With the advent of the Internet and other related computer technology, i-business firms have internationalised significantly in the last two decades. They have changed the way businesses operate and used the Internet to expand beyond national borders. With the emergence of the Internet, i-business firms may have fewer obstacles to internationalisation and expand into foreign markets at a fast pace. However, other researchers argue that distance is relevant to i-business firms due to unfamiliarity and uncertainty of international markets.
These considerations raise research questions motivating the study and therefore, the research proposes to explore how does distance affect internationalisation and how do market size and internet penetration rate as moderators affect the link between distance and internationalisation?
In the thesis, I examine the role of three dimensions of distance (i.e. cultural, administrative, and geographic) on one theme of internationalisation (i.e. location choice). In addition, I analyse the moderating role of market size and internet penetration rate on the relationship between three dimensions of distance and location choice. I use logistic regression analysis to determine the role of distance and the moderating role of market size and internet penetration rate.
Using a data set of 125 i-business firms in 2016 and 2017, I find that cultural and administrative distance are negatively related to the location choice of i-business firms, largely confirming previous studies. The results also suggest that market size and internet penetration rate positively moderate the relationship between two dimensions of distance (i.e. cultural and geographic) and the location choice of i-business firms.