The New Normal
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a qualitative study of how Covid-19 influences the digitalization of Swedish SMEs within their
international operations
Bachelor’s Thesis
Authors: Fabian Andersson and David Stark Supervisor: Rosalina Torres-Ortega
Abstract
The Covid-19 pandemic is changing the international business environment.
This global event has forced the world into an unbalance, which influences how Swedish SMEs interpret their international operations. Through the international fluctuations, the digitalization has come to partake as an important factor in order to enable the possibility of maintaining an international presence. Therefore, the aim of this thesis is to explore how the Covid-19 pandemic influences the digitalization within Swedish SMEs international operations.
In order to provide a sustainable foundation of the subject, this research have utilized the qualitative strategy. Collecting the data through semi-structured interviews enables a vast set of data, which have been comprehended in relation to chapter 2 Literature review. Through analyzing all gathered data, the outcome of the research illustrates how the pandemic influences the digitalization as well as firms’ international operations. Finally, the thesis conclude that the Covid-19 pandemic accelerates the digitalization within firms, which further influences how firms maintain an international presence.
Conclusively, it is contemplated that the Covid-19 pandemic further creates what the authors call “The New Normal”.
Keywords
International operation, Digitalization, Covid-19, Fourth industrial revolution, Physical- and Virtual presence, SME, Sweden
Acknowledgements
First and foremost, we would like to express our appreciation to all whom have contributed to this thesis. We would like to express special appreciation to our supervisor Rosalina Torres-Ortega who has supported us throughout the journey of writing this thesis. Through valuable insights and feedback, you have encouraged us to work hard and to put a huge effort into reading on the subject, in order to refine the outcome of our thesis. Due to the prevailing circumstances of the Covid-19 pandemic, we would as well like to address our gratitude towards all the respondents who participated and contributed to our research. Finally, we would like to sincerely gratitude our examiner Susanne Sandberg and the opponents from the seminars for the valuable feedback which assisted to the completion of this thesis.
Kalmar, Sweden, May 26th, 2021
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Fabian Andersson David Stark
Table of content
1 INTRODUCTION ... 6
1.1 BACKGROUND ... 6
1.2 PROBLEM DISCUSSION ... 9
1.3 RESEARCH QUESTION ... 12
1.4 PURPOSE ... 12
1.5 DELIMITATIONS ... 12
1.6 OUTLINE ... 13
2 LITERATURE REVIEW ... 14
2.1 INTERNATIONAL OPERATION STRATEGIES ... 14
2.1.1 Uppsala internationalization model ... 15
2.1.2 Born global ... 17
2.1.3 Digitalization within firms ... 18
2.2 DIGITALIZATION ... 19
2.2.1 Fourth Industrial Revolution ... 19
2.2.2 Effects of the digitalization ... 20
2.3 COVID-19 ... 22
2.3.1 Business opportunities ... 23
2.3.2 Challenges for businesses ... 23
2.4 CONCEPTUAL FRAMEWORK ... 24
3 METHODOLOGY ... 25
3.1 RESEARCH APPROACH ... 25
3.2 RESEARCH METHOD ... 26
3.3 RESEARCH DESIGN ... 27
3.3.1 Purpose of Research ... 27
3.3.2 Research Strategy ... 28
3.4 DATA COLLECTION ... 28
3.4.1 Primary data ... 29
3.4.2 Secondary data ... 30
3.5 CASES –RESEARCH DESIGN ... 30
3.5.1 Purposive sampling ... 31
3.5.2 Cases ... 32
3.6 INTERVIEWS ... 33
3.6.1 Semi-structured interviews ... 33
3.6.2 Operationalization ... 35
3.6.3 Conducting the interviews ... 35
3.7 METHOD OF DATA ANALYSIS ... 36
3.8 QUALITY OF RESEARCH ... 37
3.9 RESEARCH ETHICS ... 38
3.9.1 GDPR ... 39
3.10 CONTRIBUTION OF THE AUTHORS ... 39
4 EMPIRICAL FINDINGS ... 40
4.1 CASES ... 40
4.1.1 Robert Holm – Kurita ... 40
4.1.2 Alfa – Anonymous ... 43
4.1.3 Beta – Anonymous ... 46
4.1.4 Jörgen Johansson – Norden Machinery ... 49
4.1.5 Henrik Blad – Amokabel ... 52
5 ANALYSIS ... 55
5.1 INTERNATIONAL OPERATIONS ... 55
5.2 DIGITALIZATION ... 59
5.3 COVID-19 ... 60
6 CONCLUSION ... 63
6.1 ANSWERING THE RESEARCH QUESTION ... 63
6.2 PRACTICAL IMPLICATIONS ... 67
6.3 LIMITATIONS ... 67
6.4 FUTURE RESEARCH ... 68
BIBLIOGRAPHY ... 69
7 APPENDICES ... 79
7.1 APPENDIX 1–INTERVIEW GUIDE ... 79
Figure and Table Index
Figure 1 Outline of the study Figure 2 Conceptual framework
Figure 3 The new normal within international operations Table 1 Operationalization
Table 2 Information about the interviews
List of Abbreviations
SME Small- and Medium-size Enterprise INV International New Venture
1 Introduction
Initially in this chapter, an introduction and a background of the research field will be presented. The introduction will serve as a foundation for the chosen area of research and will result in a problem discussion which will identify the practical problem as well as the research gap of this thesis. Furthermore, the research question of the thesis is to be molded through the problem discussion, and conclusively some delimitations as well as an outline will be presented to summarize the chapter.
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1.1 Background
Digitalization is the transformation from analog to digital methods and the process of adapting as well as re-value the traditional business model through the utilization of modern technology, through redefining the traditional business processes on the international digitalized marketplace (Bloomberg, 2018; Gartner Glossary, no date; Pucihar et al., 2019). Transformation of traditional processes into the more digitalized is heavily influenced by external factors such as the Covid-19 pandemic, driving the utilization of technology forward (Mergel et al., 2019; Zahra, 2021).
