Abstract
The international expansion of digital platforms presents unique challenges and research opportunities within international business and management. Unlike traditional multinational enterprises, digital platforms can scale rapidly by leveraging network effects and digital infrastructure to coordinate ecosystem participants rather than relying on physical assets or incremental foreign direct investment. Their disruptive nature challenges existing regulatory frameworks, reshapes competitive dynamics, and redefines organizational structures. This article examines the internationalization of digital platforms by analyzing their competitive strategies, governance mechanisms, and non-market strategies. Paying special attention to the strategic implications of the distinction between broker and provider platforms, the article also highlights critical gaps in the literature and proposes avenues for future research, particularly regarding regulatory adaptation, decentralized governance, and the evolving role of digital ecosystems in multinational strategy.
Keywords
Introduction
Digital platforms are online technological infrastructures that connect users who might otherwise struggle to reach one another, facilitating the exchange of products, services, and information (Cusumano et al., 2019; García-Canal et al., 2024; Guillén, 2021). These platforms can be classified as one-sided or multisided (Cennamo, 2021; Cusumano et al., 2019; Guillén, 2021; Hagiu & Wright, 2015b). One-sided platforms serve users within a single category, such as a telephone network, whereas multisided platforms enable interactions among distinct user groups, such as buyers and sellers. By broadening the scope of exchange, multisided platforms amplify network effects, which supports rapid scalability and market dominance. A central value of multisided platforms lies in their ability to connect otherwise fragmented user groups and facilitate transactions that would be difficult or inefficient through conventional market mechanisms. As such, their rise has been transformative (Parker et al., 2016), disrupting entire industries, achieving exponential growth and unprecedented valuations, and raising complex challenges for policymakers and regulators. In doing so, digital platforms are redefining core concepts in business strategy, competition, and governance.
An intriguing aspect of digital platforms is that they have not necessarily introduced entirely new business models. Rather, they have digitized and optimized traditional forms of exchange that already existed, albeit in less efficient ways (Hennart, 2019). By leveraging digital infrastructure, platforms reduce transaction frictions, enhance search and matching processes, and help build trust among participants (Monaghan et al., 2020; Parente et al., 2018). Because network effects are central to their growth, platforms prioritize rapid expansion to achieve critical mass, gain competitive advantage, and solidify their ecosystem positions (Guillén, 2021; Stallkamp & Schotter, 2021). Unlike traditional firms, whose global growth often depends on tangible assets or export-driven strategies, digital platforms thrive by expanding digital reach and coordinating interactions at scale (García-Canal et al., 2024; Knee, 2017).
Digital platforms challenge traditional theories of the multinational enterprise (MNE) by following internationalization paths that differ fundamentally from those of conventional firms (Banalieva & Dhanaraj, 2019; Nambisan, 2020). Whereas MNEs typically internationalize through incremental foreign direct investment (FDI) and subsidiary networks (Buckley & Casson, 1976; Hennart, 1982; Hymer, 1960; Rugman & Verbeke, 2004), digital platforms scale across borders by extending their digital infrastructure—such as algorithms, interfaces, and cloud-based systems—without the need for physical replication or heavy local presence. This enables them to grow internationally at exceptional speed and efficiency. However, a key nuance in platform internationalization lies in the role the platform plays in facilitating transactions (Hagiu & Wright, 2015a; Hennart, 2019). In some business models, platforms act as brokers or facilitators, merely connecting buyers and sellers without assuming responsibility for the transaction itself. In other cases, platforms operate as providers or resellers, taking an active role by managing logistics, offering customer support, or even owning inventory. These differing roles entail distinct levels of commitment: broker platforms can scale globally with relatively light infrastructure, while provider platforms often require substantial local investment, regulatory compliance, and adaptation. This distinction critically shapes internationalization strategies, influencing entry modes, resource allocation, and governance challenges.
While some elements of platform internationalization mirror patterns seen in born-global firms (Oviatt & McDougall, 1994) or emerging-market multinationals (Guillén & García-Canal, 2009), their business models and growth trajectories reflect novel forms of global engagement. Rather than relying on asset replication or export-led expansion, platforms internationalize by scaling digital systems, orchestrating global ecosystems, and following an expansion path shaped by the interaction between the scope of network effects and competitive rivalry. These dynamics push the boundaries of existing international business theory and call for a reexamination of assumptions regarding the structure and behavior of global firms.
Despite a growing body of research on platform internationalization (see Logue et al., 2025; Yang et al., 2025 for recent reviews), important gaps remain. First, the broker–provider distinction has not been systematically examined in the context of international expansion, despite its major implications for investment, risk, and regulatory exposure. Second, the competitive dynamics of platforms in international markets—especially those driven by global network effects and the ease of scaling digital infrastructure—have not been fully explored. Third, the non-market strategies that platforms adopt in response to regulatory complexity and institutional disruption remain understudied in cross-border contexts. In addition, recent advances in artificial intelligence (AI) are further accelerating these firms’ ability to manage data flows, optimize transactions, and orchestrate global value creation (Gregory et al., 2021), thereby magnifying their impact on markets and institutions.
To synthesize current insights and chart future research directions on these topics, this article examines how digital platforms are reshaping global business across three key dimensions: international strategy, organizational structure, and non-market engagement. Before addressing each of these areas, the next section offers a conceptual framework for understanding digital platforms, highlights the importance of the broker–provider distinction, and compares platforms to both traditional MNEs and non-conventional international firms, including born-globals and emerging-market MNEs. Given their central role in the digital economy, the analysis focuses specifically on multisided platforms, which present distinct strategic, organizational, and regulatory challenges in the context of international expansion.
