The internet as an alternative path to internationalization?

Purpose While the internet enjoys increasing interest regarding its potential to extend the global reach of firms, especially small and medium‐sized firms (SMEs), little work has been done on the viability of the internet as a new and effective path to internationalization. Specifically, it is unclear how the internet can successfully support export marketing. The purpose of this paper is to examine the drivers and performance outcomes of two patterns of internet use supporting export marketing: the internet as an alternative to a physical presence and the internet as a sales channel. Design/methodology/approach Data were collected from 115UK‐based SMEs involved in “active online internationalization”. Relationships are examined in a “soft‐modeling” partial least squares (PLS) analysis. Findings The findings suggest that online channel support positively enhances export performance for SMEs. Yet, the use of the internet as an alternative to a physical market presence does not lead to higher export performance. Specifically, born‐global firms that are relying too much on the internet are prone to fall into the “virtuality trap”. Entrepreneurial firms that use the internet as a sales channel can improve their overall performance, however. Research limitations/implications This paper provides some empirical evidence of the existence of the notion of the “virtuality trap”. The paper also shows that the internet can serve a valuable complementary role. Traditional exporters are likely to use the internet as a complement to, and thus to support, existing physical operations. Practical implications Managers should focus on relationship building and on‐site learning, instead of putting too much emphasis on the internet as a substitute for a physical market presence. Originality/value The authors develop a framework and explore previously untested relationships that suggest the internet may play a complementary role in firm internationalization.