AALTO UNIVERSITY SCHOOL OF SCIENCE Degree Programme in Industrial Engineering and Management

of master's thesis II Author: Severi Siitonen Title of thesis: Drivers of Internationalization Strategies for Digital Education Startups Master’s programme: Industrial Engineering and Management Thesis supervisor: Mikko Jääskeläinen, Assistant Professor Major or Minor/Code: SCI3050 Thesis advisor(s): Simo Veistola, PhD, MBA Date: 3.7. 2017 Number of pages: 7 + 87 Language: English Abstract: As well as many other industries, education is currently being disrupted by new emerging digital solutions. Teachers all around the world are adopting new digital materials to their everyday teaching including digital books and educational games. This recent trend engenders opportunity for new companies to emerge with cutting-edge digital educational solutions. Furthermore, with a digital solution expansion to international markets without heavy investments is possible. However, for example in Finland only few companies have been able to successfully enter new markets with educational technology. As well as many other industries, education is currently being disrupted by new emerging digital solutions. Teachers all around the world are adopting new digital materials to their everyday teaching including digital books and educational games. This recent trend engenders opportunity for new companies to emerge with cutting-edge digital educational solutions. Furthermore, with a digital solution expansion to international markets without heavy investments is possible. However, for example in Finland only few companies have been able to successfully enter new markets with educational technology. Internationalization strategies have been widely studied during the past few decades. The early studies already identified a set of different market entry modes including export, licensing, franchising, joint ventures and wholly-owned subsidiaries. However, for small resource-limited companies, export is the most viable option. Export allows company to maintain the full control of the process and product without making heavy investments on the internationalization. The export performance framework shows that the export strategy is depending on both internal (company resources) and external factors (country and industry characteristics). More recent studies have also identified alternative entry modes such as cooperative strategies and innovative use of internet. However, the previous literature has not studied this topic purely in education industry and therefore does not provide detailed knowledge for startups planning international expansion in digital education industry. The aim of this study is to identify key determinants for market entry strategy selection for startups in digital education, and identify different strategies for addressing the major challenges in the digital education markets. To study this topic, 15 interviews were carried out to both experts of internationalization of digital education and companies that are pursuing international expansion with digital educational solutions. The data analysis followed Gioia methodology (Gioia, Corley, & Hamilton, 2012), in which 1st-order terms are identified first, and then the 2nd-order themes are established accordingly. The findings revealed several market-level factors that drive the market entry strategy selection. These factors were related to cultural and regulatory differences, trust and reliability, different customer types and customer needs. In addition, the findings showed several strategies how companies can address the challenges related to the above marketlevel factors. Therefore, this study provides managers of startups with insights of digital education markets as well as a toolkit for addressing the market-level challenges in digital education.