Navigating the New Frontier: How DEFS Transitions Reshape International Entrepreneurship and Startup Policy

Introduction: The Four Forces Rewriting International Entrepreneurship

For decades, international entrepreneurship (IE) followed a relatively predictable logic: a startup identified a market opportunity abroad, selected an entry mode (export, joint venture, subsidiary), and gradually expanded. This linear, opportunity-driven framework served entrepreneurs and policymakers well in a stable, globalizing world. That world no longer exists.

Today, four fundamental transitions—Digitization, Ecosystems, Fractured Geopolitics, and Sustainability (DEFS)—are collectively rewriting the rules of how startups compete, scale, and survive across borders. In a groundbreaking study published in the Journal of International Business Policy (JIBP), professors Shaker A. Zahra and Niron Hashai (2025) argue that traditional market-opportunity frameworks have become insufficient. Instead, they propose a connectivity-based perspective that treats international entrepreneurship as a dynamic system of flows: the movement of people, ideas, capital, and intellectual property across increasingly porous yet contested boundaries.

This article distills the study’s core insights for entrepreneurs building global ventures and policymakers seeking to support them. It explores how digitization has evolved from a simple cost-reduction tool into an intangible strategic agent, how ecosystem-centric models are disrupting linear internationalization, and how geopolitical fractures and sustainability mandates are reshaping market access. We conclude with actionable policy recommendations drawn from the research.

[IMAGE: Infographic showing four icons representing Digitization, Ecosystems, Fracture, and Sustainability arranged around a central globe, with arrows illustrating interconnected flows.]

The study itself combines a comprehensive literature review with multiple case studies of technology startups, offering both theoretical depth and practical relevance. Published as open access in JIBP, it benefits from the authors’ long-standing reputations in entrepreneurship and international business scholarship.

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Digitization: From Enabler to Intangible Strategic Agent

The first DEFS force—digitization—is perhaps the most transformative, yet also the most misunderstood. For years, policymakers and entrepreneurs viewed digital tools as operational enablers: cloud computing reduced IT costs, e-commerce platforms lowered distribution barriers, and digital marketing enabled targeted outreach. These benefits remain real, but the new research argues they represent only the surface layer.

Zahra and Hashai posit that digitization shifts from enabler to intangible strategic agent for startups’ international activities. Instead of simply facilitating existing strategies, digital assets—algorithms, proprietary data sets, artificial intelligence models, and platform architectures—now constitute the core competitive advantage that allows startups to leapfrog traditional incumbents across multiple markets simultaneously.

Consider a health-tech startup that develops a machine-learning model for early disease detection. Its algorithm, trained on diverse patient data from several countries, becomes an intangible asset that cannot be easily replicated. The startup’s internationalization strategy is not about exporting a physical product or licensing technology; it is about deploying that algorithm across borders, continuously refining it with new data, and building network effects. The digital capability is the business.

[IMAGE: A network of digital nodes (laptops, servers, AI symbols) connecting across a world map with highlighted data flows representing cross-border algorithmic deployment.]

For policymakers, this shift carries significant implications. Startups need more than broadband access and tax incentives. They require:

• Robust digital infrastructure that supports low-latency, high-bandwidth cross-border data transfers.
• Flexible data governance frameworks that allow startups to legally collect, process, and transfer data across jurisdictions without violating privacy regulations.
• AI literacy programs embedded in entrepreneurship training, so founders understand how to build and protect algorithmic assets.

The DEFS framework emphasizes that digitization is not a sectoral phenomenon—it cuts across all industries, from agriculture to finance, making it a strategic priority for any innovation policy aimed at supporting international entrepreneurship.

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Ecosystem-Centric View: Platforms and Network-Based Internationalization

The second force—ecosystems—represents a structural break from traditional internationalization models. Historically, startups expanded abroad through linear value chains: they manufactured at home, sold to distributors, or established foreign subsidiaries. The DEFS study documents how platform-mediated ecosystems have disrupted this logic.

