For decades, global executives have followed traditional strategies for international expansion, through establishing subsidiaries, navigating trade barriers, and adapting products market-by-market. Digital platforms have radically reshaped these strategies through technologies that can connect billions of users instantly, algorithms to personalise offerings across borders, and network effects that compound as platforms scale.

Young digital companies, such as Airbnb and Uber, are “born global” and have demonstrated an impressive ability to scale globally quickly. For example, Airbnb, launched in 2007, now operates in over 220 countries and has over 7 million listings. At the same time, however, other digital firms such as Amazon, despite its size, clout, and growth potential, still derive 61% of its revenue from the US market, and its global e-commerce market share remains only around 6%.

These contrasts expose a gap between the promise of borderless business and the reality of expansion. For business leaders developing internationalisation strategies, understanding why some platforms have scaled globally while others have remained confined to home markets is central to competitive positioning and investment decisions, according to recent research.

Geography and network effects in platform expansion

Digital innovation, platforms, and global strategy, a special volume published in the journal Information and Organization, brought together studies that analysed how platforms expand internationally and what determines their success or failure across markets. This volume co-edited by Danielle Logue, Director of the UNSW Centre for Social Impact and Professor of Innovation & Impact at UNSW Business School, together with Professor Peter Williamson from the University of Cambridge, Assistant Professor Anna Roberts from the University of Bath, Professor Yadong Luo from the University of Miami, and Professor Michael Barrett from the University of Cambridge, synthesised research insights from across information systems, business, strategy, and organisation theory. The collection drew from case studies, simulation modelling, and analysis of platform valuations to explain why expansion remained more complex than predictions suggested.

The research revealed that network effects operated at levels that altered expansion strategies. A network effect occurred when a service became more worth as more users joined, and these effects could be local, national, or global depending on the service. Ride-hailing platforms, for example, depend on local network effects because drivers and riders need to be in the same city. Video streaming services benefit from global network effects because content appeals to users worldwide, regardless of location. Financial services exhibit national network effects due to regulatory boundaries and payment system requirements.

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These variations create dynamics that fundamentally shape competition. The research found that platforms with global network effects favour first movers that can rapidly build user bases. On the other hand, platforms that depend on local network effects face competition in each market, allowing competitors to challenge new entrants.

“With my colleagues across international business, strategy, and information systems, we were observing many organisational efforts to become the next Uber or Airbnb, yet increasing evidence of the role of place and local effects on the impact these firms often have, often leading to failure,” Prof. Logue explained. “So we felt it was important to get beyond the hype of the infinite expansion of digital platforms.”

Machine learning and market entry strategies

The research identified machine learning as one technology that changed how companies approached markets. For example, expansion traditionally required firms to invest in understanding country differences through investment, building knowledge about consumer preferences, norms, and market conditions. This approach treated countries as markets that required specific strategies.

Machine learning has enabled what the researchers termed country-agnostic strategies. Platforms can collect data on user interactions and preferences and use algorithms to predict what each person wants, regardless of location. Rather than learning about preferences in countries, platforms learn about each user as a segment of one. This shift reduces the need for market knowledge infrastructure and changes the type of investment required. Instead of investing in understanding markets, the research found that firms invest in technology to capture value and maintain their license to operate across jurisdictions.

Platforms for social innovation

The research examined how platforms enable innovation by connecting stakeholders to address challenges. Platforms do this in different ways, such as user-focused platforms that empower communities to become co-creators, or civic crowdfunding platforms that enable project financing.

However, the research also noted that platforms face tensions between growth and mission alignment. More access facilitates network effects and innovation, but makes it harder to ensure stakeholder actions are aligned with goals. Platform design choices regarding identity, governance, boundaries, and reliance on technology can also lead to trade-offs between scaling impact and maintaining mission focus.

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“Understanding how to classify a social mission platform along dimensions of technology, identity, boundary, and governance reveals the design choices and trade-offs that are available to social mission platform operators,” said Prof. Logue. “It also informs the potential pathways for scaling without mission drift.”

Regulatory challenges across jurisdictions

Platforms that expand internationally encounter regulatory challenges that also complicate scaling strategies. Different jurisdictions, for example, impose rules on data privacy, competition, and content, which can increase costs and uncertainty. The European Union has prioritised data protection through GDPR, whilst the United States has favoured approaches with less regulation. Platform valuations reflect these challenges, with investors recognising that expansion into markets creates costs and complexity for scaling.

The research also highlighted concerns for developing economies, where platforms could exert market power without regulatory frameworks to protect competition. The findings suggest the need for governance standards and institutions to address these challenges without stifling innovation.

Practical implications for business strategy

The research offers insights for executives navigating expansion. Firstly, firms need to assess whether their platform benefit from local, national, or global network effects. Platforms with global network effects could prioritise expansion to capture first-mover advantages, while those that depend on local effects succeed through market-by-market entry and adaptation.

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Firms could consider how machine learning could enable a better understanding of user preferences and reduce market-entry costs. However, this requires investment in data infrastructure and algorithmic capabilities, favouring firms in environments that support the development of such technologies. Platform design choices also create consequences for scaling and governance, and organisations need to address trade-offs between openness and control, particularly when balancing growth with mission alignment.

Executives also need to anticipate regulatory complexity as jurisdictions develop different approaches to platform governance. This requires building capabilities in regulatory navigation and maintaining flexibility to adapt business models across frameworks. While digitalisation creates opportunities for expansion, the research underscored that success requires understanding how geography, technology, and institutions interact to shape dynamics that remain more complex than previously thought.

“Bringing together research from across disciplines gets beyond the hype of ubiquitous growth strategies for digital platforms, and refocuses attention on the role of place, local knowledge and local network effects that shape success and impact,” Prof. Logue concluded.