Centre for Economic and Regional Studies Hungarian Academy of Sciences Centre of Excellence

Into the unknown: The extent and boldness of firms' international footprint

Abstract

Research Summary

Firms make footprints as they internationalize. Going beyond simple measures of firms' internationalization, we conceptualize and measure the extent of a firm's international footprint as the number of location‐mode combinations it is active in, whereas the boldness of the footprint shows how widespread (across modes and locations) firms' international activities are, compared to other firms with similar extent. Extent describes the complexity of international activities, and boldness captures the risk‐taking associated with operating in less know contexts. Consistent with a microfoundations lens on global strategy, we find that boldness correlates with managerial risk‐taking attributes, while the extent of internationalization strongly correlates with capabilities conducive to managing more complex operations. These measures offer a highly suitable tool for analyzing the relationship between internationalization and performance.

Managerial Summary

Traditional ways of measuring firms' international footprints do not describe well what they do globally. We develop a more nuanced and sharper view of firms' international footprints and a new way of thinking about the roles of complexity and risk‐taking in internationalization; what we call the extent and the boldness of a footprint, respectively. The new measures are potentially particularly useful for analyzing the relationship between internationalization and performance, which is at the core of what strategy research may offer to managers and business decision‐makers. The new measures are a stepping‐stone toward a better and managerially relevant understanding of global strategy decisions.