Digital platforms (e.g., Amazon, Alibaba, Shopify, Upwork) provide startups with instant access to global customers, suppliers, and talent. More importantly, ecosystems offer shared resources, co-innovation opportunities, and market access that no single startup could build alone. A small fintech startup in Nigeria can integrate with Stripe’s payment infrastructure, leverage AWS’s cloud services, and partner with local banks through an open API ecosystem—all without owning any of those assets.

However, ecosystems also introduce dependencies and governance challenges. Startups that rely heavily on a dominant platform risk becoming locked into its rules, fee structures, and data policies. When geopolitical tensions cause platforms to restrict access (as seen with certain Chinese tech firms in Western markets), ecosystem-dependent startups can find themselves abruptly cut off from critical markets.

[IMAGE: A diagram showing a central platform hub with multiple startup nodes connected by dotted lines, some labeled "co-innovation," "shared data," "market access," and a few nodes separated by a red barrier labeled "geopolitical fracture."]

Zahra and Hashai argue that ecosystems are both a driver and a response to global fragmentation. On one hand, they enable rapid cross-border scaling despite geopolitical headwinds. On the other hand, they can amplify fragmentation when competing geopolitical blocs develop parallel ecosystems (e.g., the U.S.-led tech stack vs. China’s domestic platforms).

The policy recommendation is clear: foster platform-neutral regulations that prevent any single platform from becoming a gatekeeper for international entrepreneurship. This includes promoting interoperability standards, open APIs, and cross-border data-sharing agreements that allow startups to switch ecosystems without losing their customer base or operational data.

For entrepreneurs, the ecosystem-centric view demands a strategic mindset. Rather than choosing a single platform, successful global startups build multi-homing strategies—participating in multiple ecosystems simultaneously to reduce dependency and maintain flexibility.

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Fractured Geopolitics: The New Reality of Market Access

The third DEFS force—fracture—acknowledges the uncomfortable reality that the post-Cold War era of globalization is receding. Trade tensions between the United States and China, sanctions regimes, export controls on advanced technologies, and the weaponization of supply chains have created a landscape where geopolitical fractures directly determine market access for startups.

The DEFS framework treats fracture not as an exogenous shock but as an integral dimension of international entrepreneurship. Startups must now evaluate not only market size and growth potential, but also geopolitical alignment, regulatory risk, and potential for technology transfer restrictions. A startup developing semiconductor design tools, for instance, may find its most lucrative market (China) effectively closed due to U.S. export controls—while its European expansion faces different regulatory hurdles under the EU’s AI Act and Digital Markets Act.

[IMAGE: A world map with red fracture lines running between major economic blocs (US, EU, China, India), with startup nodes clustering within each bloc and only a few thin connections crossing the lines.]

The study highlights how fracture creates both barriers and opportunities. Startups that can navigate multiple regulatory regimes—for example, by establishing dual headquarters, maintaining separate data centers, or developing modular product architectures—gain a competitive edge. Others may specialize in “bridging” technologies that help multinational corporations manage fragmentation, such as compliance automation tools or cross-border data management platforms.

For policymakers, the imperative is to reduce the cost of navigating fractures. This means:

• Streamlining export control licensing for trusted startups.
• Negotiating mutual recognition agreements on technology standards.
• Creating sandbox environments where startups can test compliance across multiple jurisdictions.
• Avoiding the temptation to force startups to choose sides in geopolitical conflicts, which can stifle innovation.

The DEFS framework also warns that fracture is self-reinforcing: as governments impose more restrictions, startups relocate or restructure, which further fragments the global innovation landscape. Smart policy should aim to de-escalate rather than deepen these divisions.

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Sustainability: From Compliance Burden to Competitive Asset

The fourth force—sustainability—completes the DEFS framework. Environmental, social, and governance (ESG) requirements are rapidly becoming non-negotiable for startups seeking international growth. The new research argues that sustainability should not be viewed as a compliance burden but as a strategic differentiator and market-access enabler.

