Going Global, Going Digital

This research paper explores the relationship between firm internationalisation and digital resource use. On the one hand, the modularity of digital resources and their applicability in different international contexts provide significant benefits to multinational companies. On the other hand, the complexity of managing digital resources across different institutional systems escalates with rising levels of internationalisation. Because of these competing forces, I argue that the relationship is inversely U-shaped. Additionally, I investigate the moderating effect of firms' financial constraints and conjecture a steepening effect of the inverted U-shape. In my empirical identification strategy, I employ a text-based measure of internationalisation, based on companies' 10-K annual reports, and combine this measure with data on internet and e-commerce technology used by Standard & Poor's 1,500 firms. The results provide empirical support of an inverse U-shaped relationship and the moderating role of financial constraints. Various robustness tests corroborate the findings. This study contributes to the literature streams of firm internationalisation and information systems research by highlighting the trade-offs faced by MNEs when they "go digital".