Facilitating speed of internationalization: The roles of business intelligence and organizational agility

Abstract

With the aim of bridging the gap between the firm’s internationalization speed research and the emerging study of business intelligence (BI), this study draws on knowledge transformation as the theoretical lens for exploring how business intelligence leverages organizational agility to promote the speed of internationalization. By analyzing data collected from 258 Chinese firms in the Yangtze River Delta area, we conclude that: (1) Business intelligence has a significant influence on the speed of internationalization, and the organizational agility positively mediates such causal relationship. (2) Cultural distance negatively moderates the relation between organizational agility and speed of internationalization. The managerial implications of these findings and future research directions regarding the firm’s internationalization speed are discussed.

Introduction

With the intensified international competition, the accelerating internationalization has been becoming an increasingly important route to competitive advantage for international companies (Hilmersson and Johanson, 2016, Lin and Si, 2019, Tan and Mathews, 2015). firms eagerly seeking to participate in international business are on the rise (Johanson & Kalinic, 2016), with the expectation that a faster internationalization strategy will facilitate them to seize fresh opportunities, enter into potentially global niches, and build first-mover advantages (Acedo and Jones, 2007, Jiang et al., 2014, Vermeulen and Barkema, 2002). The firm’s speed of internationalization, a key aspect of international strategic decision-making, has become an important issue for expanding international markets (Chetty et al., 2014, Coviello and Cox, 2006, Prashantham and Young, 2011). It is particularly relevant for Chinese companies, which usually have strong motivations to catch up with competitors from developed markets as quickly as possible (Cheng and Yang, 2017, Deng, 2012).

Recently, the internationalization speed literature has increasingly shifted focus onto the relationship between a firm’s internationalization speed and its international performance (García-García et al., 2017, Jain et al., 2019, Sea-Jin and Jay Hyuk, 2011). These emerging studies confirm the importance of experiential knowledge that promotes the firm’s speed of internationalization by extracting such knowledge from embodied experience, such as operational experience and trust-building (Johanson and Vahlne, 1977, Johanson and Vahlne, 2009). However, the experiential knowledge accumulation is a time-consuming activity and has been severely challenged in today’s information-based competitive environment. Particularly, the extensive use and dispersion of ICT has accelerated information flowing throughout international markets (Lecerf and Omrani, 2019, Skudiene et al., 2015), and require enterprises to build an on-demand IT-based business system, such as business intelligence, to better support their international business running. Several researchers have tried to explore the effect of business intelligence on the company’s international activity. For instance, Tarek, Adel, and Sami (2016) suggested that competitive business intelligence positively influences the firm’s international expansion. Tarek, Zouhayer, and Adel (2019) indicated that the SMEs’ international competitiveness is strongly relied on a company’s business intelligence. Meanwhile, a few studies argued that business intelligence would not necessarily promote firm’s internationalization speed because it depends on how firms appropriately absorb and adapt external knowledge that business intelligence provides (Chen, Chiang, & Storey, 2012). As late-comers to global competition, Chinese firms are usually lagging behind firms from developed countries to develop firm-specific advantages, especially in knowledge acquisition and transformation (Cheng & Yang, 2017). Hence, it is not clear whether business intelligence of firms from China plays a positive role in promoting firm’s internationalization speed.

Drawing on firm’s internationalization speed studies (Acedo and Jones, 2007, Chetty et al., 2014, Prashantham and Young, 2011) and business intelligence literature (Dishman and Calof, 2008, Elbashir et al., 2008, Popovič et al., 2012), we propose a theoretical model that examines the relationships among business intelligence, organizational agility, cultural distance and firm’s internationalization speed in the context of Chinese firms. We argue that business intelligence of the internationalizing firms from China would promote firm’s internationalization speed through organizational agility, a key mediator that captures the capability of the firm to interpret and apply diversified knowledge to their internationalization strategies (Fosfuri and Tribó, 2008, Gutiérrez et al., 2015). Specifically, when Chinese internationalizing firms receive valuable knowledge via business intelligence, the internationalization speed will be accelerated if they exercise organizational agility to effectively manage this new knowledge provided by business intelligence. Additionally, the existing research indicated that the cultural distance resulting from limited understanding of the norms, values, and institutions in other countries (Laszlo, David, & Craig, 2005) may hinder a company’s utilization of organizational agility to push its internationalization. We introduce cultural distance as a moderator of the link between organizational agility and the Chinese firm’s internationalization speed. Therefore, we examine two important questions in this study: (1) how does business intelligence affect the speed of internationalization of Chinese firms via organizational agility? (2) How does cultural distance interaction with organizational agility influencing the speed of internationalization of Chinese firms?