The strategy of managing uncertainties within organizational processes is through the influence of the digitalization transformed, rendering technology development as the main eminent factor. Digitalization further enables extensive flexibility within organizations, which challenges the traditional perspective of entrepreneurship as well as transforms the traditional communication process between businesses and consumers (Nambisan, 2016;
Ghezzi and Cavallo, 2020; Yadav and Pavlou, 2014). Furthermore, it is determined that digitalization changes businesses’ approach towards their international operations through exploitation of digital technology development within organizations. The comprehensive era of digitalization is
comparable with the industrial revolution, due to its innovative influence and guidance of the internationalized economy into a new phase, consisting of quantities of data flows through technology. Scholars stipulate that the digitalization is to be considered as the fourth industrial revolution, due to its development of traditional business theories (Parviainen et al., 2017; Manyika et al., 2016; Degryse, 2016; Schwab, 2015; Schwab, 2016).
Digitalization is of great magnitude, and several firms benefit from it due to the potential cost reductions that the digitalization entails. Swapping the traditional working process into a software program that works automatically, contributes to improved understanding and more efficient gathering of information. Furthermore, digitalization provides economic growth and creates transparency of information within firms through its adaptability.
Digitalization plays a crucial role, and it is a well-known phenomenon, however, firms often struggle and stagnate when interacting with the benefits which the digitalization entails (Parviainen et al., 2017). According to Yadav and Pavlou (2014), the digitalization has contributed to significant transformations of how firms and customers interact with each other and exchange value. Hamill et al. (2012) contemplates that the next generation of webservices, web 2.0, is a factor that has influenced, transformed, and contributed to how people exchange information, products as well as communication. Moreover, Quinton et al. (2017) argues that the 3D printing machines have contributed to how goods nowadays are produced and consumed, while Benady (2014) says that the internet has transformed how we as individuals interact with the physical environment.
The economy has gone through a significant transformation due to the evolution of the digitalization (Stallkamp and Schotter, 2019). According to Lerch and Gotsch (2015), the internationalized industry has learned that the digitalization contributes with both opportunities as well as challenges within businesses which could evolve or hinder development. The opportunities that
the digitalization generates, in terms of flexibility, individualization of products as well as reactivity, improves the firm. Accelerated changes in the technology, complexity and new demands of customer preferences have led to consequences, since it creates uncertainties of how products and services are combined and implemented within the new technological opportunities that arise (Lerch and Gotsch, 2015). Mithas et al. (2013) contemplates that an evolving digital business environment in relation to services and products, creates an improved understanding when strategizing international operations.
Further on, Mithas et al. (2013) explain that investing in technology creates beneficial elements such as outsourcing, which help firms stand out from their competitors, as well as break free from stereotypical norms within the traditional business theories.
Research conducted by Lammers et al. (2018) has shown some factors that trigger firms to step into the digitalization and defines these triggers as “cost efficiency – process efficiency; environmental sustainability; customer focus and value differentiation; worker’s safety; market focus/globalization;
decision making support” (p.3). Contemplating factors triggering the era of digitalization, the Covid-19 pandemic is as well of significance to illuminate.
The limitations of social interaction during the pandemic inquire social interactions through alternate, e.g., digital, platforms which further establish new innovative business strategies that challenge the traditional business theories. Aside from the benefits of the digitalization, it is of importance to consider the consequences which the digitalized environment entails (Popov, 2021; Acosta, 2020; Zahra, 2021). Conclusively, it is important to consider that digitalization is not a new phenomenon and the evolution of it is constantly undergoing changes.
1.2 Problem discussion
The practical problem of the globalized as well as digitalized business environment distinctly requires entrepreneurs and decision-makers to re- evaluate their approach towards their international operations. Digitalization is still considered to be in the early stages which contributes to a limited amount of theoretical data on previous trends of the digitalization. However, through quickly comprehending the evolving digitalized equipment available, an accelerated internationalization process is enabled due to the benefits that technology entails. Business growth is in modern society increasingly dependent on digitalization to further succeed in developing businesses international operations, as well as to maintain the interactivity between the business and its partners (Hervé et al., 2020a).
According to Hervé et al. (2020a), the digitalization within businesses impacts international operations processes, mainly concerning different types of resources such as the skills and competence acquisition. Moreover, the knowledge learning process also have an important part regarding the development in foreign markets. Selection of the right entry mode as well as the location are influenced by the way digital equipment are utilized nowadays (Hervé et al. 2020a).
Furthermore, the contextual aspect of digitalization contributes with pioneering opportunities, which further enables businesses to withstand a higher level of international competitive advantage. Innovative technology enhancements do as well improve businesses entrepreneurial orientation in relation to their international operations and assists in the increasement of competitive advantage due to the developed possibility of accessing foreign markets (Hervé et al., 2020b).
The digital business is related to the organizational culture as well as to environmental sustainability. Isensee et al. (2020) further contemplates the
definition of digitalization as “the transformation of business models as a result of fundamental changes to core internal processes, customer interfaces, products and services, as well as the use of information and communication technologies” (p.3). Sustainability issues are in some extent related to the outcome of digitalization due to the capability of change that technology possesses (Isensee et al., 2020). The perspectives within digitalization are, when conducting business in foreign markets, of significance due the capability of the digitalization to rapidly adapting to emergent conditions.
Pagani and Pardo (2017) emphasizes that the technological changes contribute to the business environment becoming a more favorable place for a Small- and Medium-size Enterprise (SME) and in addition, to the assessment of the resources of the firm which enable the ability to enter international operations at an early stage. Digital development has entailed new opportunities for SMEs to enter the international market (Pagani and Pardo, 2017).
