Using digital technology to approach internationalisation: a capability threshold perspective

Manufacturing firms undertaking international business have widely applied digital technologies but to differing extents. Referring to the current state of digital transformation in the Chinese manufacturing industry, greater digital transformation is necessary when approaching internationalisation, but it may trigger subsequent resource redeployment to merge digital technology and other, non-digital, firm resources. Therefore, we adopt the strategic flexibility theory to explore the importance of resource redeployment and examine the buffer effect of unabsorbed slack resources when upgrading the resource base with digital technology. Using a sample of 537 manufacturing firms in China, this study found the existence of a strategic flexibility threshold in the relationship between digital technology and internationalisation. Moreover, when a firm's strategic flexibility exceeds this threshold, unabsorbed slack resources positively moderate the relationship between digital technology and internationalisation. However, absorbed slack resources negatively moderate the relationship between digital technology and internationalisation.