It’s tempting to think at times that growing a digital company overseas is something that comes quite naturally as many of the traditional barriers are not relevant to an entity that doesn’t need a physical presence.

A recent Finnish study suggests things aren’t quite that straightforward however and that a hybrid approach might be most effective.

Hybrid expansion

A hybrid competitive strategy, ie multiple different approaches, is one that runs counter to conventional thinking.  Indeed, Michael Porter has advocated that it is much less effective than a single strategy that allows for considerable focus.  So whether you go for cost leadership or differentiation, you should pick one and focus on it when you expand overseas.

The researchers analyzed the implementation of various strategies in over 250 Finnish and Swedish companies operating in the high-tech industry.  The analysis found that the best results were actually achieved when a more hybrid approach was taken, albeit with the results dependent somewhat on the state of globalization the company was in.

They contend however that the approach provides the right conditions for expanding overseas, and therefore by and large the best results from a financial perspective.

“Globalisation and the specific conditions of the home markets of the firms have received too little attention in the strategy work. Particularly dangerous it is for a firm originating from a small country to rely on the American research, books, and consultants who approach this question from a large country perspective,” the researchers say.