Distinctive Features of the Internationalization of Digital Platforms
By acting as market makers and integrators of fragmented or nascent markets, digital platforms evolve into orchestrators of ecosystems, enabling the creation of internal markets within their user communities that would not otherwise exist (Banalieva & Dhanaraj, 2019; Luo, 2022b). Their international expansion is a natural extension of this model, driven by the scalability of their digital infrastructure, which facilitates ecosystem growth and seamless cross-border transactions (Giustiziero et al., 2023; Monaghan et al., 2020). Since this infrastructure transcends national borders, platforms can rapidly enter foreign markets with minimal investment by leveraging existing digital assets (Parente et al., 2018). While this ease of internationalization offers clear strategic advantages, the synergies and challenges associated with cross-border expansion ultimately depend on two factors: the geographic scope of network effects and the nature of the platform’s role in facilitating transactions. In the following sections, we contribute to the conceptualization of digital platform internationalization by analyzing these two critical drivers and by comparing digital platforms with both traditional and non-conventional forms of MNEs.
Network Effects and Platform’s Role in Transactions as Drivers of Digital Platform Internationalization
Digital platforms are a heterogeneous group, and a key distinction lies in their functional role as either brokers or providers (Hagiu & Wright, 2015a; Hennart, 2019). Brokers—such as online marketplaces and social networks—connect individuals or firms to facilitate transactions or social interactions. They typically generate revenue through fees or targeted advertisements but do not set prices or directly participate in transactions, instead serving as neutral intermediaries (Curchod et al., 2020; Hagiu & Wright, 2015a; Hennart, 2019). In contrast, providers deliver physical or digital goods and services directly to users, acting as resellers, which requires them to develop or source products and to establish the necessary delivery infrastructure. Some companies, such as Amazon, operate as both brokers and providers, but they are classified as providers when their core operations involve local infrastructure for delivering physical goods.
This distinction significantly influences how each type of platform experiences the “liability of foreignness” (Zaheer, 1995), which arises from cultural, institutional, and psychic differences that necessitate adaptation to local environments (Berry et al., 2010; Hymer, 1960; Xu & Shenkar, 2002). Brokers are generally less affected by this liability, as user-generated content ensures local adaptation naturally, though they still face challenges related to regulations, language, and payment methods. Moreover, they may encounter the “liability of outsidership” due to a lack of an established local network of users and complementors (Brouthers et al., 2016; Johanson & Vahlne, 2009). Providers, for their part, face greater hurdles as they must tailor their offerings to local consumer preferences and invest in logistics and infrastructure to expand market reach.
Another key implication of this distinction is that broker business models are easier to imitate. Research on organizational imitation (Posen & Martignoni, 2018; Rivkin, 2000) suggests that simpler strategies are more readily replicated. Competitors can often copy a broker’s connective functions without needing proprietary content. Providers, by contrast, must develop a robust delivery infrastructure and unique offerings, making their models harder to replicate. While local adaptation allows regional competitors to emerge, the integrated nature of the provider model creates stronger barriers to imitation (Hennart, 2019).
Network effects are the second driver of digital platform internationalization. Katz and Shapiro (1994) define the “network effect” as the phenomenon where a platform gains more value and attractiveness with each new user, benefiting both current and prospective users. In multisided platforms this effect can be direct, when the value increases among users on the same side, or indirect, when it enhances the experience for users on different sides of the platform. As a result, platforms must rapidly scale across all user groups to achieve critical mass before competitors do (Eisenmann, 2006). Network effects manifest at different levels: local, national, regional, or global (Guillén, 2021; Knee, 2017; Nambisan, 2020; Stallkamp & Schotter, 2021). Local network effects rely on user proximity, as seen in ride-hailing services where demand and supply must be aligned within the same geographic area. National network effects arise from shared cultural, economic, political, and social institutions within a country, for example, labor regulations or content licensing rules that influence employment practices and streaming services. Regional network effects extend across broader geographic areas and are common in industries like international tourism, where regional integration and geographic specificity encourage intra-regional exchanges. Global network effects occur when geographic distance is largely irrelevant, such as in file sharing or video conferencing platforms. However, a true global scale is often difficult to achieve due to regulatory fragmentation, logistical constraints, and institutional complexity. For instance, eBay’s efforts to facilitate seamless cross-border commerce continue to be challenged by shipping costs, payment systems, and legal restrictions. Table 1 categorizes digital platforms into eight distinct types based on the broker-provider dichotomy and the scope of network effects, illustrating each cell with examples drawn from different regions.
Types of Digital Platforms and Geographical Scope of Network Effects.
While network effects drive digital platform growth, they differ from those in platform-based physical devices. Lower switching costs and variations in platform positioning often prevent a pure “winner-takes-all” effect in digital platforms (Cennamo, 2021; Cullen & Farronato, 2021). In addition, digital platforms can pursue global expansion even when their network effects are limited in scope by leveraging digital infrastructure and accumulated experience (Knee, 2017; Stallkamp et al., 2023; Stallkamp & Schotter, 2021). Consequently, not all platforms internationalize at the same pace or with the same intensity (García-Canal et al., 2024; Stallkamp et al., 2022).
