Resumen
La globalización, el
flujo internacional de tecnología, información, bienes y servicios a través de
diversos vínculos, como los negocios, los medios, la cultura, la geopolítica,
los viajes y la tecnología, ha tenido un impacto en los negocios y ha mejorado
vidas. Sin embargo, la globalización ha asociado desafíos globales debido a las
diferencias culturales a medida que las empresas crecen internacionalmente.
Diferentes académicos han destacado los desafíos que enfrenta la globalización
digital y el ecosistema de negocios digitales. Estos desafíos varían de una
región a otra, con países africanos como Kenia y Mauritania enfrentando más
desafíos que las naciones europeas o norteamericanas. No obstante, algunos de
los desafíos generales en el ecosistema de negocios digitales incluyen grandes
corporaciones que crean barreras de entrada comercial dentro de los ecosistemas
digitales y crean monopolios en el mercado. Otro desafío importante es la falta
de interoperabilidad en el ecosistema debido a obstáculos tecnológicos y
desafíos por el alto grado de incompatibilidad de las tecnologías de la
información, especialmente en el almacenamiento, intercambio, procesamiento,
presentación y comunicación de la información. Las empresas de aplicaciones
digitales enfrentan desafíos únicos durante la expansión global de sus
plataformas de negocios en términos de estrategias de adquisición de usuarios,
implementación de estructuras organizacionales efectivas y desafíos asociados
con "ignorar" las regulaciones locales.
Palabras Claves:
Negocio digital; ecosistema; globalización; organización; geopolítica.
Abstract
Globalization, the
international flow of technology, information, goods, and services through
various ties such as business, media, culture, geopolitics, travel, and
technology, has impacted businesses and improved lives. However, globalization
has associated global challenges due to cultural differences as enterprises
grow internationally. Different scholars have highlighted the challenges faced
in digital globalization and the digital business ecosystem. These challenges
vary from region to region, with African countries like Kenya and Mauritania
facing more challenges than European or North American nations. Nonetheless,
some of the general challenges in the digital business ecosystem include large
corporations creating business entry barriers within digital ecosystems and
creating monopolies in the market. Another major challenge is the lack of
interoperability in the ecosystem due to technological obstacles and challenges
due to information technologies’ high degree of incompatibility, especially in
the storage, exchange, processing, presentation, and communication of
information. Digital platform companies face unique challenges during the
global expansion of businesses platform in terms of user acquisition
strategies, implementing effective organizational structures, and challenges
associated with ‘ignoring’ local regulations.
Key Words:
digital business; ecosystem; globalization; organization; geopolitics.
Resumo
A globalização, o fluxo
internacional de tecnologia, informação, bens e serviços através de várias
ligações, tais como negócios, meios de comunicação social, cultura,
geopolítica, viagens e tecnologia, teve impacto nos negócios e melhorou as
vidas. No entanto, a globalização tem associado desafios globais devido às
diferenças culturais à medida que as empresas crescem internacionalmente.
Diferentes estudiosos têm destacado os desafios que a globalização digital e o
ecossistema empresarial digital enfrentam. Estes desafios variam de região para
região, com países africanos como o Quénia e a Mauritânia a enfrentarem mais
desafios do que as nações europeias ou norte-americanas. No entanto, alguns dos
desafios gerais no ecossistema empresarial digital incluem grandes empresas que
criam barreiras à entrada comercial nos ecossistemas digitais e que criam
monopólios no mercado. Outro grande desafio é a falta de interoperabilidade no
ecossistema devido a barreiras tecnológicas e desafios devido ao elevado grau
de incompatibilidade das tecnologias de informação, especialmente no
armazenamento, troca, processamento, apresentação e comunicação de informação.
As empresas de aplicações digitais enfrentam desafios únicos durante a expansão
global das suas plataformas empresariais em termos de estratégias de aquisição
de utilizadores, implementação de estruturas organizacionais eficazes e
desafios associados à "ignorância" dos regulamentos locais.
