| Distance and its affect on internationalization has been a central theme of internationalization theories since the 1950s. Business models of this time were based on the physical investment in and establishment of firm infrastructure. Firm infrastructure could be located anywhere, but typically home country firms were observed to follow a “pattern” of expansion. Typically, internationalization theories predict the pattern of internationalization a firm will embark upon that is highly correlated with various conceptions of distance. These conceptions of distance include geographic (Carlsson: 1966, 1975), cultural (Wierdersheim-Paul: 1973), and psychic measures (Nordstrom and Vahlne: 1992).; The Internet and the World Wide Web, phenomena of the 1990s, were not foreseen or predicted by early internationalization theorists. The very nature of the Internet allows instantaneous internationalization once a Web page is activated. This new technology would seem to nullify existing internationalization propagation theories that are based on concepts of distance. However, the factors driving firms prior to the Internet to internationalize in a particular pattern may affect the internationalization patterns of today's Internet-based firms.; A sample of 102 American Internet firms is used to test the internationalization theories of Johanson and Vahlne (1977, 1990). A predicted pattern of internationalization is created using Johanson and Vahlne (1977). This predicted pattern of internationalization is then compared to the observed propagation pattern of 905 Internet firm internationalizations. The observed pattern of propagation is also compared to the pattern of instantaneous internationalization, which is the null hypothesis.; Analysis of the Internet firm internationalizations shows that classic internationalization theory, in terms of geographic, cultural, and psychic distance, accurately predicts the propagation pattern of Web Pages. However, classic internationalization theory does not accurately predict the internationalization pattern of real-world foreign direct investments (FDI) of American Internet firms. A similar dichotomy is observed in the analysis of board size and in the analysis of firm and board knowledge. These results suggest the presence of a “virtual” factor that affects Web Page internationalizations and FDIs, separately. |
