Advertisement

Revealing a Social Dimension of Internationalization: Transnational Board Interlocks as a Social-Based Proxy for the Degree of Internationalization of the Firm

Research Article

Abstract

Systematic international diversification research depends on reliable measurements of the degree of internationalization (DOI) of the firm. In this paper, we argue that the inclusion of social markers of internationalization can contribute to the development of more robust conceptualizations of the DOI construct. Unlike traditional metrics of DOI, such as foreign sales over total sales or foreign assets over total assets, social-based metrics of internationalization can reveal less visible foreign resource interdependencies across the firm’s entire value chain. By combining social-based metrics of DOI with traditional measures of internationalization, we uncovered three distinct dimensions of internationalization: a real one, composed of the firm’s foreign sales and assets; an exposure one, represented by the firm’s extent and cultural dispersion of foreign subsidiaries; and a social one, represented by the extent of the firm’s top managers international experience and the number and cultural zone dispersion of the firm’s transnational board interlocks. Results from both an exploratory and confirmatory factor analysis show that these dimensions are sufficiently distinctive to warrant theoretical and empirical partitioning. These findings have implications for the way researchers select and combine DOI metrics and underscore the importance of conducting a thorough theoretical and statistical assessment of DOI conceptualizations before proceeding with empirical research.

Keywords

Transnational interlocks Internationalization Degree of internationalization 

Notes

Acknowledgements

This article received financial support from the Asociación Mexicana de Cultura, A.C.