On one hand, digitalized, in comparison to the traditional, products as well as services are more compatible between foreign markets which further creates a favorable environment regarding the distribution process of the products for the business (Lee et al., 2019). On the other hand, Knight and Kim (2009) explain that characteristics of SMEs is by limitation of tangible and intangible resources as well as their competence an important role for the favorable environment and success of the firm. Lee et al. (2019) further contemplates that to enter international operations rapidly, digitalization is to be considered as a step of significance. Through exploiting the accessibility of knowledge which digital equipment provide, an accelerated internationalization process could be acquired (Lee et al., 2019).
The research gap of this thesis is to analyze the relationship between digitalization and businesses international operations as well as how the Covid-19 pandemic influence these operations. The research gap is identified
through assessing previously conducted research, which has primarily analyzed digitalization in relation to international operations from an objective perspective, which we further will analyze through a partially subjective perspective. Hervé et al. (2020a) contemplates that digitalization enables an accelerated internationalization process into foreign markets which alter the traditional internationalization theories of the past. The impact of Covid-19 has triggered and accelerated these internationalization processes as well as contributed to extensive international adaptability amongst businesses (Hervé et al., 2020a; Zahra, 2021). The transformation of the traditional into the digitalized business environment is to be considered as inevitable and will as well contribute with positive change (Lee et al., 2019).
According to Hervé et al. (2020a), the consequences of the era of digitalization in relation to internationalization are not yet empirically addressed within literature. Fluctuations because of digitalization within international operations and strategies are of importance to identify due to the risks, besides the benefits, that digitalization entails (Hervé et al., 2020a). Lee et al. (2019) further argue that digitalization enables earlier internationalization if the concepts of the digital environment are properly utilized. Digitalization is an irreversible trend due to the pervading integration of the concept within modern society (Lee et al., 2019).
1.3 Research Question
The thesis will specifically compose how the Covid-19 pandemic influences digitalization of Swedish SMEs within their international operations, to illustrate the rapid growth of the digitalization. This thesis will provide a theoretical framework of the impacts of digitalization and Covid-19 as well as provide international operation strategies, to further establish a substantial platform to fill the identified research gap. The research question posed is:
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How does Covid-19 influence the digitalization of Swedish SMEs in their international operations?
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1.4 Purpose
The aim of this thesis is to explore how digitalization enables the international operation of the SMEs during the Covid-19 pandemic. Furthermore, the thesis will strive towards contributing to in-depth knowledge within the selected research field. To enable further research, sufficient relevant information on the subject will be provided through an academic structure to strengthen the validity of the study.
1.5 Delimitations
The delimitation of this thesis is to only focus on the consequences which digitalization entails, as well as how these consequences impact Swedish SMEs development of digitalization within their international operations. The study is solely dedicated to illustrating the consequential phenomenon of digitalization within Swedish SMEs, related to their international operations and how Covid-19 influences these operations. Due to the delimitated research field, the research is partially biased, angling the thesis towards the determined research field.
1.6 Outline
Figure 1. Outline of the study. Source: The authors Introduction
•In the indroduction chapter a background as well as problem discussion is provided to motivate the determined research field.
Research question, purpose, delimitations and an outline of the thesis will as well be illustrated.
Literature Review
•The chapter of literature review are to comprehend the subject of the study through presenting relevant theoretical frameworks.
Concepts of the subject are to be provided in order to increase the readers understanding throughout the thesis, and a
conceptual framework is as well presented.
Methodology
•This chapter will explain the methodological processes of the study. Discussions motivating the qualitative research method with an abductive approach is to be presented. The respondents of the research will as well be operationalized within this chapter.
Empirical Findings
•The chpater of empirical findings will provide the case-specific data collected from the selected respondents. The data presented within this chapter are aligned with the data presented in previous chapters to further have the thesis withstand academical structure.
Analysis
•The analysis is aiming to discuss the emperical findings in relation to the initial theoretical frameworks from the as well as to the research question of the thesis.
Conclusion
•The conclusion will provide the reader with comprehensive final conclusions produced by the authors. The conclusions are conducted through assessing all presented data stipulated throughout the thesis. There is also a presented revised conceptual framework within this chapeter.
2 Literature Review
This chapter will provide a theoretical framework positioning itself within relevant theories and concepts of international operations, digitalization, and Covid-19. Sufficient data regarding how digitalization impacts international operations through social and economic aspects within Swedish SMEs will be provided. The foundational aspect of this chapter is of importance to serve as a pillar for the outcome of this thesis.
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2.1 International operation strategies
During the last decades, trade and investment at an international level have been growing rapidly. The way goods now get transferred, further effect the domestic economies on a worldwide basis (Prasada and Babbarb, 2000).
Furthermore, international operation is the concept to provide and promote goods crossing domestic borders. International operations could emerge from various heritages, importing and exporting, licensing, and franchising. Those items could be goods, capital, and services, crossing different borders to fulfill peoples demands and satisfaction. Resources are something that every country struggle with and where there is a limitation. Therefore, they cannot produce it all by themselves. This leads to networking being an important aspect of the international operation, exchanging goods as well as services amongst each other (Grozdanovska et al., 2017).
International operation strategies e.g., Uppsala internationalization model and the born global model are the established concepts of internationalization.
Traditionally, these theories have explained the process of international operations, however, in the rapidly expanding global economy of today, these theories as well as the behavior of the firm have been forced to experience change. The increasing globalized, competitive, and digitalized environment
add a new dimension to the traditional way of doing business in foreign markets (Axinn and Matthyssens, 2002).
2.1.1 Uppsala internationalization model
The Uppsala internationalization model was initially established through analyzing the internationalization processes of Swedish manufacturing industries. Utilized as a micro-level tool, the Uppsala internationalization model combines the behavioral aspects of the individual and organization to illustrate processes within the firm (Vahlne and Johanson, 2017).
Internationalization based on the Uppsala internationalization model is done through approaching additional markets in stages, an incremental approach.
