DIGITAL REGULATORY DISTANCE AND CROSS-BORDER E-COMMERCE PERFORMANCE: THE MODERATING ROLE OF DIGITAL CAPABILITY

The rapid expansion of cross-border e-commerce (CBEC) has changed how firms access foreign markets, but digital channels do not eliminate differences between national regulatory environments. This study examines whether digital regulatory distance between a firm's home and destination markets is associated with lower CBEC performance and whether firm-level digital capability weakens this relationship. Drawing on the Uppsala internationalization perspective and the resource-based view, the study conceptualizes digital regulatory distance as a digital-specific form of institutional distance and digital capability as an internal resource for managing regulatory complexity. A synthetic panel dataset representing 300 firm–destination pairs observed over four years (1,200 observations) is used to demonstrate the proposed fixed-effects models. The simulated results indicate a negative association between digital regulatory distance and CBEC performance (β = −0.184, p < 0.001), a positive association between digital capability and CBEC performance (β = 0.217, p < 0.001), and a positive interaction between regulatory distance and digital capability (β = 0.096, p < 0.01). The interaction suggests that the negative association between regulatory distance and CBEC performance becomes weaker as digital capability increases. The study contributes a framework linking country-level digital regulatory heterogeneity with firm-level capability and identifies digital capability as a potential buffering mechanism. Because the dataset is synthetic, the numerical findings are illustrative rather than evidence from observed firms.