Multinational Business in the Era of Global Digital Revolution

The article analyzes the manifold effects of digital revolution on the economic positions and strategies of multinational corporations. The author focuses first of all on the recent trends in international economic flows (trade in goods and services, capital flows) and shows that, despite their certain deceleration, the overall globalization trend has not stopped but just turned into digital format, with soaring cross-border data flows becoming the main driving force. Multinationals play a key role in leading the world economy into the new digital phase of globalization. This role is particularly evident when looking into the new fast-growing universe of the so-called digital MNCs, whose core activities are connected with internet-business in some way or another. The author argues that these digital natives represent a non-traditional approach to corporate internationalization, allowing them to grow foreign sales without corresponding expansion of foreign assets (and thus breaking well-observed correlation between the two parameters in classic multinationals). The success of extremely dynamic global expansion of digital MNCs is mainly due to the widespread use of platform-based business models. The author explores the main features of global digital platforms as specific forms of business networks. Though global ecosystems emerging within digital platforms look rather amorphous, in reality most of them have clear internal organization with transparent allocation of roles and strict rules, regulating access and behavior. The author suggests that under the growing platform economy it would be natural to reconsider the notion of international production that (in addition to covering production of foreign MNCs’ subsidiaries) should include the production at enterprises working within global platform ecosystems. In contrast to digital-born MNCs the “old” multinationals have to take serious efforts in order to succeed in digital transformation under the growing pressure of competition. The situation is complicated by simultaneous dramatic shifts in global competitive landscape, including digitally-enabled changes in customer behavior patterns and expectations, blurring borders between traditional industries and large-scale revenue redistribution in favor of digital leaders and consumers. In this environment the dynamic multinational incumbents are already on the way of digital transformation. Some of them have introduced significant digital innovations in their core business models, others decided to change their business completely, but most are pursuing some combination of both approaches.