This study examines heterogeneity in internationalization tendencies among digital firms in emerging markets. Drawing on the resource-based view, we introduce the concept of “digital dampening”— the extent to which a digital firm integrates non-digital routines, processes, resources, and capabilities into its operations. We argue that digital dampening inhibits international expansion. We develop testable hypotheses in the context of smartphone apps from Chinese vendors, examining rich data on 35,266 smartphone apps by 26,129 Chinese vendors on the Tencent app market. Employing Latent Dirichlet Allocation supplemented with large language models, we study digital dampening in Tencent apps and their presence in domestic (Huawei App Gallery) and foreign (Google Play) app markets. We show that digital dampening is negatively associated with a presence on Google Play, a finding reinforced with supplementary analyses ruling out alternative explanations. Overall, the study presents an alternative to the prevailing view of digital firms as inherently global, emphasizing that strategic decisions that incorporate non-digital complementarities into the resource base could pose an unintended consequence by discouraging internationalization.