References

  1. Annavarjula, M., & Beldona, S. (2000). Multinationality–performance relationship: A review and reconceptualization. The International Journal of Organizational Analysis, 8(1), 48–67.CrossRefGoogle Scholar
  2. Asmussen, C. G., Pedersen, T., & Petersen, B. (2007). How do we capture “global specialization” when measuring firms’ degree of globalization? Management International Review, 47(6), 791–813.CrossRefGoogle Scholar
  3. Autio, E., Sapienza, H. J., & Almeida, J. G. (2000). Effects of age at entry, knowledge intensity, and imitability on international growth. Academy of Management Journal, 43(5), 909–924.Google Scholar
  4. Bagozzi, R. P., Yi, Y., & Phillips, L. W. (1991). Assessing construct validity in organizational research. Administrative Science Quarterly, 36(3), 421–458.CrossRefGoogle Scholar
  5. Bourdieu, P. (1986). The forms of capital. In J. G. Richardson (Ed.), Handbook of theory and research for the sociology of education (pp. 241–258). New York: Greenwood Press.Google Scholar
  6. Buckley, P. J., & Casson, M. (1976). The future of the multinational enterprise. London: Macmillan.CrossRefGoogle Scholar
  7. Carpenter, M. A., & Fredrickson, J. W. (2001). Top management teams, global strategic posture, and the moderating role of uncertainty. Academy of Management Journal, 44(3), 533–545.Google Scholar
  8. Carpenter, M. A., & Westphal, J. D. (2001). The strategic context of external network ties: Examining the impact of director appointments on board involvement in strategic decision making. Academy of Management Journal, 44(4), 639–660.Google Scholar
  9. Carroll, W. K., & Sapinski, J. P. (2010). Corporate elites and intercorporate networks. In J. Scott & P. Carrington (Eds.), The Sage handbook of social network analysis (pp. 180–195). London: Sage.Google Scholar
  10. Coviello, N., & Munro, H. (1997). Network relationships and the internationalisation process of small software firms. International Business Review, 6(4), 361–386.CrossRefGoogle Scholar
  11. Daniels, J. D., & Bracker, J. (1989). Profit performance: Do foreign operations make a difference? Management International Review, 29(1), 46–56.Google Scholar
  12. Ellis, P. (2000). Social ties and foreign market entry. Journal of International Business Studies, 31(3), 443–469.CrossRefGoogle Scholar
  13. Forsgren, M. (1989). Managing the internationalization process: The Swedish case. London: Routledge.Google Scholar
  14. Forsgren, M. (2002). The concept of learning in the Uppsala internationalization process model: A critical review. International Business Review, 11(3), 257–277.CrossRefGoogle Scholar
  15. Forsgren, M. (2016). A note on the revisited Uppsala internationalization process model—the implications of business networks and entrepreneurship. Journal of International Business Studies, 47(9), 1135–1144.CrossRefGoogle Scholar
  16. Freeman, L. C. (1979). Centrality in social networks: Conceptual clarification. Social Networks, 1, 215–239.CrossRefGoogle Scholar
  17. Ghoshal, S., & Bartlett, C. A. (1990). The multinational corporation as an interorganizational network. Academy of Management Review, 15(4), 603–626.CrossRefGoogle Scholar
  18. Glaum, M., & Oesterle, M.-J. (2007). 40 years of research on internationalization and firm performance: More questions than answers? Management International Review, 47(3), 307–317.CrossRefGoogle Scholar
  19. Goerzen, A., & Beamish, P. W. (2003). Geographic scope and multinational enterprise performance. Strategic Management Journal, 24(13), 1289–1306.CrossRefGoogle Scholar
  20. Gomes, L., & Ramaswamy, K. (1999). An empirical examination of the form of the relationship between multinationality and performance. Journal of International Business Studies, 30(1), 173–187.CrossRefGoogle Scholar
  21. Granovetter, M. (1985). Economic action and social structure: The problem of embeddedness. American Journal of Sociology, 91(3), 481–510.CrossRefGoogle Scholar
  22. Greve, P., Nielsen, S., & Ruigrok, W. (2009). Transcending borders with international top management teams: A study of European financial multinational corporations. European Management Journal, 27(3), 213–224.CrossRefGoogle Scholar
  23. Harachi, T. W., Choi, Y., Abbott, R. D., Catalano, R. F., & Bliesner, S. L. (2006). Examining equivalence of concepts and measures in diverse samples. Prevention Science, 7(4), 359–368.CrossRefGoogle Scholar
  24. Hassel, A., Höpner, M., Kurdelhusch, A., Rehder, B., & Zugehör, R. (2003). Two dimensions of the internationalization of firms. Journal of Management Studies, 40(3), 705–723.CrossRefGoogle Scholar
  25. Haunschild, P. R., & Beckman, C. M. (1998). When do interlocks matter? Alternate sources of information and interlock influence. Administrative Science Quarterly, 43(4), 815–844.CrossRefGoogle Scholar
  26. Haynes, K. T., & Hillman, A. (2010). The effect of board capital and CEO power on strategic change. Strategic Management Journal, 31(11), 1145–1163.CrossRefGoogle Scholar
  27. Hennart, J.-F. (1977). A theory of foreign direct investment, Doctoral dissertation. Maryland: University of Maryland.Google Scholar
  28. Hennart, J.-F. (1982). A theory of multinational enterprise. Ann Harbor: University of Michigan Press.Google Scholar
  29. Hennart, J.-F. (2007). The theoretical rationale for a multinationality–performance relationship. Management International Review, 47(3), 423–452.CrossRefGoogle Scholar
  30. Hennart, J.-F. (2011). A theoretical assessment of the empirical literature on the impact of multinationality on performance. Global Strategy Journal, 1(1–2), 135–151.CrossRefGoogle Scholar
  31. Hitt, M. A., Bierman, L., Uhlenbruck, K., & Shimizu, K. (2016). The importance of resources in the internationalization of professional service firms: The good, the bad, and the ugly. Academy of Management Journal, 49(6), 1137–1157.CrossRefGoogle Scholar
  32. Hitt, M. A., Tihanyi, L., Miller, T., & Connelly, B. (2006). International diversification: Antecedents, outcomes, and moderators. Journal of Management, 32(6), 831–867.CrossRefGoogle Scholar
  33. Holm, U., Johanson, J., & Thilenius, P. (1995). Headquarters’ knowledge of subsidiary network contexts in the multinational corporation. International Studies of Management Organization, 25(1–2), 97–119.CrossRefGoogle Scholar
