How do firm characteristics and behavior affect i18n?

"Internet firms are born global" (Kotha et al, 2001)

There are four main factors that affect the i18n of the Internet company:

(1) Reputation (intangible asset): number of media articles

(2) Website traffic (intangible asset): unique monthly users

(3) Level of competitive activity: new products and features

(4) Level of cooperative activity: partnering agreements

In 2001 Kotha, Rindova and Rorhaerrnel researched that these 4 factors are positively related to the degree of i18n (number of foreign domain websites).

Intangible assets

"The more intangible assets an Internet firm has, the greater will be its propensity to internationalize" (Kotha et al, 2001)

One of the greatest source of competitive advantage in the Internet world is reputation. It is often highlighted as an intangible asset, difficult to create, imitate, or substitute. It is very important, because Internet market space is ridden with uncertainty about the reliability & trustworthiness as many of the firms are new entrants with short histories.

Web traffic is another intangible asset likely to be particularly important for internationalization. It indicates the degree users are aware of and interested in a website. Value increases exponentially with its size.

  

Competitive activity

"The greater the level of competitive activity of an Internet firm, the greater will be its propensity to internationalize" (Kotha et al, 2001)

Actions and interactions of competing firms drive competitive advantage because actions disrupt the linkages between strategy and performance in a given market.

Success of innovating firms provokes competitive responses from existing firms and new entrants. Thus, competitive actions constitute the primary mechanism through which firms establish and protect their own advantage, as well as erode the advantage of competitors.

Research on hyper-competitive environments has demonstrated that firms taking more competitive actions have superior performance.

Partnering

"The greater the level of cooperative activity of an Internet firm, the greater will be its propensity to internationalize" (Kotha et al, 2001)

Firms with a high level of cooperative activity also tend to have a high level of competitive activity, and both are positively related to performance.

In addition, research on inter-firm cooperation suggests that cooperative activity, as partnering in strategic alliances is motivated by the complementarity of assets possessed by potential partners. There is a possibility of gaining advantages through each others resources.