts Singapore presence with O
Amazon.com rollout
Amazon Kim, E. 2018 Top Amazon exec who was large shareholder is O
leaving after two-year hiatus, adding to exodus
Amazon Sawhney, M. 2018 7 Ways Amazon Is Winning By Acting O
'Glocally' In India
Amazon Singh, S. 2014 Amazon's strategy for India: Stick to the O
concept of sister site
Amazon EDAMAME 2020 Japan E-Commerce | Top 3 Sites, Market R
Share, and Statistics
Amazon CB Insights 2018 Alibaba Vs. Amazon: How The E-Commerce R
Giants Stack Up In The Fight To Go Global
Amazon CB Insights 2018 Amazon Strategy Teardown R
Amazon Statista 2018 Most popular online stores in Italy in 2018, by R
e-commerce net sales
Amazon Statista 2018 Most popular online stores in Spain in 2018, by R
e-commerce net sales
Amazon Masters, K. 2016 Trends on Amazon’s international growth, and R
how brands can ride the wave of Amazon’s
aggressive international expansion
BlaBlaCar Wells, P., Wang, 2020 More friends than foes? The impact of A
X., Wang, L., Liu, automobility-as-a-service on the incumbent
H., & Orsato, R. automotive industry
BlaBlaCar Casprini, E., 2019 How do companies organize nascent markets? A
Minin, A. D., & The BlaBlaCar case in the inter-city shared
Paraboschi, A. mobility market

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BlaBlaCar Farajallah, M., 2019 What drives pricing behavior in Peer-to-Peer A
Hammond, R. G., markets? Evidence from the carsharing
& Pénard, T. platform BlaBlaCar
BlaBlaCar BlaBlaCar 2020 Never Assume. Always Check. C
BlaBlaCar BlaBlaCar 2019 BlaBlaCar launches BlaBlaBus in Europe C
BlaBlaCar BlaBlaCar 2018 BlaBlaCar acquires Russian carpooling C
platform Beepcar
BlaBlaCar BlaBlaCar 2018 BlaBlaCar acquires urban carpooling company C
Less
BlaBlaCar BlaBlaCar 2016 You can now carpool in Czech Republic and C
Slovakia
BlaBlaCar BlaBlaCar 2015 BlaBlaCar rides into India! Namaste! C
BlaBlaCar BlaBlaCar 2015 BlaBlaCar and Carpooling.com team up C
BlaBlaCar BlaBlaCar 2015 BlaBlaCar spreads its wings to Eastern Europe C
BlaBlaCar BlaBlaCar 2015 Sharing, innovating and going global — a new C
milestone
BlaBlaCar BlaBlaCar 2015 BlaBlaCar community rides into Mexico C
BlaBlaCar BlaBlaCar 2014 Let’s welcome Russia and Ukraine to the C
Community
BlaBlaCar BlaBlaCar 2014 BlaBlaCar members, say hello to Turkey C
BlaBlaCar Vleugels, A. 2019 Why French unicorn BlaBlaCar still believes in O
‘done is better than perfect’
BlaBlaCar Dillet, R. 2017 How BlaBlaCar faced growing pains and had to O
change its focus
BlaBlaCar Rose, I., & 2017 How BlaBlaCar created a global transport O
Wheeler, M. network
BlaBlaCar Scott, M. 2016 BlaBlaCar, a ride-sharing Start-Up in Europe O
looks to expand its map
BlaBlaCar Balachandran, M. 2015 Why BlaBlaCar’s carpooling plan could skid in O
India, just like Uber
BlaBlaCar Dillet, R. 2015 BlaBlarCar Expands beyond Europe O
BlaBlaCar Wright, M. 2015 Why BlaBlaCar isn’t scared of Uber’s O
problems in India
BlaBlaCar Woods, B. 2015 BlaBlaCar snaps up Carpooling, aiming to O
dominate European ridesharing
BlaBlaCar Ghoshal, A. 2015 BlaBlaCar brings its ride-sharing service to O
India
BlaBlaCar O'Brien, C. 2015 France’s BlaBlaCar acquires Germany’s O
Carpooling.com to clinch European dominance
BlaBlaCar The Economist 2015 BlaBlaCar: Something to chat about O