Palavras-chave:
negócios digitais; ecossistema; globalização; organização; geopolítica.
Introducción
Globalization, as we know
it today, involves the open international flow of technology, information,
goods, and services through various ties such as business, media, culture,
geopolitics, travel, and technology. Due to technological advancements, the
world is deeply connected as it gets ‘smaller’ every day. Thus, enterprises
that do not integrate globalization into their strategies risk losing a
competitive edge within the global market. However, despite improving lives,
globalization has associated challenges as enterprises grow internationally.
Due to cultural differences worldwide, enterprises must adapt to the global
market. Therefore, this bibliographic analysis describes critical challenges in
the globalization of digital businesses.
According to
Stommen-Bakhtiar and Razavi (2008), the current internet technology research
and developments have created new opportunities and threats for all businesses,
SMEs and large. The authors state that SMEs perceive the digital ecosystem as a
unique opportunity to participate, innovate, and compete equally with large
corporations. The paper highlights the role of large enterprises in the digital
ecosystem and examines two significant problems in the global networks. One of
these emerging problems is caused by large corporations.
These corporations have a
history of creating business entry barriers within digital ecosystems, creating
monopolies in the market. These keystones regulate and determine the number or
type of other SMEs in the market. The other problem in the digital ecosystem is
the present structure of scale-free networks. The current structure facilitates
the natural development of super-nodes that can dominate global networks in the
future. Besides, the existing structure will enable the development of future
oligopolies or monopolies and SMEs’ loss of local anatomy.
The paper by Lenkenhoff
et al. (2018) examines the main challenges in the digital business ecosystem.
It highlights interoperability challenges and actor-related problems by
comparing two situations- one from Germany and the other from China. It also
proposes various ways of coping with these challenges. The findings from the study
highlight the specific challenges of digital business. First, there are
challenges in interoperability due to technological barriers and challenges.
Information technologies’ high degree of incompatibility, especially in
storage, exchange, processing, presentation, and communication of information
and collected data, becomes an obstacle. Besides, organizational challenges
arise from different organizational structures, cultures, and communication
styles. This affects decision-making coherency. Secondly, there are
actor-related challenges due to the attitude, behavior, competence, and
engagement of individuals involved in the digital business ecosystem. Actors in
digital networks are hieratically organized. Therefore, keystone actors define
standards of interoperability for SMEs. The findings of the study show
limitations in the design and testing processes of the digital business
ecosystem.
Development
Rapid digitalization
affects all aspects of our lives, such as work, social interactions, shopping,
and delivery of services. However, there are vast differences between and
within nations on their readiness to utilize available data; the data-related
divide. Therefore, countries without the capacity to harness data into digital
intelligence are disadvantaged. The “Digital Economy Report 2021” examines the
challenges surrounding international data and data flows. It also stresses the
regulation of global data flows. According to the United Nations (2021), one of
the challenges in the digital ecosystem is the difficulty in measuring the
fast-growing data flows.
Data traffic measurement
is difficult, coupled with the steep upward trend in internet use prompted by
the Corona Virus pandemic. Also, the substantial cross-border data volume flows
increase the challenge of measuring data flows. Secondly, data-dependent
economies have large imbalances. For instance, only twenty percent of citizens
in developing countries can access low-speed internet. The UN also states that
there is a lack of understanding of international data flows and that it should
be handled differently from the conventional trade of products and services.
According to the World
Trade Organization (2021), e-commerce varies from one region to another.
Digital business is not yet a prominent aspect of trade in most African
nations. For example, Mauritius faces challenges in regulating the e-commerce
sector. The digital business sector faces significant challenges in the low
bandwidth and speed of internet systems. Enterprises also have the inadequate
infrastructure, especially in remote areas.
Another African country,
Kenya, faces challenges of its own. Although there has been a higher uptake of
e-commerce by both the public and private sector due to increasing access to
the internet and ICT, Kenya still faces several digital trade challenges. For
instance, the limited access to infrastructure and funding reduces the capacity
of enterprises and individuals to buy digital technology products and services.
