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About 50% of innovations achieve commercial success in advanced countries. The number is much lower in emerging markets. Examining the impact of the digital environment on product success is crucial. The purpose of the study is to investigate the direct effects of disruptive technology (quality, efficiency and congruity) on digital entrepreneurship (new product development, cost-effectiveness and internationalization) and indirect moderating effects of the digital environment (data security, customer privacy and search engine optimization [SEO] algorithm) between disruptive technology and digital entrepreneurship.

This is a qualitative study by design. It uses the literature review method and the theory of disruption and competitive advantage to construct the six hypotheses linking the variables – disruptive technology, digital environment and digital entrepreneurship.

The study’s conceptual model proposes that disruptive technology leads to digital entrepreneurship; however, the digital environment moderates the relationship between disruptive technology and digital entrepreneurship in emerging markets.

The conceptual study has research implications for scholars. It constructs a conceptual framework and develops six hypotheses contextualized in emerging markets. The framework can be empirically tested across countries to validate the hypotheses and develop a competing model to explain more variance in digital entrepreneurship. This study also presents the possibility of analytical generalization.

This study has practical implications for digital entrepreneurs in emerging markets or those wishing to enter emerging markets. The main implication is that disruptive technology leads to digital entrepreneurship; however, the digital environment moderates it. Thus, digital entrepreneurs need to consider digital environmental effects such as data security, customer privacy and SEO. Given that two-thirds of the world is classified as an emerging market, the impact of the study is noticeable for practitioners as well.

Disruptive technology fosters digital entrepreneurship, which creates opportunities for innovative solutions for society worldwide. It breaks down the barriers to entry and promotes inclusivity by providing products and services that were unavailable before. Digital products are also economical and environmentally friendly, making them more suitable for people in emerging markets.

This study makes three new contributions. First, it proposes that disruptive technology leads to digital entrepreneurship and that the digital environment moderates the relationship between disruptive technology and digital entrepreneurship. Second, from a theoretical viewpoint, it develops a theoretical testable framework, links the variables and proposes the six hypotheses. Finally, the most significant contribution of the study is the identification of the digital environment variable and its dimensions – security, privacy and SEO algorithm – and its comparison between advanced countries and emerging markets.

Prior research from transaction costs economics argued that central firms perform better because they have superior access to information to discipline their alliance partners. Central firms may also, however, face higher costs and risks of unintentional learning and weaken their competence through structural inertia. We propose that these costs and risks are influenced by the learning capacities of the firms in the network and can explain different outcomes for focal firm performance.

To test our predictions, we use instrumental variable–generalized method of moments estimation techniques on 15,517 firm-year observations from equity alliance portfolios in the global food industry across a 21-year window.

We find support for our predictions and show that the relationship between network degree centrality and firm performance is negatively influenced by partners’ learning capacity and positively influenced by focal firms’ learning capacity, while firms with low network degree centrality benefit less from their learning capacity.

Future developments in transaction cost economics may consider partner and focal firms’ learning capacity as moderators of the network degree centrality – firm performance relationship.

In alliance decisions, managers must consider that the combination of high network degree centrality and partners’ learning capacity can lead to high costs, risks of unintentional learning, and structural inertia, all of which have negative consequences for performance. In concentrated industries where network positions are controlled by a few large firms, policymakers must acknowledge that firms may face substantial barriers to collaboration with learning-intensive firms.

This study is the first to develop and test a comprehensive transaction cost analysis of the central firm’s unintended knowledge flows and structural inertia in alliance networks. It is also the first to incorporate theoretically and empirically the hazards of complex and unintended information flows on the relationship of network degree centrality to performance in equity alliance portfolios.