Revealing a Social Dimension of Internationalization: Transnational Board Interlocks as a Social-Based Proxy for the Degree of Internationalization of the Firm

Abstract

Systematic international diversification research depends on reliable measurements of the degree of internationalization (DOI) of the firm. In this paper, we argue that the inclusion of social markers of internationalization can contribute to the development of more robust conceptualizations of the DOI construct. Unlike traditional metrics of DOI, such as foreign sales over total sales or foreign assets over total assets, social-based metrics of internationalization can reveal less visible foreign resource interdependencies across the firm’s entire value chain. By combining social-based metrics of DOI with traditional measures of internationalization, we uncovered three distinct dimensions of internationalization: a real one, composed of the firm’s foreign sales and assets; an exposure one, represented by the firm’s extent and cultural dispersion of foreign subsidiaries; and a social one, represented by the extent of the firm’s top managers international experience and the number and cultural zone dispersion of the firm’s transnational board interlocks. Results from both an exploratory and confirmatory factor analysis show that these dimensions are sufficiently distinctive to warrant theoretical and empirical partitioning. These findings have implications for the way researchers select and combine DOI metrics and underscore the importance of conducting a thorough theoretical and statistical assessment of DOI conceptualizations before proceeding with empirical research.