Consequences of expanding into foreign markets are minimized due to the utilization of the Uppsala model (Hollensen, 2020; Figueira-de-Lemos et al., 2011). Sufficient minimizing of risks regarding the internationalization process are through the Uppsala model to be excluded to enable safer expansions abroad. Through selecting markets with a low level of psychic distance, the establishment process on that market is simplified. Managing the uncertainties within the internationalization processes is of significance discussing the Uppsala internationalization model. Higher level of commitment on to the foreign markets consequently reduces the uncertainties for firms acting abroad, meanwhile a low level of commitment further contributes with increasing uncertainties. When firms experience growth, the relation between the level of commitment and uncertainties tend to contribute with an exaggerated level of commitment regarding the internationalization processes of the firm (Hollensen, 2020).
The evolution of the traditional Uppsala model is necessary to consider due to the nuanced markets within the modern society (Hult et al., 2020). The revised Uppsala internationalization model provided by Johanson and Vahlne (2009) suggests that the differences between markets is mainly the culture as well as
institutions and that commitment is related to the utilization of projected opportunities. Psychic distance is in other words considerable as a critical factor within the concept of internationalization within the Uppsala model, due to the difference of perception between different markets (Hollensen, 2020).
2.1.1.1 Psychic distance
Psychic distance is the behavioristic term of the difference between markets on the level of the individual. Different markets possess various characteristics which further contributes to a complex network of relationships for a firm conducting business abroad. Fluctuations within the flow of goods as well as information for the firm acting abroad, are to be considered as consequences of the psychic distance. Psychic distance is the condition of the individual manager and how this manager perceives the distance between two international markets (Hollensen, 2020; Avloniti and Filippaios, 2014).
High level of psychic distance is identified as the deficiency of knowledge which contribute to knowledge gaps, the higher the level of psychic distance, the vaster the knowledge gap becomes. Awareness, perception, and understanding are some perspectives within psychic distance which are of importance to consider when conducting business abroad. Through collecting sufficient data on a particular market before entry, the uncertainties within the international operation of the firm are reduced (Nebus and Chai, 2014).
2.1.1.2 Network model
The network model attaches value when it comes to personal and cognitive relationship established among the members. However, the model points out that the network of a firm is mostly motivated in relation to the internationalization, but also to each firms’ ability to produce resources. There are two possible ways that the firm of the network could act on. On one hand, act individually, independent of the recourses that could be controlled by other firms, on the other hand, the firm could be dependent on the resources. Firms
continuously adjust their independency/dependency of the resources over time from a long-term perspective (Danciu, 2012).
Furthermore, the network model empathizes the importance of relationship since it is connected to the creation of networks and how capacities are exchanged. Therefore, it is of importance where the firm is positioning itself in the network model, which creates an overview of how much control the firm has access to. Moreover, this model makes it further easier for firms to implement extension, penetration, and coordination as three strategies related to their international operations (Danciu, 2012).
Networks are of importance for a firms’ business, since they use this in order to expand their limitation of resources. Further, creating a well-established network will generate strong relationships which could help to generate competitive advantage. These relationships are often created in relation to local authorities, suppliers, investors, customers, etc. (Lee et al., 2019).
According to Lee et al. (2019), it could be argued that firms which are related to “poor access to economies of scale and lack of financial and knowledge resources” (p.4), can assist the firm to overcome potential constraints.
Networks could help SMEs to establish new knowledge and to further seek resources that could complement and create new opportunities (Freeman et al., 2010).
2.1.2 Born global
The concept of born global could be defined as a firm which internationalizes at an early stage from their birth, seeking to perform at a high level in multiple foreign markets. What is special with these types of firms is that their origins already from the start is at an international level, and that the management within the firms are structured with focus on international operations (Knight and Cavusgil, 2004). Furthermore, Oviatt and McDougall (2005) is defining born global as a firm that from its early stage has a vision to become successful
at the international market, without having a slow successful curve or internationalization period at their domestic market.
The born global firm is typically an organization where the number of employees is less than 500 and the total amount of sales do not exceed 100 million dollars annually. These firms are as well often dependent on advanced technology to produce and develop products and innovations. Moreover, born globals are mostly managed by entrepreneurs that seize opportunities within international operations, and therefore the world could be seen as one marketplace already from the day the firms were established (Hollensen, 2020).
Knowledge, learning, and commitment could be connected to the internationalization process, as well as former experience and knowledge are factors forming the current position of the firm (Johanson and Martín, 2015).
However, this is not an option for a born global firm. Instead, they must develop this in collaboration with other firms that have already achieved this.
At last, these global start-ups target markets which are to be homogeneous and where the marketing mix requires as little adjustment as possible compared to their initial one (Hollensen, 2020).
2.1.3 Digitalization within firms
Digitalization contribute to the creation of International New Ventures (INV) and the process has accelerated in relation to the rapid growth of technological developments during the last decades (Oviatt and McDougall, 1994, 1999).
However, firms are first and foremost from a digitalized perspective triggered because of the way we nowadays use communication and transportation, due to the advanced development which has also contributed to lower the transaction costs (Knight and Cavusgil, 2004).
The information that is communicated through digital equipment makes it possible for SMEs to exchange information with their business partners.
Nowadays, information can be exchanged without physical meetings due to advanced technology. Finally, digital developments have shortened the distance between firms where they benefit in form of closer relationships, but utilization of the digitalization must occur (Lee et al, 2019).
2.2 Digitalization
Digitalization is to be equated with the industrial revolution and is according to scholars known as the fourth industrial revolution (Parviainen et al., 2017;
Degryse, 2016; Schwab, 2015; Schwab, 2016). The revolution of digitalization is to be considered as the new frontier regarding the implementation of international operations within businesses. The automatization of industries’
capacity through digitalized means is what defines and separates the fourth industrial revolution i.e., digital revolution, from the previous industrial revolutions (Degryse, 2016; Kowalski, 2015).
