A general framework of digitization risks in international business

Area of Science:

• International Business
• Organizational Information Processing
• Digital Risk Management

Background:

• Digital global connectivity presents new opportunities and risks for multinational enterprises (MNEs).
• The unique risks associated with digital connectivity for MNEs remain underexplored in international business literature.
• Existing research has not fully addressed the interplay between digital transformation and international business risks.

Purpose of the Study:

• To present an organizational information-processing framework for understanding and managing digital risks in MNEs.
• To identify and categorize unique digital risks faced by MNEs, including digital interdependence, information security, and regulatory complexity.
• To elucidate the drivers of these risks within and across countries and the factors influencing MNE vulnerability and response.

Main Methods:

• Development of an organizational information-processing framework.
• Analysis of risk types, sources, assessment, and management strategies.
• Examination of how factors like information flow intensity, geographic diversity, international strategy, and global platform participation affect risk exposure.

Main Results:

• Identified three key digital risks for MNEs: digital interdependence, information security, and regulatory complexity.
• Documented variations in MNEs' exposure to these risks based on information flow, geographic spread, strategy, and platform use.
• Highlighted the dialectical relationship between theoretical insights and practical managerial actions in risk management.

Conclusions:

• The proposed framework offers actionable insights for MNEs to manage digital risks effectively.
• Emphasizes the importance of developing and deploying digital intelligence for achieving transnational resilience.
• Provides a structured approach for MNEs to navigate the complexities of increasingly digitally connected cross-border activities.