Digital Platforms Versus Traditional and Non-Conventional Multinationals
Unlike digital platforms, traditional firms do not have internationalization embedded in their core models, as not all firms are equally suited for global expansion (Buckley & Casson, 1976; Hennart, 1982; Hymer, 1960; Rugman & Verbeke, 2004). While digital platforms can scale rapidly across borders to maximize network effects, traditional firms take a more cautious approach, expanding based on market opportunities, risk assessments, and incremental strategies (Johanson & Vahlne, 1977). Their higher investment requirements—whether through FDIs, joint ventures, greenfield projects, or acquisitions—further slow their internationalization compared to digital platforms (Monaghan et al., 2020). Moreover, their value creation models differ: digital platforms grow by aggregating users (Brouthers et al., 2016), whereas traditional multinational firms expand by replicating their production and sales routines across foreign subsidiaries (Kogut & Zander, 1993). Consequently, digital platforms follow aggressive, technology-driven global strategies, while traditional firms adopt a more measured and gradual approach.
However, digital platforms are not the first to challenge the traditional approach by pursuing accelerated expansion paths. This strategy was previously adopted by emerging-market multinationals and born-global firms. Born-globals tend to internationalize at an early stage, often bypassing domestic market consolidation and overcoming the dual liabilities of newness (Stinchcombe, 1965) and foreignness (Hymer, 1960) by leveraging innovation and network-based advantages (Oviatt & McDougall, 1994). They thrive on adaptability, niche strategies, and resource recombination (Knight & Cavusgil, 2004), a process accelerated by globalization and digital technologies (Rialp et al., 2005). Similarly, emerging-market multinationals expand aggressively to adapt quickly to global competition, relying on external resources through alliances, joint ventures, and acquisitions (Guillén & García-Canal, 2009). Following a “dual expansion path,” they enter developed markets to upgrade resources while also expanding into less developed markets to exploit opportunities, leveraging their experience in weak institutional environments (Cuervo-Cazurra & Genc, 2008; Guillén & García-Canal, 2009). Their lack of legacy implantation prior to globalization gives them flexibility, enhancing their ability to navigate uncertainty and reconfigure strategies as needed (Mathews, 2006).
Interestingly, digital platforms share characteristics with both born-globals and emerging-market multinationals. Like born-globals, they usually expand before consolidating their domestic market, often pursuing niche strategies (Birkinshaw, 2022; Cennamo, 2021). In fact, many digital platforms exhibit characteristics commonly associated with born-globals, although not all born-global firms operate as digital platforms. Similar to emerging-market multinationals, digital platforms do not follow a simple distance-based approach but are instead guided, at least in part, by the potential for experiential learning in new environments (Shaheer et al., 2020). However, unlike those firms, the primary driver of their internationalization is typically the scope of network effects, which shapes where and how platforms expand (Guillén, 2021; Knee, 2017; Stallkamp & Schotter, 2021). Digital platforms use acquisitions to upgrade technologies and scale their market presence, a strategy commonly employed by emerging-market multinationals (Guillén & García-Canal, 2013). In addition, they frequently acquire businesses to expand market share, integrate complementary services, or obtain new technologies (Jia et al., 2018). Their internationalization also mirrors aspects of traditional multinationals, as they engage in FDI to establish local infrastructure when necessary (Stallkamp et al., 2023) and strategically optimize their international operations, for instance, by locating back-office functions in low-cost countries (Lehdonvirta et al., 2019). Moreover, not all digital platforms pursue rapid international expansion. While some scale quickly across borders, others adopt a more gradual approach, target a limited number of strategic markets, or are even created with the specific purpose of cloning an existing business model within a single country (García-Canal et al., 2024; Stallkamp et al., 2022). Table 2 summarizes the key characteristics of digital platforms in comparison to born-global firms, emerging-market multinationals, and traditional MNEs.
Distinctive Features of Digital Platforms and Other Multinationals.
In sum, digital platforms defy easy categorization. Their rise and international expansion can, to some extent, be explained using existing theories of MNEs, as they share certain characteristics with other types of international firms. However, the full strategic and structural implications of their global growth remain unclear—particularly given the emergence of new competitive dynamics (García-Canal et al., 2024), the specific political and regulatory risks they face (Luo, 2022a), and the impact of technological advances such as AI-based algorithms (Gregory et al., 2021). The following sections build on this conceptual foundation to examine how digital platforms formulate international strategies, structure their global operations, and navigate non-market interactions with governments and regulators. Particular attention is given to the differences between broker and provider platforms, whose distinctive internationalization features are summarized in Table 3.
Differences in the Internationalization of Broker vs. Provider Platforms Across Three Key Dimensions.
The International Strategy of Digital Platforms: Rethinking Globalization Pathways
This section focuses on the global strategies adopted by digital platforms. Existing research on their international expansion highlights two distinctive features that set them apart from traditional MNEs: the accelerated pace at which they can expand abroad by leveraging their digital infrastructure and their unconventional internationalization paths. In what follows, we examine these two dimensions in detail, paying also specific attention to how the strategic behavior of platforms may vary depending on whether they operate as brokers or providers.
The Speed of International Expansion
The digital nature of the infrastructure of digital platforms creates unique competitive dynamics, where imitation, first-mover advantages, and the scope of network effects influence decisions regarding when, where, and how quickly to expand internationally (García-Canal et al., 2024). First movers face a strategic dilemma: if they expand too gradually (Johanson & Vahlne, 1977), they risk allowing foreign imitators to replicate their business model in key foreign markets; if they internationalize too rapidly (Guillén & García-Canal, 2009; Weerawardena et al., 2007), they may struggle to defend their home market against fast-following competitors. Imitators also can introduce upgraded versions of the business model as illustrated by the case of TikTok and its AI-based algorithm (Ma & Hu, 2021), introducing more complexity to the internationalization decision on this issue.