SMEs often lack creditworthiness. Besides, broadband services’ high
installation and use costs and the limited wireless spectrum hinder digital
trade. The high rates of illiteracy and poverty limit participation in
e-commerce. Generally, the main challenge in e-commerce especially facing SMEs,
is the high cost of broadband and connectivity products.
Another study by Lazovic
and Durickovic (2014) on the digital trade of emerging countries highlights
some of these challenges. The digital business ecosystem offers numerous
opportunities but leads to new challenges within the international market. A
country that positions itself appropriately on the global stage enjoys benefits
such as bridging the gap between poor and rich countries. Developing countries
would benefit more from such opportunities offered by digital trade. However,
they face numerous challenges in the digital business ecosystem.
Most developing economies
cannot meet the demands of the digital business ecosystem and have limited
access to the latest digital technology.
They also have low computer literacy and complicated telecommunication
facilities. Besides, some socio-economic and cultural factors pose significant
obstacles to digital trade. Developing countries have not been able to respond
adequately to the international market. Such countries must establish clear
policies to facilitate the creation of digital economies.
Kraus et al. (2021)
highlight digital transformation’s significance in helping businesses remain
competitive in the ever-digitalizing global market. Digitalization has led to
disruptive changes at the organizational level and in society, the environment,
and institutions. Digital trade has led to issues with the traditional trading
model. The new digital operating model focuses on customer preferences. Thus,
there is a need to realign business operating models.
As a result, due to a
lack of embracing technological challenges and advancements, most project
management projects fail. The shift in consumer behavior has disrupted
companies’ operating business models, and companies that do not adapt lose
their market share. However, not all economic actors have the skills and
knowledge to adapt to the disruptive digital changes, making it necessary to
train individuals on digital trade. The digital business ecosystem poses a risk
of automation. This has led to several public and economic debates on
technologies like AI and robotics replacing human labor.
Digital platforms play an
undeniable role in the digital business ecosystem. However, these platforms
face obstacles due to growth, new technologies, and regulation (Parker et al.,
2019). Digital platforms were innovated when challenges appeared
straightforward as strategists focused mainly on cutting transaction costs and
providing solutions to fundamental business problems. As these digital
platforms grew, giants such as Apple, Facebook, Uber, and Google had to invest
in governing their platforms. Today, digital media have several potential
challenges, such as new regulatory constraints. There are growing antitrust
concerns and restrictions on data acquisition. Secondly, there are increasing
pressures as the explosive digital era is declining. Thus, these platforms need
to identify new development areas like moving to adjoining markets. Also,
platforms in the digital business ecosystem face challenges in creating trust
and transparency and constantly have to update their technologies due to
technological disruptions.
Although technological
progress has increased the ease of reaching global customers, digital platform
companies face unique challenges during the global expansion of businesses
platform. Qualitative and quantitative studies conducted by Chen et al. (2022)
identified three critical challenges digital platforms face when pursuing
international growth. First, there are challenges in user acquisition
strategies.
The study revealed that
network effects often decline when crossing international borders. Some
platforms are unable to attract overseas users. Secondly, digital business
platforms maintain a flat organizational structure despite multiplying. This
structure is insufficient to address the diverse and volatile global market.
Besides, each market has its unique challenges. The flat form also leads to
duplication of work and internal competition. Finally, digital enterprises
enter markets faster than traditional enterprises; therefore, they often
‘ignore’ local regulations and evade scrutiny from local partners. The
disruption of established enterprises leads to pushbacks from government
regulators and other stakeholders.