  34. Horn, J. L. (1965). A rationale and test for the number of factors in factor analysis. Psychometrika, 30(2), 179–185.CrossRefGoogle Scholar
  35. Johanson, J., & Mattsson, L. G. (1987). Interorganizational relations in industrial systems—a network approach compared with the transaction cost approach. International Studies of Management and Organization, 17(1), 34–48.CrossRefGoogle Scholar
  36. Johanson, J., & Mattsson, L. G. (1988). Internationalization in industrial system: A network approach. In N. Hood & J.-E. Vahlne (Eds.), Strategies in global competition (pp. 303–321). New York: Croom Helm.Google Scholar
  37. Johanson, J., & Vahlne, J. E. (1977). The internationalization process of the firm—a model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8(Spring/Summer), 23–32.CrossRefGoogle Scholar
  38. Johanson, J., & Vahlne, J. E. (1990). The mechanism of internationalisation. International Marketing Review, 7(4), 11–24.CrossRefGoogle Scholar
  39. Johanson, J., & Vahlne, J. E. (2009). The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership. Journal of International Business Studies, 40(9), 1411–1431.CrossRefGoogle Scholar
  40. Kaczmarek, S., & Ruigrok, W. (2013). In at the deep end of firm internationalization. Management International Review, 53(4), 513–534.CrossRefGoogle Scholar
  41. Kwok, C. C. Y., & Reeb, D. M. (2000). Internationalization and firm risk: An upstream-downstream hypothesis. Journal of International Business, 31(4), 611–629.CrossRefGoogle Scholar
  42. Lu, J. W., & Beamish, P. W. (2004). International diversification and firm performance: The s-curve hypothesis. Academy of Management Journal, 47(4), 598–609.Google Scholar
  43. Miller, S. R., Lavie, D., & Delios, A. (2016). International intensity, diversity, and distance: Unpacking the internationalization-performance relationship. International Business Review, 25(4), 907–920.CrossRefGoogle Scholar
  44. Mizruchi, M. S. (1996). What do interlocks do? An analysis, critique, and assessment of research on interlocking directorates. Annual Review of Sociology, 22(1), 271–298.CrossRefGoogle Scholar
  45. Nguyen, Q. T. K. (2016). Multinationality and performance literature: A critical review and future research agenda. Management International Review, 57(3), 1–37.Google Scholar
  46. Oesterle, M.-J., & Richta, H. N. (2013). Internationalisation and firm performance: State of empirical research efforts and need for improved approaches. European Journal of International Management, 7(2), 204–224.Google Scholar
  47. Pfeffer, J. (1972). Size and composition of corporate boards of directors: The organization and its environment. Administrative Science Quarterly, 17(2), 218–228.CrossRefGoogle Scholar
  48. Pfeffer, J., & Salancik, G. R. (1978). The external control of organizations. New York: Harper and Row.Google Scholar
  49. Ramaswamy, K. (1995). Multinationality, configuration, and performance: A study of MNEs in the US drug and pharmaceutical industry. Journal of International Management, 1(2), 231–253.Google Scholar
  50. Ramaswamy, K., Kroeck, K. G., & Renforth, W. (1996). Measuring the degree of internationalization of a firm: A comment. Journal of International Business Studies, 27(1), 167–177.CrossRefGoogle Scholar
  51. Ronen, S., & Shenkar, O. (1985). Clustering countries on attitudinal dimensions: A review and synthesis. Academy of Management Review, 10(3), 435–454.CrossRefGoogle Scholar
  52. Ronen, S., & Shenkar, O. (2013). Mapping world cultures: Cluster formation, sources and implications. Journal of International Business Studies, 44(9), 867–897.CrossRefGoogle Scholar
  53. Rugman, A. M. (1981). Inside the multinationals. New York: Columbia University Press.Google Scholar
  54. Rugman, A. M., & Oh, C. H. (2011). Methodological issues in the measurement of multinationality of US firms. Multinational Business Review, 19(3), 202–212.CrossRefGoogle Scholar
  55. Sambharya, R. B. (1995). The combined effect of international diversification and product diversification strategies on the performance of U.S.-based multinational corporations. Management International Review, 35(3), 197–218.Google Scholar
  56. Stopford, J. M., & Dunning, J. H. (1983). The world directory of multinational enterprises 1982–83. Detroit: Gale Research Company.Google Scholar
  57. Sullivan, D. (1994). Measuring the degree of internationalization of a firm. Journal of International Business Studies, 25(2), 325–342.CrossRefGoogle Scholar
  58. Sullivan, D. (1996). Measuring the degree of internationalization of a firm: A reply. Journal of International Business Studies, 27(1), 179–192.CrossRefGoogle Scholar
  59. Thomas, D. E., & Eden, L. (2004). What is the shape of the multinationality-performance relationship. Multinational Business Review, 12(1), 89–110.CrossRefGoogle Scholar
  60. Useem, M. (1984). The inner circle: Large corporations and the rise of business political activity in the U.S. and U.K. New York: Oxford University Press.Google Scholar
  61. Vachani, S. (1991). Distinguishing between related and unrelated international geographic diversification: A comprehensive measure of global diversification. Journal of International Business Studies, 22(2), 307–322.CrossRefGoogle Scholar
  62. Verbeke, A., & Brugman, P. (2009). Triple-testing the quality of multinationality-performance research: An internalization theory perspective. International Business Review, 18(3), 265–275.CrossRefGoogle Scholar
  63. Verbeke, A., & Forootan, M. Z. (2012). How good are multinationality-performance (M–P) empirical studies? Global Strategy Journal, 2(4), 332–344.CrossRefGoogle Scholar
  64. Welch, D. E., & Welch, L. S. (1996). The internationalization process and networks: A strategic management perspective. Journal of International Marketing, 4(3), 11–28.Google Scholar
  65. Wiersema, M. F., & Bowen, H. P. (2011). The relationship between international diversification and firm performance: Why it remains a puzzle. Global Strategy Journal, 1(1–2), 152–170.CrossRefGoogle Scholar
  66. Williamson, O. E. (1975). Markets and hierarchies. New York: Free Press.Google Scholar
  67. Zaheer, S. (1995). Overcoming the liability of foreignness. Academy of Management Journal, 38(2), 341–363.Google Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Department of Business AdministrationInstituto Tecnológico Autónomo de México (ITAM)Mexico CityMexico

Personalised recommendations