Beyond the technological ease of expansion, the primary driver of internationalization speed for digital platforms is the need to capitalize on network effects and economies of scale (Guillén, 2021; Stallkamp & Schotter, 2021). Platforms that benefit from regional or global network effects must reach critical mass across multiple markets to prevent competitors from achieving a dominant position first (Knee, 2017). In contrast, when network effects are localized, platforms can remain viable and profitable with a more limited geographical footprint, provided they achieve a minimum threshold for economies of scale (Stallkamp & Schotter, 2021). For instance, in ride-hailing and food delivery—industries where local network effects predominate—the benefits of a larger user base are confined to specific locations. Consequently, platforms in these sectors tend to adopt multilocal or multidomestic strategies rather than a fully global approach (Knee, 2017; Stallkamp & Schotter, 2021).
Regardless of the type of network effects, rapid expansion is crucial to preempt competitors from replicating successful business models, leading to oligopolistic reactions and intensified competition. Platforms with global network effects must secure a critical mass of users worldwide before rivals do, while those operating under local network effects must act swiftly to establish market dominance in each location. This dynamic makes the international expansion of digital platforms an intriguing research area for scholars in international business strategy and competitive dynamics. While previous studies have analyzed this issue through simulation models and just for brokerage platforms (e.g., García-Canal et al., 2024), the growing availability of empirical data across industries and platform types provides valuable opportunities for refining our understanding of these dynamics. As such, digital platforms offer a compelling setting for testing and extending existing theories of international competitive strategy (see Yao et al., 2024, for a review), particularly in relation to the trade-offs associated with expansion speed, network effects, and competitive imitation.
The Sequence of Market Entry
The sequence of market entry is another well-established topic in international business (Johanson & Vahlne, 1977; Vernon, 1979). Differences in values and norms significantly influence international expansion decisions (Berry et al., 2010; Kogut & Singh, 1988). As cultural distance increases, platforms must decide whether to standardize their offerings or adapt them to local market conditions. Given these challenges, firms typically prioritize foreign markets that are economically, culturally, or politically similar to their home country. This pattern is particularly evident when network effects are local or national, as platforms must tailor their offerings to each market’s unique characteristics, including user preferences, cultural norms, and regulatory frameworks (Guillén, 2021; Knee, 2017; Stallkamp & Schotter, 2021). Consequently, in the case of national network effects, platforms often expand first into the most similar markets, where adaptation costs are lower and the probability of achieving critical mass is higher.
However, when network effects span multiple countries—or, more importantly, when they are global—geographical and cultural proximity become less restrictive. Other factors, such as market influence and user behavior, play a more significant role in shaping expansion strategies. Chen et al. (2019) found that the prestige and technological sophistication of initial target markets influence global expansion patterns, as prospective users in new markets often observe adoption trends in leading economies. Similarly, Shaheer et al. (2020) emphasize that platforms derive crucial learning benefits from interactions with new users, making the composition of early-adopting markets a key factor in long-term success.
Brouthers et al. (2016) suggest that firms can leverage their existing user base to facilitate entry into foreign markets, particularly in locations where current ecosystem members have direct connections with potential users. This implies that a platform’s learning curve, brand reputation, and network effects do not evolve independently of its expansion path. Instead, these competitive advantages coevolve with the platform’s trajectory, making the internationalization process highly path-dependent.
This raises interesting avenues for further research, particularly in comparing the optimal expansion trajectories of first movers versus late entrants. The dynamics of market sequencing may be especially relevant for firms expanding from emerging economies, as they may follow different strategic pathways compared to platforms originating from established digital hubs. Understanding these variations could provide deeper insights into the interplay between learning, reputation-building, and network externalities in global platform competition.
The Role of Distance in the Expansion of Brokers and Providers
The relevance of distance-related factors varies depending on whether a platform operates as a broker or a provider. While all digital platforms leverage their digital infrastructure to scale internationally (Monaghan et al., 2020), providers that require local adaptation tend to follow a distance-based expansion strategy to minimize costs and maximize success (Shaheer et al., 2020). In contrast, brokers—platforms that facilitate transactions without directly providing goods or services—face fewer local adaptation challenges and focus on filling gaps in their international networks rather than strictly adhering to a distance-based approach.
For brokers, cultural preferences are less constraining since they do not directly create content, products, or services. However, they must still account for variations in user behavior across different markets. Providers, by contrast, must tailor their digital content and service offerings to reflect the cultural and socioeconomic characteristics of target markets (Shaheer et al., 2020).
This distinction is evident in industries such as music streaming and online dating. For instance, Spotify must curate its music catalog to align with local user preferences, requiring significant adaptation for each market. Failure to do so can lead to competitive disadvantages, as seen in India, where the local platform Gaana outperformed Spotify. In contrast, Tinder primarily adjusts language and safety features to comply with regulations, while its core matchmaking function remains largely unchanged across markets, allowing for a more standardized approach to internationalization.
One key implication is that providers’ content, products, and services tend to lose appeal as cultural distance increases, mirroring the challenges faced by traditional firms. In response, digital platforms may adopt one of two extreme strategies, or a hybrid approach. One strategy is to minimize cultural adaptation, prioritizing rapid growth in markets where global network effects dominate. The other involves tailoring offerings to each market, requiring more resources and time but increasing the likelihood of local success. Additional research could help clarify the conditions under which each strategy is most effective, providing deeper insights into the expansion strategies of digital platforms.
