How do we capture “Global Specialization” when measuring firms’ degree of globalization?

Abstract and Key ResultsThe IB literature informs us of several ways to measure firms’ degree of globalization. In this paper we make the argument that in fact none of the existing indices really measure firms’ degree of “global specialization”, that is, to what extent their allocation of resources is multidomestic or global.In order to remedy this we introduce a complementary index measuring how firms are configuring their value chains — whether they are replicating value chain activities from country to country or locating them in globally specialized units in order to exploit an international division of labor. We then test this “global specialization” index empirically on a sample of Danish MNCs.We find that the index is able to identify a distinct group of firms with significantly higher degrees of global value chain configuration. The firms in this group do not necessarily score high on conventional internationalization measures.

[1]  Joseph C. Miller,et al.  The Effects of Multinational and Export Diversification on the Profit Stability of U.S. Corporations , 1980 .

[2]  Nicolai J. Foss,et al.  Knowledge and Organization in the Theory of the Multinational Corporation: Some Foundational Issues , 2006 .

[3]  Karl P. Sauvant.  UNCTAD, World Investment Report 2004: The Shift Towards Services (Geneva and New York: United Nations, 2004). , 2004 .

[4]  H. Belloc.  The Free Press , 2002 .

[5]  Rolph E. Anderson,et al.  Multivariate Data Analysis with Readings , 1979 .

[6]  U. Steger.  Facetten der Globalisierung , 1999 .

[7]  Robert Torrens,et al.  An Essay on the External Corn Trade , 1972 .

[8]  Baruch Lev,et al.  Sales Stabilization Through Export Diversification , 1971 .

[9]  David M. Schweiger,et al.  Global Strategy Implementation at the Business Unit Level: Operational Capabilities and Administrative Mechanisms , 1991 .

[10]  Nicolai J. Foss,et al.  Resources and Transaction Costs: How the Economics of Property Rights Furthers the Resource-based View , 2004 .

[11]  K. Sauvant.  Unctad's World Investment Report 2004: The Shift Towards Services , 2005 .

[12]  C. Bartlett,et al.  Managing across Borders: The Transnational Solution , 1990 .

[13]  J. Dunning.  Toward an Eclectic Theory of International Production: Some Empirical Tests , 1980 .

[14]  H. Germann,et al.  Messung der Globalisierung: ein Paradoxon , 1999 .

[15]  Snejina Michailova,et al.  Knowledge Sharing and National Culture: A Comparison Between China and Russia , 2004 .

[16]  Peter G. Klein,et al.  The Theory of the Firm and its Critics: A Stocktaking and Assessment , 2005 .

[17]  Torben Pedersen,et al.  Closing the Knowledge Gap in Foreign Markets - A Learning Perspective , 2005 .

[18]  Nicolai J. Foss,et al.  The limits to designed orders: Authority under “distributed knowledge” conditions , 2006 .

[19]  Robert E. Hoskisson,et al.  International Diversification: Effects on Innovation and Firm Performance in Product-Diversified Firms , 1997 .

[20]  Paul W. Beamish,et al.  Geographic scope and multinational enterprise performance , 2003 .

[21]  Mary B. Teagarden,et al.  Human Resource Management in Cross-Cultural Contexts: Emic Practices versus Etic Philosophies , 1997 .

[22]  T. Andersen,et al.  Capital Structure, Environmental Dynamism, Innovation Strategy, and Strategic Risk Management , 2005 .

[23]  J. Fisch,et al.  Exploring the Globalization of German MNCs with the Complex Spread and Diversity Measure , 2003 .

[24]  A. Salter,et al.  My Precious. The Role of Appropriability Strategies in Shaping Innovative Performance , 2005 .

[25]  S. Ghoshal.  Global strategy: An organizing framework , 1987 .

[26]  J. Dunning,et al.  The world's largest industrial enterprises , 1981 .

[27]  A. Morrison,et al.  An Empirical Analysis of the Integration-Responsiveness Framework in Global Industries , 1990 .

