The dual effects of digitalization on SMEs: export gains and learning losses

Longstanding debates persist about the impact of new technologies on firms, particularly as it relates to internationalization. Some scholars suggest that digitalization will enhance the benefits of export activity by facilitating connections with partners and customers. Others, however, suggest that digitalization will simply fail to live up to the hype—or perhaps even worse. This debate is especially relevant for SMEs given that export activity is the primary route to global markets for such firms. We propose that digitalization will exert dual effects on SMEs: on the “bright” side, larger investments in digital technologies will lead to greater export activity (i.e., higher export sales); on the “dark” side, however, digitalization-induced export activity will generate fewer learning opportunities from export partners (i.e., smaller productivity gains). The proposed hypotheses were tested and supported using detailed firm-level panel data from 20,133 Portuguese firms from 2010 to 2019. Additional analyses and case studies corroborate the proposed mechanisms and point to hybrid approaches as one possible way to balance these dual effects of digitalization. Taken together, the findings shed new light on the debate about the role of digitalization in internationalization efforts.