Strategy Implementation and Organization in Digital Platforms: Managing Decentralized Ecosystems
Organizational choices in the international expansion of digital platforms entail complex strategic decisions that differ markedly from those of traditional MNEs. The extent of externalization, entry mode choices, and governance arrangements all depend on the nature of the platform’s network effects and the need for local adaptation. In addition, the distinction between brokers and providers influences the degree of localization and partnership requirements in international expansion. As digital platforms continue to reshape global business landscapes, understanding these organizational and strategic dynamics remains a critical area for research and practice.
Networking and International Expansion of Digital Platforms
The organizational decisions of digital platforms are driven by the need to coordinate large, decentralized ecosystems of users, workers, developers, and third-party sellers. In contrast to traditional firms, which tend to prioritize direct control over their operations, digital platforms depend on external actors to leverage two-sided network effects and engage a broad base of complementors (Miric & Jeppesen, 2020). This necessary reliance on external participants is a defining characteristic of platform-based organizations. While it introduces greater complexity, it is made possible by digital technologies that enable large-scale coordination and monitoring (Hennart, 2019). This technologically enabled transparency lies at the core of platform-based business models, allowing platforms to operate as orchestrators within vast, interactive user communities. As such, digital platforms offer a fertile ground for examining networks as organizational forms.
While digitalization inherently facilitates global reach, internationalized digital platforms derive additional advantages from their network-based structure. As Nambisan et al. (2019) emphasize, these platforms not only open new avenues for international expansion but also transform how firms acquire knowledge, build relationships, and generate value for users across borders. They enable extensive forms of arbitrage that benefit both the platform and its participants. For instance, tax arbitrage is a well-documented advantage (Ting & Gray, 2019), while economic arbitrage allows platforms to optimize global value chains by reallocating tasks and resources internationally (Alcácer et al., 2016). Moreover, microproviders on digital platforms are often compensated according to local wage levels, yet quality signals allow the most capable to command higher earnings (Lehdonvirta et al., 2019). These dynamics underscore the need for a decentralized approach to managing foreign operations. Rather than relying on rigid control mechanisms, successful international platform strategies often center on enabling value-creation initiatives across dispersed user networks (Zeng et al., 2019). This is hardly surprising, as governance in network-based organizations typically prioritizes incentive alignment over hierarchical oversight.
Chen et al. (2022) describe the network structure of digital platforms as a hybrid organizational form that combines market incentives with hierarchical control, increasingly mediated by technology-driven governance mechanisms such as algorithms and automated decision-making. Recent technological advances, including smart contracts and blockchain-based systems, further enable decentralized governance by automating decisions and enforcing rules without human intervention (Hanisch et al., 2023; Lumineau et al., 2021). These innovations challenge traditional assumptions about firm boundaries and control, adding an additional twist to the ongoing shift from vertically integrated hierarchies to modular, ecosystem-based coordination. This transformation remains in flux, propelled by the rapid evolution of digital technologies. As digital platforms illustrate, such developments not only redefine internationalization strategies but also reshape the fundamental architecture of modern organizations. Future research should explore how decentralized governance mechanisms can be effectively implemented and scaled globally, and how they alter power dynamics, coordination challenges, and strategic control in international business.
Entry Modes and Expansion Strategies
For digital platforms, entry mode decisions are closely linked to the need to coordinate decentralized ecosystems. The extent of geographic decentralization depends on the nature of network effects in each market, which shapes the necessity for local partners. When local network effects dominate, platforms tend to rely more heavily on external partners to accelerate market reach, as local users drive further adoption (Stallkamp & Schotter, 2021) and the firm must overcome the liability of outsidership (Brouthers et al., 2016). Conversely, when global network effects prevail, platforms can expand with limited reliance on local actors, reducing the need for partnerships to address outsidership liabilities and making full control over foreign operations a more viable strategy (Brouthers et al., 2016).
Like traditional firms, digital platforms frequently use acquisitions to strengthen their ecosystems by gaining access to strategic assets, capabilities, or user bases (Gautier & Lamesch, 2021). Acquisitions also facilitate “platform envelopment,” where platforms integrate complementary technologies to enhance their competitive position (Eisenmann et al., 2011). For instance, Airbnb has acquired companies specializing in discovery platforms, social networking, review aggregation, trip planning, digital payments, and software development to reinforce its global presence and ecosystem functionality. When network effects operate regionally or globally, the impact of acquisitions extends beyond the target market, as adding user bases in one country enhances the platform’s overall value (Nambisan et al., 2019).
Acquisitions play a crucial role when digital platforms face strong incumbents in foreign markets. The broader the geographical scope of network effects, the greater the incentive to acquire competitors to accelerate user base growth and prevent rivals from reaching critical mass (Fuentelsaz et al., 2015; Shy, 2001). When a competing platform already dominates a market, acquisitions can serve as a catch-up strategy, enabling the acquiring firm to challenge the market leader’s position (Rietveld & Schilling, 2020).
International acquisitions can thus serve dual purposes for digital platforms: on the one hand, they help fill gaps in the platform’s global network by establishing or strengthening the platform’s presence in untapped markets; on the other hand, they enable the acquisition of complementary businesses and adjacent capabilities that broaden the platform’s service offering (i.e., platform envelopment). The interaction between these two types of acquisitions and the geographic scope of network effects warrants further attention, as the strategic logic behind acquisitions may vary depending on whether local or global network effects dominate in a given market. Understanding how platforms balance these motives can shed light on the evolving nature of their international expansion strategies.