[28]  Kenneth Husted,et al.  Enhancing selective capacity through venture bases , 2003 .

[29]  Rolph E. Anderson,et al.  Multivariate data analysis (4th ed.): with readings , 1995 .

[30]  Lars Frederiksen,et al.  Why Firm-established User Communities Work for Innovation: The Personal Attributes of Innovative Users in the Case of Computer-controlled Music , 2004 .

[31]  David M. Reeb,et al.  Systematic Risk of the Multinational Corporation , 1998 .

[32]  Nicolai J. Foss,et al.  The Next Step in the Evolution of the RBV: Integration with Transaction Cost Economics , 2004 .

[33]  Thomas Ritter,et al.  The knowledge retrieval matrix: codification and personification as separate strategies , 2005, J. Knowl. Manag..

[34]  Kannan Ramaswamy,et al.  Measuring the Degree of Internationalization of a firm: A Comment , 1996 .

[35]  Alan V. Deardorff.  Weak links in the chain of comparative advantage , 1979 .

[36]  Kendall Roth,et al.  International Configuration and Coordination Archetypes for Medium-Sized Firms in Global Industries , 1992 .

[37]  P. Christensen,et al.  Facilitating Knowledge Sharing: A Conceptual Framework , 2005 .

[38]  Sumantra Ghoshal,et al.  Organizing for Worldwide Effectiveness: The Transnational Solution , 1988 .

[39]  Richard Winefield,et al.  Never the Twain Shall Meet , 2009 .

[40]  Bent Petersen,et al.  Knowledge Gaps: The Case of Knowledge about Foreign Entry , 2003 .

[41]  C. Cheng,et al.  An Investigation of the Relationship between International Activities and Capital Structure , 1997 .

[42]  Stephen Tallman,et al.  Effects of International Diversity and Product Diversity on the Performance of Multinational Firms , 1996 .

[43]  D. Ricardo.  On the Principles of Political Economy and Taxation , 1891 .

[44]  Nicolai J. Foss,et al.  Entrepreneurship and the Economic Theory of the Firm: Any Gains from Trade? , 2004 .

[45]  Paul W. Beamish,et al.  DIVERSIFICATION STRATEGY AND INTERNATIONALIZATION: IMPLICATIONS FOR MNE PERFORMANCE , 1989 .

[46]  Øystein D. Fjeldstad,et al.  CONFIGURING VALUE FOR COMPETITIVE ADVANTAGE: ON CHAINS, SHOPS, AND NETWORKS , 1998 .

[47]  Balaji S. Chakravarthy,et al.  Strategic planning for a global business , 1986 .

[48]  Torben Pedersen,et al.  Internal Versus External Knowledge Sourcing Of Subsidiaries - An Organizational Trade-Off , 2003 .

[49]  J. Cosset,et al.  The measurement of the degree of foreign involvement , 1995 .

[50]  Daniel P. Sullivan.  Measuring the Degree of Internationalization of a Firm , 1994 .

[51]  G. Hedlund.  The hypermodern MNC—A heterarchy? , 1986 .

[52]  N. Nohria,et al.  Global strategic linkages and industry structure , 1991 .

[53]  Anke Hassel,et al.  Dimensionen der Internationalisierung: Ergebnisse der Unternehmensdatenbank "Internationalisierung der 100 größten Unternehmen in Deutschland" , 2000 .

[54]  Nicolai J. Foss,et al.  Methodological Individualism and the Organizational Capabilities Approach , 2004 .

[55]  B. Nielsen,et al.  Toward a Phase-Model of Global Knowledge Management Systems in Multinational Corporations , 2004 .

[56]  Kirsten Foss,et al.  Hands Off! How Organizational Design Can Make Delegation Credible , 2005 .

[57]  T. Andersen,et al.  A Strategic Risk Management Framework for Multinational Enterprise , 2005 .

[58]  Anke Hassel,et al.  Two Dimensions of the Internationalization of Firms , 2003 .