David overshadows Goliath: Specializing in generality for internationalization in the global mobile money industry

Abstract

Research Summary We investigate the emergence of a global industry based on digital innovation by studying how the international expansion of pioneering firms relates to their characteristics and strategies for capability development and deployment. Using detailed archival data on mobile money, we classify pioneers that internationalize based on whether they were multinational diversifying entrants, developed country startups, or developing country startups. Our quantitative evidence suggests developing country startups that internationalize have the highest impact on the industry through subsequent platform launches. Digging deeper into the business histories of each firm, we uncover why: these startups “specialize in generality” by developing and deploying “bundled knowledge” capital consisting of technology, problem solving and alliance management capabilities, thereby offsetting their physical capital scale and scope disadvantages relative to multinational diversifying entrants. Managerial Summary Our study demonstrates how pioneers in mobile money created and utilized capabilities for international expansion. We show that among pioneers who engaged in internationalization, developing country startups had a greater global footprint than both developed country startups and diversifying entrant multinationals, even though conventional wisdom might predict greater impact for the latter two types. We link such impact of developing country startups to their focus on developing “bundled knowledge” capital, consisting of technology, problem solving, and alliance management capabilities which they could leverage in multiple countries. Not only did these firms grow through collaboration, they created and democratized access to needed financial services worldwide.

Digital technologies and knowledge processes: new emerging strategies in international business. A systematic literature review

“…Two articles in this set (Mathews et al , 2016; Pergelova et al , 2019) explore the market growth strategies of SMEs, while a third one analyses the emergence of a global industry based on digital innovation, i.e. mobile money (Wormald et al , 2021).…”

“…The methodologies used are mainly qualitative through either single or multiple case studies. This approach is effective in the exploration of innovative strategies in the attempt to shed light on the impact of digital technology on the identification of new categories of knowledge (such as bundled or integrated knowledge – Wormald et al , 2021; van Bommel et al , 2021) and new process innovation strategies based on the exploitation of digital affordances – Bailey et al (2012), Abrell et al (2016), Jacobsen and Tan (2022). Nevertheless, additional studies could investigate the organizational impact of such process innovation, building on the insight that the interaction among artificial and human actors could lead to countereffects and undermine the innovation strategic outcomes, as suggested by Klimkeit and Reihlen (2022).…”

“…On a different level of analysis, Wormald et al (2021) study the emergence of a global industry based on digital innovation, i.e. mobile money, by investigating the process of international expansion of different kinds of pioneering firms, namely, multinationals diversifying entrants, developed countries start-ups or developing countries startups.…”

Renewing the resource‐based view: New contexts, new concepts, and new methods

“…On the one hand—as exemplified by the Giustiziero et al paper in this issue—the scale‐free nature of digital offerings and the resulting negligible marginal costs (Levinthal & Wu, 2010), combined with the global reach of digital markets (Wormald, Shah, Braguinsky, & Agarwal, 2022) and various types of network effects associated with many digital contexts (Loh & Kretschmer, 2023; Parker & Van Alstyne, 2005; Zhu & Iansiti, 2012), suggests that digitization may create an impetus for hyperscaling, as a small number of firms (or potentially just one firm) come to dominate the market. On the other hand, digitization is also associated with lower costs of experimentation as entry barriers related to fixed costs are lowered (Jin & McElheran, 2017; Waldfogel, 2018), low‐cost experimental techniques become available (Koning, Hasan, & Chatterji, 2022), and conventional knowledge constraints are overcome (Tajedin, Madhok, & Keyhani, 2019), as well as with improved access to detailed real‐time customer data, suggesting the potential for greater learning‐by‐doing (Chen, Wang, Cui, & Li, 2021) and the opportunity for small and start‐up firms to overcome their traditional disadvantages (Wormald, Agarwal, Braguinsky, & Shah, 2021) by targeting valuable niches in the market (Benner & Waldfogel, 2023; Dushnitsky, Piva, & Rossi‐Lamastra, 2022). More work is needed to understand the factors that moderate the balance between these two effects of digitization—the drive to scale and the drive to differentiate (Cennamo & Santalo, 2013; Ellison & Fudenberg, 2003; Panico & Cennamo, 2022)—not only to understand the conditions under which one tendency may dominate the other (Schilling, 2002; Simcoe & Watson, 2019), but also to study the process through which digital markets evolve (Khanagha, Ansari, Paroutis, & Oviedo, 2022) and how this process compares to more traditional evolutionary models (Nelson & Winter, 1982).…”

Pioneering digital platform ecosystems: The role of aligned capabilities and motives in shaping key choices and performance outcomes

“…Early work often explicitly assumed that markets for technology/ideas or markets for corporate control are absent in nascent industry stages (Gort & Klepper, 1982; Stigler, 1951; Williamson, 1975). However, recent work demonstrates all three markets may simultaneously exist even in the incubation and pretake‐off industry stages to show how pioneering firms, particularly startups, may capture value through alliances and seeking acquisitions (Moeen & Agarwal, 2017; Moeen & Mitchell, 2020; Wormald, Agarwal, Braguinsky, & Shah, 2021).…”