Digitalized equipment has reached the stage where it is almost impossible to conduct business and personal errands without it. Firms which enter the digitalization are encouraged to strategize their organizations with point of departure from digital opportunities (Cöster and Westelius, 2016). Utilization of technology contributes with improved efficiency within multiple processes of the firm, such as its potential to reach distant markets as well as to enhance the productivity of production. Through adapting the business based on the circumstances given regarding digitalization, the firm and its business is provided with the opportunity to mature and evolve. It is the natural order for the industries and business of today, to develop as well as innovate themselves to further sustain long-term competitive advantage on the internationalized market (Ek and Ek, 2020; Kane et al., 2015; Degryse, 2016).
2.2.1 Fourth Industrial Revolution
The fourth industrial revolution emphasizes the automatization of technological equipment such as 3D-printing, self-driving cars and
robotization. Technologies’ capability of replacing and executing simple service operations through human command enables the society to challenge the traditional process of doing things (Degryse, 2016). However, important to consider is that technology is partially unable to proceed on its own. Human interaction will be necessary to guide the digital intelligence, which is why it is of significance to consider investments as well in human capital (Brynjolfsson and McAfee, 2011).
The megatrend which digitalization and the fourth industrial revolution entails, contributes to transformations yet to be discovered. Artificial intelligence, computing power and the capacity for comprehending data are some aspects of the fourth industrial revolution which will certainly influence the modern society. Due to the future influence of technology in society, it is of significance to derive the evolution of digitalization in a sustainable direction to ensure supportable future growth (Kowalsky, 2015; Schwab, 2015; Schwab, 2016). The fourth industrial revolution is to challenge the traditional society and contribute with both pros and cons. The way individuals live today as well as how processes within society function will be altered and evolved into a new era of living (Mihyun and Jaehyoun, 2016).
2.2.2 Effects of the digitalization
Digitalization has become a powerful tool and plays an important role of the economy, despite that it could be time consuming and where the expenses could easily become high, it could erase and entail problems. The digitalization era has nowadays contributed to more transparency and efficiency, which first and foremost applies to governments which further have made a tremendous impact on the economic growth. However, the international economy has for the last years been defined as a bit languid, but nowadays the frequent use of digital equipment has overall been boosting the economic growth. From an international perspective, the digitalization has been more adapted. Tying together services with different devices have contributed to growth in the
economy which has generated job opportunities (Khan, et al., 2015).
According to Parviainen et al. (2017) digitalization has offered a huge economic growth, especially for those countries that is in the forefront of digitalization. Furthermore, Parviainen et al. (2017) argue that the unemployment will decrease as the economy increase.
Nowadays when the digitalization is constantly increasing, the economy has as well increased. This contributes to firms handling their resources in a new way outside their own boundaries (Stallkamp and Schotter, 2019). Finally, the business environment points out that the digitalized world that has emerged the last decade has contributed to improved production, lower the cost in operations, change different business processes and create new business and work opportunities, which all of this can be connected to economic growth (Ek and Ek, 2020).
Furthermore, developed digital environments change and generate fluctuations in social welfare within society. Preceded material of society is all more or less digitalized to ease the accessibility of these materials (Khan et al., 2015). With modern technology at hand, working conditions as well as of how we interact with other individuals’ change. Transforming the traditional way of interaction challenges the society with complications due to the consequences which this transformation entails. Conducting business through digital platforms lacks the traditional physical social interaction and have been forced upon society during the Covid-19 pandemic (Popov, 2021; Acosta, 2020).
The research on how digitalization impact organizations on the social level is somewhat vague. However, it has been concluded that the digital business environment is marched forward in a rapid phase which contributes with organizational changes. Transformation of the physical business environment to the virtual enables firms to expand into foreign markets and sustain future growth (Kuusisto, 2017).
2.3 Covid-19
The Covid-19 crisis around the world has nowadays become the new normal and has brought changes as well as growth regarding the use of digital equipment. Lockdowns and quarantines have forced people to work from home, which have boosted the digitalization and contributed to innovative solutions that have enabled people to continue to live as usual, but with the help of digitalization. Furthermore, the Covid-19 pandemic has also brought people together around the world, which has generated an increasing understanding of using various digital equipment. Digital equipment therefore creates new opportunities (Zahra, 2021).
One of the driving forces for digitalization is cost-efficiency due to the positive economic impact this has on businesses. Developing efficient methods as a substitute for traditional business strategies are inevitable (Lammers et al., 2018; Lee et al., 2019). The restriction of travel has as well been a driving force for the utilization of digital equipment, due to it being difficult for firms to arrange physical meetings. Therefore, the frequent use of digital equipment has made it possible to connect the employees with one another, which have resulted in that the business is still able to keep its business in operation (Zahra, 2021). The rapid growth of the frequent use of digital equipment, has contributed to transform the traditional business functions for major firms, but as well for INVs (Jean et al., 2020). Firms have invested in developing their digitalization, in order to counter the emerging complex international market.
The international market is widely contemplated from the perspective of firms.
Due to the Covid-19 pandemic, businesses must reconsider how their international operations are defined. Uncertainties on the international market contribute to the questioning of international operations, and how these operations should be managed. Concerning multinational businesses, the Covid-19 pandemic has entailed restrictions as well as limitations for further growth (Zahra, 2021).
2.3.1 Business opportunities
The Covid-19 pandemic has, as mentioned before, forced us to more frequently use digital equipment, which has contributed to create new business opportunities. For INVs this new way of business results in a more stable control regarding higher productivity and cost-efficiency (Jean et al., 2020).
Working from home has nowadays become the new normal and most people find it comfortable. Therefore, it is unlikely to go back to the previous way of doing business, as before Covid-19. The communication between borders is easier to maintain online, but most of all, it is less expensive and could be used more frequently (Zahra, 2021).