According to Patel and
Foda (2018), the declining trends in productivity growth and increasing trends
in income inequality that shape the global economy are attributed to the
decline in competition in the digital business ecosystem. The effects of
increased market concentration increased the market power of large
corporations, and slow business dynamics indicate a weakening competition among
firms. The growth of large corporations could hinder the spread of technology
and increase income inequality. Besides, the digital economy presents two other
concerns; the growing significance of intangible capital and the scale
potentials offered by digital platforms. The ever-increasing importance of
intangible capital like branding, procedures, ideas, and software favors larger
firms than SMEs. SMEs will have a more challenging time sourcing funding and
investors, unlike large corporations with social relationships and economies of
scale. Secondly, more giant corporations have a higher potential for scale than
SMEs on digital platforms due to the high capital expenditures. The network
effects favor the more significant investment by big firms.
In an article in “The
Economic Times,” Pagan Chandra (2017) highlights six significant challenges
facing contemporary e-commerce. Chandra suggests that although the current $2.1
trillion spent in India’s digital business ecosystem is expected to surpass $5
trillion, there are numerous challenges in the sector. To begin with, digital
enterprises are faced with blurred economic boundaries. Companies must balance
providing the best services and dealing with government regulations. Digital
enterprises face challenges in building trust and brand. This often leads to
the loss of online clients and failure to retain them.
Another major challenge
facing digital businesses is the vast differences in digital systems’ architecture
and usage. Outdated systems lead to economic stagnation. There is also a lack
of corporation between departments of digital enterprises. Digital enterprises
also struggle to deliver personalized experiences and face costly technical
issues running digital infrastructures like bandwidth, server, and security and
data privacy issues.
As Muggah et al. (2020)
suggest, the digital revolution has changed every aspect of human life, but it
is neither equitable nor sustainable. Besides, the Covid-19 pandemic has
significantly accelerated global internet traffic. Over decades, the
international IP traffic has increased from 100 GB per day to nearly 150,000 GB
per second (Muggah et al., 2020). The digital economy has resulted from the
innovation of AI and cloud computing. However, the digital economy has its
negatives. For example, the digital divide in e-commerce is still growing
between rich and developing nations due to a gap in data, code, and
infrastructure ownership. Thus, the returns of the digital business ecosystem
are unevenly shared. Many manufacturers and retailers have been extinguished
due to digital globalization. Besides, the digital economy contributes
significantly to negative externalities like climate change due to increased
mining activities and vast amounts of electronic waste. The internet also
consumes almost a tenth of the total global electricity produced (Muggah et
al., 2020).
According to Schilirò
(2018), digital globalization is defined by data and information flows. It
results in significant changes concerning how business is carried out
internationally, broadening participation and the flow of economic gains.
However, emerging issues such as pandemics and financial crises are affected.
Although people cannot be isolated from the global economy, the globalization
pattern is changing. In 2008, for instance, the global financial flows and
goods trade flattened due to the recession.
Additionally, the
financial crisis resulted in a slowing down of international investments, that
is, global direct investment. This, in turn, arose fears of globalization
slowdown. Later, the US government tariffs imposition drove the adverse
protectionism wind contributing to a slowdown in global trade.
The Corona Virus disease
pandemic negatively affected the global economy resulting in withdrawal from
easy-going global supply chains. In the twenty-first century, digital
technologies Foster digital globalization while the increasing and accelerating
data and information flow characterize it. Despite the advantages of digital
globalization, several challenges are associated. Despite the ability to enter
new markets, the digitalized global companies encounter disruptive digital
models, aggressive international competition, and pricing pressures. Data is
exposed to cybercrime. Although social media forms global communities, it links
extremist networks. Most of these issues can only be solved through
international coordination. The current globalization version is fast-paced and
complex.
Moreover, the growing
nationalism encourages different forms of digital wars and hinders trade, thus
slowing down the digital globalization process (Schilirò, 2018). Digital
globalization is also characterized by Artificial Intelligence, which is
associated with difficulties. Some AI problems could be its adoption widening
gaps between workers, companies, and countries. AI can foster economic
activity; however, it will likely impose non-uniform benefits. Additionally, AI
is associated with risks based on unethical or poor digital practices that rise
rapidly and raise concerns, including the loss of personal privacy and the
economic and social cost of gig economy jobs having inadequate protections.
