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RIMS: A new approach to measuring firm internationalization

Author

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  • Victor B Marshall

    (Wright School of Business, Dalton State)

  • Lance Eliot Brouthers

    (Kennesaw State University)

  • Dawn L Keig

    (Whitworth University)

Abstract

Understanding the antecedents to, and consequences of, a firm’s degree of internationalization is integral to international business research. In order to be accepted by scholars, empirical research that tests hypotheses regarding drivers and/or consequences of firm internationalization needs to use a valid measure of firm internationalization. In this paper, we develop a new measure, the ratio of international market shares (RIMS); RIMS measures a firm’s degree of conformance to the theoretically grounded characteristics of a maximally internationalized global firm. RIMS is theoretically and empirically compared to three widely used measures of firm internationalization: foreign sales to total sales (FSTS), international diversification, and international scope. Each of the three is shown to have serious limitations while RIMS does not. In addition to being theoretically based, RIMS also has the advantages that it: measures the degree to which a firm has penetrated the rest of the world’s market relative to the degree it has penetrated its primary market; captures the combined effects of the breadth and average depth of internationalization; is easy to calculate; is easy to interpret, and is calculable for more firms than measures of diversification or FSTS. All four measures are tested on a sample of large manufacturing firms.

Suggested Citation

  • Victor B Marshall & Lance Eliot Brouthers & Dawn L Keig, 2020. "RIMS: A new approach to measuring firm internationalization," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(7), pages 1133-1141, September.
    • Handle: RePEc:pal:jintbs:v:51:y:2020:i:7:d:10.1057_s41267-020-00320-2
    DOI: 10.1057/s41267-020-00320-2
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    References listed on IDEAS

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    Cited by:

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    3. Viswanathan Nagarajan & Prateek Sharma, 2021. "Firm internationalization and long‐term impact of the Covid‐19 pandemic," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(6), pages 1477-1491, September.
    4. Qiao, Penghua & Chang, Ming & Zeng, Yuping, 2024. "The influence of digitalization on SMEs’ OFDI in emerging countries," Journal of Business Research, Elsevier, vol. 177(C).
    5. López-Caicedo, Juan Camilo & Baena-Rojas, Jose Jaime & Gomez-Trujillo, Ana Maria & Bonilla-Calle, Daniel, 2024. "The internationalization of Colombian Multilatinas: a composite indicator analysis," TEC Empresarial, School of Business, Costa Rica Institute of Technology (ITCR), vol. 18(1), pages 43-64.
    6. Artemis Chang & Rui Torres de Oliveira & Hsi-Mei Chung & Nan Zheng, 2022. "Subnational response differences on the Belt and Road Initiative policy and firm internationalization: A longitudinal and multi-level approach," Journal of International Business Policy, Palgrave Macmillan, vol. 5(2), pages 152-171, June.
    7. Puhr, Harald & Müllner, Jakob, 2022. "Foreign to all but fluent in many: The effect of multinationality on shock resilience," Journal of World Business, Elsevier, vol. 57(6).
    8. Suyash Garg & Zhiang Lin & Haibin Yang, 2023. "Board caste diversity in Indian MNEs: The interplay of stakeholder norms and social embeddedness," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(5), pages 797-828, July.
    9. Frederic Läger & Yassin Denis Bouzzine & Rainer Lueg, 2022. "The relationship between firm complexity and corporate social responsibility: International evidence from 2010–2019," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(3), pages 549-560, May.
    10. Juergensen, Jill Josefina & Narula, Rajneesh & Surdu, Irina, 2022. "A systematic review of the relationship between international diversification and innovation: A firm-level perspective," International Business Review, Elsevier, vol. 31(2).

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