Beyond connectivity: Artificial intelligence and the internationalisation of digital firms

Abstract

With the rapid development of artificial intelligence/machine learning technologies (AI/ML) it is now opportune to consider the potential for these technologies to create new strategies for internationalisation. In this paper we examine the implications of deploying AI technologies on the internationalisation process of firms. We show how firms can create digital interactions from which information about individual's revealed preferences can be imputed. The use of this information by a proprietary AI model, rather than using FDI designed to learn about the characteristics of country markets as proxies to predict the general behaviour of consumers located there, provides a new, country-agnostic way to enter foreign markets and adapt to differences among consumers based on segments of one. AI can, therefore, enable born-digital firms, and potentially other businesses where digitalisation can play a role, to build new kinds of competitive advantages based on data network effects. We illustrate these theoretical propositions with reference to value-creation activities of the short-video streaming born-digital TikTok.