Date of Award
Doctor of Business Administration (DBA)
Dr. Lance E. Brouthers
Dr. Keith Brouthers
Dr. Rajaram Veliyath
In this research I address the question: how global should a firm be? Answering this question requires addressing several related questions. First, what is a global firm, and how does one measure how global a firm is? Second, which firm capabilities are antecedents to firm globalization? And finally, what is the relationship between firm globalization and performance?
I begin by examining Rugman’s (2003, 2005) and Asmussen’s (2009) measures for the globalization of a firm and develop a new, simplified, enhanced measure, the Degree of Globalization (DOG). DOG is an easy to interpret continuous ratio variable that is mathematically and empirically equivalent to Asmussen’s overall measure. Compared to Rugman’s and Asmussen’s systems, however, DOG has the advantages that it is: more parsimonious; easy to calculate; can be applied to more firms; is not sensitive to the definition of the countries that comprise the Asia-Pacific, North American, and European triads; and clarifies the distinction between the degree of globalization and degree of internationalization constructs. I validated DOG and confirmed the results for this new measure versus the two existing globalization measurement systems using the same sample used to develop those approaches.
I next examined the differences in capabilities that distinguish highly global firms from less global firms and the relationship between firm globalization and firm performance. Based on the Resource-Based View (RBV), I hypothesized that firms with greater technological and/or marketing capabilities would tend to be more globalized. Combining my application of the RBV with the concept of strategic fit as profile deviation, I further hypothesized that firms would perform better with a higher degree of fit between a firm’s actual and predicted DOG. I reasoned that firms that under-globalized relative to their capabilities would suffer an opportunity cost from the inefficient under-utilization of their capabilities. I similarly reasoned that firms that over-globalized relative to their capabilities would suffer diminished performance due to the ineffective over-utilization of their capabilities. My empirical analysis of 222 large firms from multiple industries across the globe supported my hypothesis that firms with greater technological capabilities tend to be more global.