In addition, a particularly relevant research topic is killer acquisitions, in which the acquired platform is discontinued, and its users are migrated to the bidder’s platform (Cunningham et al., 2021; Katz, 2021). Understanding when such moves enhance efficiency or, conversely, serve an anticompetitive purpose remains an important research question that warrants further investigation.
Managing Headquarters–Subsidiary Relationships
Once digital platforms establish a presence in foreign markets, managing the relationship between headquarters (HQ) and subsidiaries becomes a key challenge (Bartlett & Ghoshal, 1989; Kostova & Roth, 2003; Prahalad & Doz, 1987). While traditional multinational corporations have historically relied on strong hierarchical control, digital platforms represent a novel organizational form by operating as decentralized ecosystems from the outset. This demands governance structures that can effectively balance global coordination with local responsiveness (Zeng, 2022). Although contemporary multinationals are increasingly adopting more network-like organizational forms (Ghoshal & Bartlett, 1990), digital platforms take this logic further by embedding decentralization into their core architecture. What sets platforms apart is their deep reliance on externalization (Hennart, 2019), which requires them to govern not just internal subsidiaries but a wide array of external stakeholders. To do so, they employ a distinctive mix of algorithmic management, contractual arrangements, and incentive mechanisms. These tools allow them to align decentralized actors while retaining strategic control over the platform’s direction.
However, decentralization does not imply that subsidiaries operate with full autonomy. Platforms must implement knowledge-sharing mechanisms, enforce governance standards, and ensure coordinated strategic actions across their ecosystem (Alcácer et al., 2016; Nambisan et al., 2019). For instance, Netflix’s “local-for-global” content strategy involves producing content in many different locations but distributing it globally based on demand patterns (Brennan, 2018). In addition, Netflix forms alliances with regional telecom providers to expand its subscriber base while maintaining centralized oversight of strategic decisions. More broadly, as the geographical reach of network effects expands, platforms must ensure that their dispersed activities align with their competitive strategies, , particularly in such as preventing competitors from reaching critical mass and in leveraging economies of scale (Hennart, 2019; Knee, 2017; Stallkamp & Schotter, 2021). This is an area in which the established literature needs to evolve to accommodate the peculiarities of digital platforms.
Differences Between Brokers and Providers in Governance Systems
Despite not being systematically studied, the distinction between brokers and providers has important implications for the governance systems of digital platforms. Governance, in this context, refers to the mechanisms and structures through which platforms coordinate activities, exercise control, and ensure compliance within their ecosystems, whether through contracts, algorithms, strategic partnerships, or user-generated norms.
Provider platforms, which deliver physical or digital goods and services directly to users, typically require more complex governance systems. Because they must adapt offerings to local conditions and ensure service quality, these platforms often depend on formal partnerships and contractual oversight. For instance, Netflix collaborates with local telecom and cable operators to increase market reach, while also managing licensing agreements and producing localized content across different regions (Brennan, 2018). Similarly, Amazon coordinates with third-party logistics providers to manage last-mile delivery, using digital tracking and contractual enforcement mechanisms to uphold quality standards (Janjevic & Winkenbach, 2020). These activities demand robust coordination and monitoring capabilities to align incentives and control operational execution (Helfat & Raubitschek, 2018; J. Li et al., 2019).
Broker platforms, in contrast, act primarily as intermediaries that facilitate interactions between third parties, without directly delivering products or services. Their governance challenges are different. Because they are less dependent on local infrastructure or partnerships, brokers often expand with minimal need for formal adaptation. For example, social media platforms, online marketplaces, and dating apps rely more on user participation than on structured partnerships (Javalgi et al., 2004). Yet, brokers are not free from governance concerns. To ensure trust and functionality, they must implement internal rules and systems such as reputation mechanisms, content moderation protocols, and dispute resolution procedures. In addition, they must comply with jurisdiction-specific regulations, which may require adjustments to terms of service, payment systems, or data governance.
In sum, while both types of platforms require governance mechanisms to manage risk, ensure reliability, and foster trust, the nature and intensity of these systems vary significantly. Providers often depend on more formal governance structures to control their delivery networks, whereas brokers rely more on platform-level rules, digital enforcement tools, and user-based trust systems. These differences shape not only how platforms operate across borders but also how they adapt to institutional environments and scale globally. Further empirical work is needed to deepen our understanding of how governance systems are designed and evolve in different types of digital platforms.
The Non-Market Strategy of Digital Platforms: Navigating Institutional Complexity
Although traditional multinational firms engage in non-market strategies both at home and abroad to secure favorable operating conditions (Boddewyn & Brewer, 1994), digital platforms often face an even greater need to devote substantial resources and attention to the non-market dimension of their strategy, not only during international expansion but also within their domestic markets. This is largely because they tend to disrupt existing industries and challenge established regulatory frameworks at both national and international levels (Cusumano et al., 2019; Parker et al., 2016). As a result, digital platforms frequently encounter resistance from incumbents and regulators at home, prompting proactive engagement through lobbying, legal adaptation, and coalition building. As they expand globally, these challenges multiply, requiring sophisticated and adaptive non-market strategies to navigate diverse regulatory regimes and political environments (Curchod et al., 2020).
Disruption and Regulatory Challenges
The complexity of managing institutional challenges becomes even more pronounced when platforms disrupt highly regulated sectors such as transportation, finance, or energy, where compliance with local laws requires significant managerial attention. In addition, platforms must address national security concerns and citizen privacy issues, which are subject to strict regulations in certain regions. To navigate these challenges, many platforms develop non-market strategies tailored to local regulatory frameworks (Curchod et al., 2020; Luo, 2022a). Adapting to local regulations demands substantial managerial effort, particularly for platforms seeking to disrupt tightly regulated industries. The case of Uber is paradigmatic in this regard. The company has repeatedly challenged city, state, and national legislation concerning the legality of the services offered through its platform, as well as the labor rights of its drivers, often taking these disputes to court (Collier et al., 2018).