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BlaBlaCar Chen, L. 2015 Meet Europe’s Newest Unicorn: BlaBlaCar O
Raises $200 million at $1.6 billion valuation
BlaBlaCar O'Hear, S. 2014 European Carpooling Site BlaBlaCar Rides O
Into Russia And Ukraine Via Acquisition
BlaBlaCar Dillet, R. 2014 BlaBlaCar Raises A Massive $100 Million O
Round To Create A Global Long Distance
Ride-Sharing Network
BlaBlaCar The Economist 2014 Sharing à la française O
BlaBlaCar Rodriguez, C. 2014 Carpooling And BlaBlaCar Are Redefining O
Green And Cheap Travel In Europe,
BlaBlaCar OECD Observer 2014 A Sharing Economy O

BlaBlaCar Ahmend, M. 2014 French Ride-Sharing Service Is Not Surfing O

USA
BlaBlaCar Carnegy, H. 2013 Ride-Sharing O
BlaBlaCar Butcher, M. 2012 Carpooling Marketplace BlaBlaCar Acquires O
PostoinAuto to Drive into Italy
BlaBlaCar McKinsey 2015 How the sharing economy can make its case R
Netflix Brennan, L. 2018 How Netflix Expanded to 190 Countries in 7 A
Years (HBR article)
Netflix Oh, W.-Y., & 2016 Netflix International Expansion A
Myer, D.
Netflix Netflix, Inc. n.d. About Netflix C
Netflix Netflix, Inc. 2016 Annual Report C
Netflix Netflix, Inc. 2015 Annual Report C
Netflix Netflix, Inc. 2014 Annual Report C
Netflix Netflix, Inc. 2011 Annual Report C
Netflix Netflix, Inc. 2010 Annual Report C
Netflix Netflix, Inc. 2010 Annual Report C
Netflix Craft n.d. Netflix headquarters and office locations O
Netflix C|Net 2010 Sharp launches two new Netflix-ready Aquos O
Blu-ray players
Netflix Arias, A. M. 2020 The secret behind Netflix’s international O
expansion
Netflix Investopedia 2020 If You Invested Right After Netflix's IPO O
Netflix Maonahan, N., & 2019 Why 2.7 million Americans still get Netflix O
Griggs, B. DVDs in the mail
Netflix C and C 2019 Netflix: International Media Strategy (in a O
Marketing Factory nutshell)

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Netflix Kharbal, A. 2019 Netflix has a China strategy — but it doesn’t O
involve launching there soon
Netflix Pham, Sherisse 2017 Netflix finally finds a way into China O
Netflix S&P Global 2017 Netflix entering China via licensing deal with O
iQiyi
Netflix Schilling, M. 2015 Netflix In Japan Production Pact With O
Yoshimoto Kogyo, Say Reports
Netflix Yalan, L. 2015 Netflix is making a move into the Chinese O
market
Netflix Smith, D. 2014 CHART OF THE DAY: Netflix's Brilliant O
Expansion Plan
Netflix Statista 2019 Most popular video streaming services in the R
United States as of September 2019, by
monthly average users
Netflix Sandvine 2018 The global internet phenomena report R
Netflix FRPT 2017 Netflix to invest in several avenues to expand R
its presence in India
Spotify Sun, H 2019 Chapter 5: Case study - Spotify A
Spotify Spotify 2020 Spotify Reports Fourth Quarter and Full-Year C
Technologies S.A. 2019 Earnings
Spotify Spotify 2020 Company Info C
Technologies S.A.
Spotify Merlin 2008 Merlin, the Virtual Fifth Major, to Join Spotify C
At Launch
Spotify Shaw, L. 2018 Spotify Is Said to Secure Rights to Booming O
Indian Market
Spotify Vikas, S. N. 2018 Spotify working on India launch: CEO Daniel O
Ek
Spotify Safian, R. 2018 Spotify's $30 billion playlist for global O
domination
Spotify Lidsky, D. 2018 The definitive timeline of Spotify’s critic- O
defying journey to rule music
Spotify Auchard, E. 2018 Timeline: Spotify's winding road from outsider O
to music industry ally
Spotify Firstpost 2016 Spotify launches in Japan with premium service O
for $9.70 per month
Spotify Russel, J. 2015 Spotify Moves Closer To Launches in O
Indonesia and Japan
Spotify O'Reilly, L. 2014 Spotify Launches biggest UK marketing push O
Spotify Campaign Asia- 2013 The Month: Media - Spotify expands, O
Pacific with ad partners