Startups that embed sustainability into their core business models—for example, circular economy platforms, carbon-accounting software, or green supply chain solutions—find that sustainability credentials open doors in markets where regulators and consumers demand transparency. Moreover, sustainability-focused startups often benefit from preferential access to impact investors, green bonds, and government procurement programs.

[IMAGE: A soft green aura overlaying a globe with icons representing renewable energy, circular economy arrows, and carbon footprint metrics, connecting startup nodes.]

However, the DEFS study identifies a critical tension: sustainability requirements can also create new barriers for startups from developing economies. A startup in Bangladesh that manufactures eco-friendly textiles may face complex certification requirements imposed by European importers, which smaller firms lack the resources to meet. Without supportive policy, sustainability can become a new form of trade protectionism.

Policymakers must therefore ensure that sustainability standards are proportionate and accessible. Specific recommendations from the research include:

• Developing tiered certification systems that recognize incremental progress, not just perfection.
• Providing subsidized auditing and compliance support for early-stage startups.
• Aligning national sustainability policies with international frameworks (e.g., the UN Sustainable Development Goals, EU Taxonomy) to reduce duplication.

For entrepreneurs, the message is clear: treat sustainability as a product feature, not an afterthought. Startups that can quantify and communicate their environmental and social impact will have a distinct advantage when seeking cross-border partnerships and funding.

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Actionable Policy Recommendations: Supporting Startups in a DEFS World

The DEFS framework is not merely descriptive; it is prescriptive. Zahra and Hashai offer a set of integrated policy recommendations designed to help governments, development agencies, and innovation bodies support startups navigating the new frontier.

1. Invest in connectivity infrastructure.
Governments should prioritize investments in digital infrastructure (fiber, 5G, satellite internet), data centers, and cross-border data corridors. Without foundational connectivity, startups cannot leverage digitization as a strategic asset.

2. Build ecosystem bridges, not walls.
Rather than trying to create self-sufficient national ecosystems, policymakers should facilitate cross-border ecosystem linkages through bilateral innovation agreements, joint accelerators, and visa programs for global talent mobility.

3. De-risk geopolitical exposure.
Export credit agencies and development finance institutions should offer insurance products tailored to startups facing geopolitical risks—such as sudden sanctions, technology transfer restrictions, or expropriation of digital assets.

4. Harmonize sustainability standards.
International bodies (WTO, OECD, UNCTAD) should work toward mutual recognition of sustainability certifications, reducing the compliance burden on startups that operate in multiple markets.

5. Support intangible asset creation and protection.
Since digitization transforms algorithms and data into strategic assets, governments should help startups patent AI innovations, register trade secrets, and navigate intellectual property regimes across jurisdictions.

6. Create agile regulatory sandboxes.
Cross-border sandboxes allow startups to test products and business models simultaneously in multiple regulatory environments, reducing the cost of experimentation.

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Conclusion: Embracing Connectivity as the New Paradigm

The DEFS framework, as developed by Zahra and Hashai, offers a timely and comprehensive lens for understanding international entrepreneurship in an era of radical uncertainty. The traditional view—startups find a market opportunity and then figure out how to enter it—is being replaced by a dynamic, connectivity-based perspective that emphasizes flows of people, ideas, capital, and intellectual property.

For entrepreneurs, this means building startups that are inherently global in their DNA, not as an afterthought. Digital capabilities must be treated as proprietary strategic assets; ecosystem participation must be multi-homed and deliberate; geopolitical risks must be priced into market selection; and sustainability must be woven into the business model from day one.

For policymakers, the message is equally urgent. In an age of fractured geopolitics and rapid technological change, the countries that succeed will be those that create enabling conditions for connectivity—not walls that protect domestic industries, but bridges that allow startups to flow across borders efficiently and responsibly.

The DEFS transitions are not a passing trend. They are the new normal. Understanding and acting on them is no longer optional for anyone serious about international entrepreneurship and startup policy.

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Reference: Zahra, S. A., & Hashai, N. (2025). DEFS transitions and international entrepreneurship: A connectivity-based perspective. Journal of International Business Policy. Open access.