G20 countries’ economies’
performance varies significantly, which is partly associated with the economy’s
development stage. The economies that lack robust digital infrastructure have
failed to perform efficiently in many other sectors partly since the digital
infrastructure is a foundational element. Digital technologies have some
barriers to their access and efficient use, including some combination of lack
of affordable and high-quality infrastructure; lack of interoperability of
standards; obstacles to resource allocation across firms and sectors; poor
access, and high costs to smaller firms’ financing, services trade barriers, a
less proactive and more reactive approach to internet openness; inadequate
skills required for the success of digital economy; and lack of trust in
digital activities and technologies(OECD, 2017).
The nature of infrastructure
is a significant barrier to high-speed network and services deployment arising
of high entry barriers. According to OECD (2017), the changing nature and
digital security risk scale are pushing G20 economies to reassess their
policies and strategies in digital security. Although there has been a
consistent increase in business-to-consumer ecommerce, there’s significant
untapped potential. Well-tailored competitive markets and consumer protections
effectively build the trust required to improve the needs further to suit the
business and consumers.
According to Cote (2020),
language barriers, cultural variation, global team management, currency
exchange, inflation rates, and nuances of foreign policy, politics, and
regulations are the main challenges facing international businesses. When
looking to expand businesses internationally, the major challenge faced is the
language spoken in the country of question. It is hard to ascertain whether or
not the product messaging can translate well into other languages. Another
consideration factor is the languages spoken by one’s company’s team members in
global offices; it poses the challenge of hiring interpreters to ensure smooth
business operation. Every culture has its culture or culture consisting of social
norms, foods, Traditions, arts, and holidays. Global business requires one to
learn about the cultures of the countries where the businesses will be
conducted. Thus, one is faced with the challenge of depicting that they’ve
taken time to comprehend the foreign cultures to earn respect and the emotional
intelligence needed to carry out their trades.
Managing teams is also a
challenge. It is hard to account for varying technological levels, time zones,
cultural differences, and language barriers when managing worldwide employees.
Pandemics such as Covid-19 make it even harder. Currencies go across the world,
and so does the value of goods. Goods can’t be worth the exact value of
currency globally. This poses the challenge of learning the currency rates between
countries involved in the business. The inflation rate is another factor that
varies across countries and puts Pressure on global digital companies (Cote,
2020). International trade is also influenced by inter-country relationships,
laws, policies, and politics; the connections can be considerably nuanced.
Decisions by political leaders can affect transportation infrastructure, raw
material costs, labor laws, and taxes. It is exciting but intimidating that
nuance of relations, policies, and international politics can impact one’s
global business.
Conclusion
Digital globalization
faces various challenges, as outlined by different scholars. First, there are
challenges in interoperability due to technological barriers and challenges.
Information technologies’ high degree of incompatibility, especially in storage,
exchange, processing, presentation, and communication of information and
collected data, becomes an obstacle. Countries without the capacity to harness
data into digital intelligence are disadvantaged. Digital business is not yet a
prominent aspect of trade in most African nations.
The digital business
sector faces significant challenges in the low bandwidth and speed of internet
systems. Enterprises also have the inadequate infrastructure, especially in
remote areas. Most developing economies cannot meet the demands of the digital
business ecosystem and have limited access to the latest digital technology.
Digital platform
companies face unique challenges during the global expansion of businesses
platform. First, there are challenges in user acquisition strategies. Some
platforms are unable to attract overseas users. Secondly, digital business
platforms maintain a flat organizational structure despite multiplying. Also,
digital enterprises enter markets faster than traditional enterprises;
therefore, they often ‘ignore’ local regulations and evade scrutiny from local
partners. The growing nationalism encourages digital
wars and hinders trade, thus slowing down digital globalization. Cybercrime is
another major challenge.
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