The Impact of Digitalization on Internationalization of High-Tech Firms : A Case Study of Space Company

ABSTRACT This master thesis examined the impact of digitalization on the speed of internationalization and explores the various foreign market entry options for a company that would like to expand from a developed market to an emerging market as part of its internationalization. The case study analyzed in this paper is Arctic Space Technologies, a unique satellite operator company offering an all-in-one solution for sustainable satellite data handling and processing. The firm’s founders have a niche market (satellite operators) and have established business in Sweden and would like to enter an emerging market (South Africa). The firm can be classified under the high-tech industry and the study obtained valuable information that could be useful to other similar firms. The nature of technology for adoption is easily transferable for such firms regardless of geographical location. Digitalization is instrumental in facilitating earlier and faster internationalization through digitalized knowledge, network creation and decision-making processes (Coviello et al., 2017). The digitalization of new foreign market development helps such firms to efficiently identify new market opportunities in global markets and with this approach, they save resources while developing the most attractive markets (Neubert, 2018a). Qualitative research was applied through a company case study, where primary interviews and a survey were used to collect data. A case study was employed to further understand and practically apply adaptations a firm can make to increase its chances of success in a foreign market environment. The researcher also obtained information from desktop and literature review. The study findings suggested that business networking, business models, culture and geographical distance, market size are key factors that influence the choice of foreign market entry mode for a high-tech firm internationalization process from a developed market to an emerging market. In addition, the main challenges faced by born-global firm in entering an emerging market includes, lack of financial resources, management transitions and lack of proper market information for the internationalization process. The firm may need to identify information related to the market size, competitors, financial costs and entry barriers of the emerging market. The study insight was that despite the born global firms’ nature of technology enabling faster adoption in terms of digitalization being instrumental in facilitating their internationalization process through the digitalized knowledge, network creation and decision-making processes, they still face the challenges of entry into unfamiliar emerging markets. The researcher identified the institutional voids faced, liability of foreignness and noted that it would be crucial for the firm to conduct a proper environmental analysis. This may include political and legal forces, economic forces, social-cultural forces and technological forces. Arctic Space Technologies may need to create relevant business networks and the study identified that the ideal foreign market entry mode would be Joint venture/Partnership. Since the South African government is keen on foreign investors/entrepreneurs entering into their market through partnership with a local business entity. The firm could establish a good network with South African National Space Agency (SANSA) and other space firms in the country. SANSA is keen on fostering international partnerships to enable unlock opportunities for the national space sector. Further studies could investigate the time frames for high-tech firms internationalization processes. Further research is needed to analyze connections between software firms’ business models and selected entry modes by using a quantitative research method. The study could also be extended to other emerging countries in Africa and new business opportunities in the global markets for high-tech firms especially with the changing dynamics of international business in the wake of the current pandemic.