SMEs as well as family firms has somehow been forced to change how they conduct traditional business, to a more digital business strategy to not invoke bankruptcy, which has generated new opportunities. This trend is likely here to stay since people nowadays know the power of digitalization (Zahra, 2021).
Furthermore, the Covid-19 pandemic have made people more innovative, and people are searching for solutions to the issues which the pandemic has entailed. Fortunately, these innovations and solutions will contribute to sustainable growth for businesses in the future post Covid-19 (Schroeder, 2020).
2.3.2 Challenges for businesses
The environment of Covid-19 we nowadays are living in causes challenges for businesses that could make it difficult in the future. Businesses of today has been forced to close their operations with no hesitation, which has caused uncertainties in most business sectors on the market. Furthermore, the consequences of the Covid-19 pandemic have created challenges for most of retailers and brands that could be directly connected to the health and safety sector, as well the supply chain, the demand of the consumer, and lastly the sales and marketing. Despite if those businesses manage to stay on track during the pandemic, there could not be any guarantee of how the outcome of the
future will be. However, when this pandemic has come to an end, the market will still be very uncertain, and the recovery process will take time. Most businesses of today have been working towards optimizing their overall spending to survive, which could be a challenge when the pandemic is over (Donthu and Gustafsson, 2020). Although, digitalization is a frequently used phenomenon and those opportunities as well the challenges that could be associated with it will always change. Finally, most organizations have been forced to transform into become digitalized businesses which has been challenging (Almeida et al., 2020).
2.4 Conceptual framework
The conceptual framework illustrated in Figure 2 is constructed through summarizing the chapter 2 Literature review in relation to the research question of the thesis. First, the literature review highlights different international operation strategies in order to build knowledge of how international operations are managed. Secondly, firms’ operations are linked to the digitalization to further enhance the understanding of how the digitalized era has evolved as well as influenced the business environment within modern society. Conclusively, the conceptual framework illustrates the influence which the Covid-19 pandemic has on the digitalization, which in further extent reconstruct how firms’ international operations are conducted. The conceptual framework illuminates the chain reaction of how the pandemic directly influence the relationship between digitalization and firms’ international operations.
Figure 2. Conceptual framework. Source: The authors
Covid-19 Digitalization International
operations
3 Methodology
This chapter will provide thorough information which explains the methodological process of this research. Motivational discussions of the selected methods are to be presented as well, to further illustrate the reasoning behind the methodological selection process. Initially, amplification of the research approach is stipulated which is followed by the selected research methods as well as the selected categories of data within this thesis.
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3.1 Research approach
When conducting research, there are mainly two different approaches at hand to utilize: inductive and deductive approach. Inductive approaches allow the collected data to emerge into concepts of the research. Deductive approaches begin with deciding on what kind of data are needed, and first then sets out to collect the wanted data. Generally, the inductive approach is utilized within qualitative research and deductive approaches are used to conduct research through quantitative methods. Through the inductive approach, the theoretical framework is not yet fulfilled without retrieval of data from the field (Yin, 2016; Bryman and Bell, 2017). Conducting research through the inductive approach is executed through observation which on the contrary to the deductive approach is assumed as riskier. Deductive approach is generally less risky due to the vast collection of data, based on an initially generated hypothesis (Ghauri et al., 2020). In order to reduce risk as well as to not in further extent limit the collection of data (Yin, 2016), the third existing abductive approach is utilized.
The abductive approach excludes the dilemma of selecting inductive or deductive approach when conducting qualitative research. From the perspective of the abductive approach, inductive and deductive approaches are merged (Awuzie and McDermott, 2017; Ali and Birley, 1999). Through the
utilization of the abductive approach, the conflict between inductive and deductive strategies is neutralized which contributes to new interesting results when conducting research. The more commonly exploited approach of abduction allows researchers to easier observe patterns to discover in-depth hidden structures. Abduction is identified as the interweaving of theory and empirical data to dissolve conclusions based on the insights of the researcher into the two major different fields (Alvesson and Sköldberg, 2000).
As this thesis will explore the influential aspect of Covid-19 on the existing digitalization of Swedish SMEs international operations, conducting the research through the abductive approach is appropriate. The study sets out to explore the current conditions within the research field similar to induction.
Conclusively, analyses as well as positioning the thesis from the perspective of both induction and deduction, hence abduction (Dubois and Gadde, 2002).
3.2 Research method
When conducting research, there are two different methods available for use:
quantitative or qualitative. The two different methods possess various abilities to extract data from respondents. Reasoning behind the differences between the two methods are contradistinguished, some scholars believe there are differences, whilst some do not. A quantitative research approach focuses on the quantification of data and contain a deductive perspective, meanwhile the qualitative approach mainly focuses on the verbal outcome of, for instance, interviews. Qualitative research illustrates an inductive perspective between provided theories as well as research to embrace the continuous flexibility of the modern society and tend to be more open-ended in comparison to the quantitative approach (Bryman and Bell, 2017).
The inductive approach of qualitative research strengthens the research and assists in gaining access to information. Conducting research through qualitative data-sampling is more time-consuming compared to the
quantitative method, however, the qualitative method enables researchers to in further extent collect in depth data from respondents (Maher and Dertadian, 2017; Bryman and Bell, 2017). Throughout this thesis, a qualitative research method is applied for both data collection and analysis, due to the aim of this thesis to explore how Covid-19 influences digitalization within Swedish SMEs international operations, from the perspective of the respondents. The data collection from these respondents are then further analyzed with point of departure from the theoretical framework of the research.
3.3 Research design
Most studies comprehend a research design which is either implicit or explicit.
The research design strategizes how the thesis connect collected empirical data with the initial stipulated research question (Yin, 2018). The research design is molding the outcome of the thesis and is to be considered as the logical blueprint of the research. Through the research design, it is determined how the initial research question will be addressed throughout the thesis (Yin, 2016).