Not all platforms face the same regulatory burdens. Brokers, such as online marketplaces and social networks, primarily facilitate interactions between users without directly engaging in pricing, transactions, or service fulfillment (Curchod et al., 2020; Hagiu & Wright, 2015a; Hennart, 2019). This model allows them to avoid many of the regulatory requirements that apply to businesses providing goods or services directly. For example, eBay’s experience in France illustrates that brokers typically face fewer legal constraints than firms operating in heavily regulated industries, as they position themselves as neutral facilitators to minimize regulatory exposure (Curchod et al., 2020). However, even brokers must contend with non-market challenges such as content moderation, consumer protection, and data security, all of which shape their regulatory exposure and social legitimacy, as illustrated by TikTok’s struggles with data sovereignty (Ma & Hu, 2021).
The distinction between brokers and service providers is often blurred, leading to complex legal challenges. Uber’s ongoing battles over labor classification exemplify the intense regulatory scrutiny faced by platforms operating in highly regulated sectors (Collier et al., 2018). Gig economy platforms such as Uber and Deliveroo have been at the center of legal disputes over worker classification and fair wages, prompting them to adjust their labor policies across different markets. A particularly illustrative case is Spain’s “Rider Law,” passed in 2021, which required delivery platforms to classify couriers as employees rather than independent contractors. The responses from different platforms varied significantly. Deliveroo exited the Spanish market in November 2021, citing the country’s relatively small contribution to its overall revenue and a strategic decision to focus on other regions. 1 Glovo, on the other hand, initially continued to operate with self-employed couriers, leading to fines and legal proceedings. By December 2024, however, the company announced a shift in its labor model, committing to hiring couriers as employees in compliance with the law. 2 Interestingly, the welfare effects of this regulation have been found to be negative, raising concerns about its broader economic implications (Dolado et al., 2025).
The different reactions of platforms to regulatory changes, such as Spain’s “Rider Law,” provide a valuable research opportunity. Examining how firms respond to such regulations can shed light on both competitive dynamics within a country and their broader global strategies. Future research could examine how platforms navigate the tension between regulatory compliance and the pursuit of competitive advantage, offering insights into the evolving interplay between business strategy and institutional environments.
Another promising avenue for future research could explore the coevolution of non-market capabilities and platform internationalization. As digital platforms disrupt existing markets, they often need to invest considerable resources domestically to address regulatory hurdles. Uber is a paradigmatic example: having challenged regulations at home has provided these companies with political capabilities (Collier et al., 2018; Gleiss et al., 2023) that can be leveraged to face regulatory challenges abroad. However, the challenges and outcomes of these regulatory confrontations remain uncertain and context-dependent. In addition, platforms can vary significantly in their non-market capabilities. For instance, as Jean and Tan (2019) argue, platforms from emerging economies that possess institutional capabilities—the ability to operate in environments characterized by weak institutions—are better equipped to increase their international performance, counteracting the negative effects of weak institutions or a lack of reputation. This suggests that, similar to multinational firms from emerging markets (Guillén & García-Canal, 2009), platforms originating from these regions benefit from possessing institutional capabilities. An interesting research question would be comparing the non-market capabilities of digital platforms originated from emerging countries with those platforms from developed countries that have challenged their home regulators.
Antitrust and Social Responsibility Issues
Compliance with labor regulations is not the only challenge platforms face. Antitrust concerns have emerged as a critical issue, with regulators increasingly scrutinizing large digital platforms for potential market dominance, as seen in investigations into Amazon’s competitive practices (Hovenkamp, 2024). In a context of regulatory uncertainty caused by disruption, platforms often assume the role of regulators within the markets they intermediate (Gleiss et al., 2023). Digital platforms have amassed significant power by leveraging network effects, controlling information, and dictating market conditions within their ecosystems. This has created a significant power asymmetry between platforms and other participants, such as gig workers, third-party sellers, and app developers, who have minimal influence over platform governance and decision-making (Rahman et al., 2024). The existence of these claims at the international level also introduces broader concerns regarding regulatory fragmentation, global enforcement, and the role of national governments in shaping platform governance that deserve further investigation.
Like other firms, digital platforms can proactively mitigate regulatory risks by adopting firm- or industry-led self-regulation practices and corporate social responsibility (CSR) initiatives (Yi et al., 2022). In this context, platforms are increasingly expected to address issues such as labor rights, data privacy, and environmental impact, all while facing public scrutiny and mounting calls for stricter regulations worldwide (Rahman et al., 2024). Similarly, e-commerce and cloud service platforms must navigate growing concerns over data protection, particularly in regions with stringent privacy laws, such as the European Union. Effectively managing these issues has become crucial for platform legitimacy and long-term sustainability.
Cusumano et al. (2021) argue that a combination of industry self-regulation and government oversight is the most effective approach to ensuring responsible platform governance. The adoption of common CSR policies, in practice, extends social responsibility norms across the entire platform ecosystem, a concept referred to as ecosystem social responsibility (ESR) by Yi et al. (2022). Their study highlights the unique challenges faced by both multidomestic and global digital platforms and introduces a framework that can be further developed and refined through empirical research. This presents an excellent avenue for future investigation into the interplay between platform governance, regulatory adaptation, and social responsibility.
