An empirical examination of the influence of industry and firm drivers on the rate of internationalization by firms

Abstract

Abstract Foreign direct investment made by firms globally rose by 40 percent to $315 billion in 1995 compared with the previous year. In spite of the apparent importance of globalization, very little research has examined the factors with potential to influence the rate of internationalization of firms. Using 158 large U.S.-based multinational firms drawn from seven different industries, this study explains about 24 percent of the variance of the rate of internationalization. Results indicate that global market growth rate, domestic market growth rate, relative size of domestic market to international market, employee productivity, administrative investments, as well as new plant and equipment influence the rate of internationalization of firms.