71
Spotify Peoples, G. 2013 Streaming Ahead O
Spotify Russel, J. 2013 Spotify launches in 8 new markets, including O
first-time expansions into Asia and Latin
America
Spotify Summers, N. 2013 Spotify opens its beta browser-based app to O
users in the UK ahead of full launch “later this
year”
Spotify Savitz, E. 2011 Spotify To Launch Music Service In U.S. O
Thursday
Spotify Sawers, P. 2011 Spotify: The Story so far O
Spotify Olson, P. 2011 Facebook To Launch Music Service O
With Spotify
Spotify Bradshaw, T. 2011 Spotify Launches in the US O
Spotify Bradshaw, T. 2011 Spotify Eyes Further Expansion amid to US O
Launch
Spotify Music Week 2011 Spotify Mixes it up for US Debut O
Spotify Smith, E. 2011 Spotify Nears U.S. Launch after Universal O
Music Deal
Spotify Forde, E. 2010 Spotify eyes US/Japan expansion O
Spotify Bradshaw, T., 2009 Spotify wins high-profile backing in its battle O
Edgecliffe- to challenge iTunes
Johnson, A., &
Mitchell, T.
Spotify Lu, K. 2016 Localization in Asia: How Spotify Conquered 6 R
Challenging Markets
Spotify Lu, K. 2016 9 International Growth Strategies from Spotify R
Uber Cusumano, M. A. 2020 Platformizing a bad business does not make it a A
good business
Uber Spicer, Z., 2019 Patterns of Local Policy Disruption: Regulatory A
Eidelman, G., & Responses to Uber in Ten North American
Zwick, A. Cities
Uber Anwar, S. T. 2018 Growing global in the sharing economy: A
Lessons from Uber and Airbnb
Uber Kosintceva, A. 2016 Business models of sharing economy A
companies
Uber Cramer, J., & 2016 Disruptive change in the taxi business: The A
Krueger, A. B. Case of Uber
Uber Ghemawat, P. 2016 What Uber’s China Deal Says About the Limits A
of Platforms
Uber Uber 2020 Annual report C
Technologies, Inc.

72
Uber Uber 2020 Investor Presentation C
Technologies, Inc.
Uber Uber 2020 Uber Completes Acquisition of Careem C
Technologies, Inc.
Uber Uber 2015 Times Internet and Uber enter into a strategic C
Technologies, Inc. partnership
Uber Grant, E., & n.d. These are the places that are trying to put the O
Khosla, S. brakes on Uber
Uber The Economist 2017 Hard driving - Uber is facing the biggest crisis O
in its short history
Uber Tsang, A. 2017 Uber Is Dealt a Fresh Blow in European Legal O
Case
Uber Lu, K. 2016 Launch Everywhere—How Uber Won 450+ O
Markets
Uber Newcomer, E., & 2016 In Deal With Didi, Uber Frees Itself to Expand O
Wang, S. in Other Markets
Uber Scott, M. 2015 What Uber Can Learn From Airbnb’s Global O
Expansion
Uber Vincent, J. 2015 Uber suspends UberX services in South Korea O
— but promises to return
Uber Weise, K. 2015 This is how Uber takes over a city O
Uber McKinsey 2017 Cracks in the ridesharing market—and how to R
fill them

73