Another important research avenue is how platforms deal with regulatory heterogeneity. This heterogeneity lead firms to adopt a multidomestic non-market strategy, which prevents the development of a truly global approach (Curchod et al., 2020). However, the regulatory differences that platforms face across borders also create an opportunity for regulatory arbitrage (Li, 2024). Unlike traditional firms, whose activities are often tied to specific physical locations, platform activities, often occurring in the cloud facilitate such arbitrage by enabling firms to exploit regulatory differences across regions.
Finally, the strategies employed by digital platforms to address regulatory and broader non-market challenges offer valuable insights into the evolving relationship between technology, regulation, and global governance. Emerging digital technologies such as blockchain, AI, and algorithmic governance can facilitate responses to these challenges by enhancing transparency and automating compliance processes (Nambisan & George, 2024). These strategic approaches highlight the dynamic interplay between innovation and institutional constraints. By analyzing how platforms navigate these tensions, scholars can further refine theories of non-market strategy and institutional adaptation.
Conclusion
The internationalization of digital platforms challenges established theories of the MNE and compels scholars, practitioners, and policymakers to rethink how firms expand, operate, and organize themselves in the digital economy. In the preceding sections, we identified several research gaps and proposed targeted research questions to deepen our understanding of platform internationalization, particularly in relation to international strategy, organizational structure, and non-market dynamics. These are summarized in Table 4. Beyond these specific contributions, this article offers three broader insights for academics, practitioners, and policymakers engaging with the global platform economy.
Summary of Future Research Directions on Digital Platform Internationalization.
First, we show that digital platforms follow distinctive internationalization paths shaped by their need to scale network effects and by the strategic differences between broker and provider platforms, an important conceptual distinction examined here in relation to internationalization patterns. Unlike traditional MNEs, which expand incrementally through physical investments, digital platforms rely on scalable infrastructures that enable rapid and flexible cross-border growth. Strategic decisions—such as market entry timing, governance design, and non-market engagement—must be aligned with the platform type and the geographic scope of network effects. While brokers can often achieve global reach with minimal localization, providers must invest in delivery infrastructure and adapt to local regulatory conditions. By mapping these strategic and structural differences, our framework contributes to refining international business theory and offers practical guidance for managers scaling platforms internationally.
Second, our article offers actionable insights for managers overseeing global platform operations. Digital platforms coordinate loosely coupled ecosystems rather than traditional subsidiaries, raising new challenges around governance, control, and coordination. We highlight how platforms increasingly rely on technologies such as AI-based algorithms to manage interactions across geographies and user groups. As this is a rapidly evolving field, we note that these technologies open new opportunities for organizational innovation grounded in algorithmic governance and digital coordination. Understanding how platforms balance decentralization with strategic alignment can inform broader management practices in the digital era.
Third, our findings have direct implications for policymakers and regulators facing the disruptive effects of platform models. Platforms increasingly transcend industry and national boundaries, complicating enforcement in areas such as labor law, competition policy, and data governance. By analyzing how broker and provider platforms differ in their regulatory exposures—and how some platforms engage in strategic non-compliance or regulatory arbitrage—we provide a framework for understanding the governance dilemmas posed by platform internationalization. We also explore the role of ESR, where voluntary firm- or industry-led initiatives may complement formal regulation across borders.
Rather than reiterating individual research questions (summarized, as mentioned, in Table 4), we conclude by synthesizing the broader implications of our review. The rise of digital platforms marks a shift in the logic of international business—from asset-intensive expansion and centralized control to ecosystem orchestration, decentralized governance, and data-driven strategy. These dynamics call for a rethinking of traditional concepts such as the liability of foreignness, subsidiary autonomy, and non-market strategy. As platforms expand across jurisdictions and industries, their choices will shape the future architecture of global business.
In sum, the study of digital platforms’ internationalization is not merely an extension of traditional research on MNEs; it provides a lens through which to understand the future of global business. The international growth of digital platforms is often deeply intertwined with their overall expansion, making it difficult to analyze one without the other. This inseparability implies that examining their global trajectories also offers broader insights into how the corporation of the future might evolve—not just internationally, but in terms of its fundamental structure, strategy, and governance. Digital platforms, by their very nature, rely on principles of externalization, decentralized governance, and continuous interaction with their institutional environments. If these principles extend beyond the platform economy and begin to influence wider corporate practices, they may signal the emergence of a new organizational paradigm. Traditionally, firms have been conceptualized as information-processing systems designed to compensate for individuals’ bounded rationality through hierarchical structures and internal coordination mechanisms (March & Simon, 1958; Simon, 1976). However, the rise of digital platforms and AI-based governance systems fundamentally challenges this logic. With the capacity to process vast amounts of data at unprecedented speed and to automate increasingly complex decisions, AI enables firms to transcend many of the cognitive and informational constraints that historically shaped organizational design (Menz et al., 2021). As digital platforms demonstrate, these capabilities facilitate a redefinition of firm boundaries, with value creation shifting toward modular, ecosystem-based coordination rather than traditional vertical integration and hierarchical governance. Studying these firms thus illuminates not only new internationalization strategies but also the evolving architecture of modern organizations. By analyzing their competitive dynamics, organizational forms, and regulatory interactions, scholars can advance international business theory and better anticipate the challenges and opportunities that will define large corporations in the digital age.
Footnotes
Funding
The authors disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The first author thanks the financial support of the Spanish Ministry of Science, Innovation and Universities (PID 2024-160438NB-I00).
Declaration of conflicting interests
The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.