3.3.1 Purpose of Research
The structural aspects amongst various types of studies are the main difference between these studies. Descriptive research is generally exploring and explaining an individual or situation to collect data through a rigid as well as structured strategy. The outline of the analysis is pre-determined to enable correct collection of valuable data. Explanatory research on the contrary, aims to through collecting qualitative data, further explain the initial interpretation of literature and is commonly exploited within quantitative research methods.
Exploratory research, however, sets out to investigate a formulated issue in order to discover new creations. Compared to the descriptive strategy, research conducted through an exploratory strategy is flexible, unstructured and an unplanned process (Saunders et al., 2019; Surbhi, 2017; Creswell and Creswell, 2018).
Throughout this thesis, the exploratory research is the strategy which will characterize this study. The utilization of a qualitative research method further imply that the thesis is initially based on assumptions, which have been collected from credible sources. Qualitative research aims to address an interpreted issue through exploiting the abductive approach, which conclusively contribute to a research where various variables from interviews, the authors and the main problem concludes the research question (Creswell and Poth, 2018). Exploratory research design contributes to conclusive thoughts of how the qualitative study, through in this case interviews, improves the outcome of the research and the end results (Creswell and Creswell, 2018). The exploratory research design comprehends literature as preparation for further data collection through interviews and withstand adaptive characteristics to mold the research into a substantial conclusion of the initial research question (Bell et al., 2019; Surbhi, 2017; Blumberg et al., 2011).
3.3.2 Research Strategy
There are various strategies to choose from when conducting a qualitative research such as narrative research, phenomenology, grounded theory, ethnographies, and case studies (Creswell and Creswell, 2018). The selected research strategy for this thesis is the case study strategy, due to this strategy being commonly utilized within exploratory as well as explanatory research designs (Saunders et al., 2019; Yin, 2018). Extensive information about the research strategy of this thesis will be presented in chapter 3.5 Cases – Research design.
3.4 Data collection
One main pillar for a research study is the data and the foundation it serves.
The data collected in a qualitative research could come from various methods, but the four most common methods are interviewing, observing, collecting, and examining. More in detail, collecting data through interviews could either
be structured or qualitative. Different objects can be collected in relation to the material collection which could be useful for upcoming fieldwork. Moreover, feelings play a crucial role since it could activate and represent different senses (Yin, 2016). Furthermore, which alternative to choose when collecting the data are dependent on the outcome of the overall judgement, and what type of data that could be best applied to the research problem. For example, when firms are being studied it is important to create clear criteria that could be matched against age, size, sector etc. At last, the answer which the thesis seek, will conclude which type of analysis to expect (Ghauri et al., 2020).
3.4.1 Primary data
The data collection could be divided into different sections, the data are composed for a specific study which is called primary data (Svenning, 2003).
Furthermore, according to Alvesson and Sköldberg (2000), primary sources could be ranked higher and provide more value compared to secondary sources. When gathering data using primary sources, various methods could be applicable, often it is the purpose of the study that decide it. The availability of resources and the talent of the researcher are of importance. However, sometimes, various methods will not be applicable due to the lack of resources and specific skills that are required (Purnell et al., 2014). Primary data are data collected for the first time by the researchers and it is real data. The most important factor is that primary data are trustful, original, and collected to find a solution to the problem but could be a very complex process. Surveys, observations, interviews etc. are included in primary data (Ajayi, 2017).
Finally, the primary data could either be collected through a qualitative or quantitative method, and what makes the collected data unique are the restriction of the material until it is published (Kabir, 2016). For this thesis, the main material will be collected from primary sources which will help to clarify the aim of this study.
3.4.2 Secondary data
Unlike the primary data, secondary data come from already published sources.
It is common that already available information is used in the literature review which further has been collected by other researchers for other purposes.
Further, this information will then be analyzed by the authors and be put into another context. However, the main problem that comes with secondary data are that it could be considered less valid, but this does not mean that secondary data are not of importance. Primary data could be difficult to obtain compared to secondary data, which are in further extent easier to collect (Kabir, 2016).
According to Blumberg et al. (2011), secondary data could help the authors to create an improved understanding of the subject, which also makes the findings of primary data easier to understand, when you comprehend the subject through the secondary data.
3.5 Cases – Research design
Research design is, as previously mentioned in chapter 3.3 Research design, the strategy of how the thesis connect collected empirical data with the initial stipulated research question (Yin, 2018). The research design is molding the outcome of the thesis and is to be considered as the logical blueprint of the study (Yin, 2016). Furthermore, when specifying the research design to case studies, there are mainly two different designs to emanate from, single-case and multiple-case designs. These two designs can then further be comprehended from either a holistic or embedded point of view. The holistic view organizes the different cases within the study separately, whilst the embedded view layers various analysis within the same case (Ghauri et al., 2020; Yin, 2018).
Single-case designs are commonly utilized when the research is facing a set of circumstances, which Yin (2018) mentions as “critical, unusual, common, revelatory, or longitudal” (p.49). The utilization of single-case studies is most frequent amongst studies which are having an experimental imprint. However,
in some fields of research, single-case studies are exchanged with multiple- case designs instead. The multiple-case design, which is the design utilized within this thesis, further focus on conducting fieldwork on one case at a time before, in the end of the research, concluding all findings within the research (Yin, 2018).
3.5.1 Purposive sampling
Selecting cases for the research is conducted through purposive sampling, which imply that the cases are selected with the main research question in mind. There are mainly two various sampling strategies: probability sampling and non-probability sampling. These are suited differently depending on the research (Saunders et al., 2019). Furthermore, when dealing with large amount of data within quantitative research, non-probability sampling is not the most suitable strategy to utilize, instead probability sampling is used. Non- probability sampling is commonly utilized when developing new theoretical frameworks based on the already existing. Important to consider is that the non-probability sampling strategy lacks the capability of generalization, which is why this strategy is most suitable when a particular phenomenon is to be studied. Purposive sampling through the non-probability sampling strategy, is conducted using judgement and is relatively easy to apply as well as it demands less financial support in order to be conducted (Saunders et al., 2019;
Yin, 2018; Showkat and Parveen, 2017). Throughout this thesis, the cases have been selected through five different criteria to enable valuable data collection.
