Edited by Craig C. Julian
Chapter 10: A capacity-building framework for the internationalization of firms from emerging economies
Internationalization is generally described as the method of increasing foreign commitment through various modes of entry, such as direct/indirect exports, mergers and acquisitions, wholly owned subsidiaries and joint ventures, over a period of time. The degree of internationalization is a tiered concept dependent on several factors, for example, structure, performance and even the attitude of managers in the internationalizing firms. Several approaches have been documented in the literature as being suitable for measuring the degree of internationalization. For example, a composite measure of five ratio variables was used to measure the performance, structure and attitude towards internationalization amongst 100 American MNCs as per Forbes Magazine (Sullivan, 1994). In Europe, the SCOPE Project conducted a detailed study on 200 core firms to measure the degree of internationalization and create a universal scoreboard based on three ratio variables, namely, FSTS (foreign sales as a percentage of total sales), FATA (foreign assets as a percentage of total assets) and FETE (foreign employment as a percentage of total employment) (Tudler et al., 2001). The scoreboard indicated that a combined score of 30 per cent and below indicated a low level of internationalization whereas more than 30 per cent indicated a high level of internationalization. The scoreboard indicated that a combined score of 30 per cent and below indicated a low level of internationalization whereas more than 30 per cent indicated a high level of internationalization. This measure was known as the Transnationality Index (TNI) for the firm.
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