Capturing value with free business models in the global digital economy

Abstract Capturing value across national borders represents a fundamental issue in international business (IB). The burgeoning digital economy has made free business models commonplace, raising the question of how firms can capture value from freely available products. Building on the demand-side perspective, we propose that firms relying predominantly on ad-sponsored models generate lower revenues compared to those emphasizing freemium models. Further, we argue that this negative relationship is less pronounced in markets where consumers have a stronger free mentality and higher online engagement tendency. Using a multilevel dataset from the global mobile app industry across 50 country/region markets, we find empirical support for these hypotheses. Our study underscores the importance of integrating consumer heterogeneity into IB research, highlighting how demand-side factors shape international value capture strategies in digital contexts.