The cases/respondents selected for this thesis must:
1. Be within the manufacturing industry 2. Be a Swedish SME
3. Be operating on the international market
4. Be a well-established firm, before and during Covid-19 5. Have a key position within the firm
3.5.2 Cases
3.5.2.1 Robert Holm – Kurita
Kurita is a firm that produces water treatment solutions which further optimize and streamlines facilities’ boiling water, cooling water, heat systems and wastewater. Water treatment solutions are made more efficient through reverse osmosis. Furthermore, they offer developed technologies that are specialized to be used within steel industries, petrochemical plants, and within the pulp and paper business (Kurita, 2021).
3.5.2.2 Alfa – Anonymous
The firm have their headquarter in Japan, and they are one of the world leaders within the robots, electric and servomotors industry. Their business within Sweden started 1970 and nowadays there is almost half a million robots installed on a worldwide scale.
3.5.2.3 Beta – Anonymous
This is a firm that deliver complete sealing solutions that could be applied in various branches, on land, at sea and underground. With a strong teamwork within the firm, they manage to create new solutions which enable them to explore new potential markets.
3.5.2.4 Jörgen Johansson – Norden Machinery
Norden Machinery is a firm working within the manufacturing industry, where their focus is to create innovative machines and produce robots within the tube filling area for the customers that need it (Norden Machinery, 2021).
3.5.2.5 Henrik Blad – Amokabel
Amokabel is a Nordic Region koncern with three cable firms which manufacture different types of wires, cables, and consumer packaged products.
They are the industry leader when it comes to innovations and focus on high quality within the cable industry (Amokabel, 2021).
3.6 Interviews
Interviews which are conducted within qualitative research are according to Bell et al. (2019) referred to the term “qualitative interview” (p.433).
Qualitative interviews are commonly offering a vaster opportunity for flexibility as well as adaptability depending on the respondent, which is why interviews have been selected for this study. When conducting interviews, there are mainly three different structures of the interview, unstructured, structured, and semi-structured. Important to notice, is that the outcome of an interview depend on the interviewers’ experience and knowledge of how to execute a well formulated interview, which further molds the outcome of the research (Bell et al., 2019; Bryman and Bell, 2017; Kvale and Brinkmann, 2014; Lantz, 2013; Gillham, 2000). In order to study the phenomenon of how Covid-19 influence the digitalization of Swedish SMEs in their international operation, the selection of utilizing interviews as method of collecting data is primarily based on the demand for extensive responses from the respondents.
The flexibility of interviews, in this case which will be semi-structured, is highly applicable to ensure a sustainable outcome of this thesis (Bryman and Bell, 2017; Gillham, 2000).
3.6.1 Semi-structured interviews
The semi-structured interviews do in a flexible manner extract information from the respondent. Flexibility of the semi-structured interview imply that the interview is not structured nor unstructured. Instead, it aims to identify the perspective of the respondent of the phenomenon which the researcher explores. Interviewing through a semi-structured strategy enables natural answers from the respondent, and if well practiced, the semi-structured interview could infer as the most valuable source of information within the study (Gillham, 2000; Kvale and Brinkmann, 2014; Blumberg et al., 2011).
The three various interview strategies, structured, unstructured, and semi- structured, are the most utilized interview strategies. The different ways of
conducting interviews further determine the outcome of the interview itself.
Structured interviews are conducted through strictly following a questionnaire which is predetermined and retains the same structure regardless of the respondent. Unstructured interviews, however, are informal regarding its structure to further in-depth investigate the perspective of the respondent. This interview is trying to simulate an everyday conversation between the interviewer and the respondent, to collect data necessary for the research. The third and final way of conducting interviews, the semi-structured which have been briefly mentioned, is combining the principals of the structured and unstructured interview strategies. Through the semi-structured interview, the questions are guiding the respondent towards the answer, but the final answer is yet to be determined. Predetermined categories which the interviewer wants covered are listed, which are further utilized in order to keep the respondent within the essential field of the research (Saunders et al., 2019; Gillham, 2000;
Blumberg et al., 2011).
Semi-structured interviews are by Saunders et al. (2019) evaluated as suitable when there are many questions which could further be interpreted as complex or open-ended. The semi-structured interview is particularly useful within this thesis due to its capability of answering a wide-ranging problem. The issue is predetermined; however, the outcome of each interview is allowed to vary in order to explore the perspectives of the respondents, and from that perspective answer the main research question of the thesis (Blumberg et al., 2011).
3.6.2 Operationalization
Concepts Questions Reasoning
General Information 1-3
Initially, three main questions regarding general information about
the respondent and the interviewed firm are
presented.
International Operations 4-8
Questions about the firms’
international operations are asked, to understand how the firm have operated
internationally in the past and how to sustain growth
in the future.
Digitalization 9-13
Questions of how the firm have integrated itself within
the digital era are presented, to further enhance the understanding
of how the digitalization influence the firms’
processes.
Covid-19 14-17
The pandemic of Covid-19 has contributed with opportunities as well as challenges. Here, questions
regarding this matter are presented to increase the knowledge of how Covid-19
have entailed new opportunities as well as
challenges for the firm.
Concluding Question 18
The concluding question is to interpret the main research question from the
perspective of the respondent, to conclude the
interview.
Table 1. Operationalization. Source: The authors 3.6.3 Conducting the interviews
The conceptual framework presented in Figure 2 and the operationalization presented in Table 1 have provided the authors with a sufficient basis when constructing as well as conducting the interviews. The interview guide utilized within this study is presented in Appendix 1. The interview guide was after
