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...ternational assignment experience for their middle managers (Kobrin, 1988; Lublin, 1996). However, these firms still vary considerably in the degree to which they are “multinational” (Stopford, 1992; =-=Sullivan, 1994-=-). Therefore, in this section we consider the performance consequences of CEO international assignment experience when it is bundled with top-team international assignment experience and MNC global st...

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...and weights each segment according to its contribution to total sales (cf. Palepu, 1985). As discussed further below, we also conducted separate models that distinguished between related and unrelated diversification. Although the entropy score is an imperfect measure of diversification (e.g., an increase in the entropy score inflates the true increase in diversification), this measure “has been found to have good construct validity relative to other diversification measures” (Hoskisson et al., 1994: 1222). We operationalized geographic diversification using the composite measure validated by Sullivan (1994; see also Sambharya, 1996; Sanders and Carpenter, 1998). This measure includes three components: (1) the ratio of foreign sales to total sales; (2) foreign assets divided by total assets; (3) the number of country subsidiaries (calculated as a percentage of the highest value in the sample). Following Sullivan (1994), the three variables are summed to form our composite measure. Prior research has shown high inter-item reliability for the component variables (Sanders and Carpenter, 1998); we found similarly high reliability in this sample (alpha = 0.88). We then created variables indicating fo...

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..., we controlled for diversification using the number of four-digit SIC industries in which a firm operated, and we controlled for internationalization using the ratio of foreign sales to total sales (=-=Sullivan, 1994-=-). Since ownership effects may differ to the extent that a firm uses external finance, we controlled for reliance on the stock market for financing using a firm’s debt-to-equity ratio, corrected for t...

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...or the number of foreign countries with subsidiary operations. Recent research has suggested that studies of international diversification rely on multidimensional measures to improve validity (e.g., =-=Sullivan, 1994-=-). Consistent with this, we measure international diversification as the average FSTS and the average country scope for the three-year period from 1986 to 1988. We collected the FSTS data from the Ele...

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...e assets, and the degree of intangible assets is likely to differ considerably across different service industries (for example, utility firms vs consulting firms). Thus assets-based performance measures are less likely to take this difference into consideration. International diversification Consistent with the majority of previous studies, international diversification was operationalized as the ratio of FSTS in this study (e.g., Stopford and Wells, 1972; Grant, 1987; Habib and Victor, 1991; Tallman and Li, 1996). There have been recently some arguments in the literature about this measure (Sullivan, 1994; Ramaswamy et al., 1996; Hitt et al., 1997; Gomes and Ramaswamy, 1999). For example, Sullivan (1994) has suggested the use of a multidimensional measure consisting of five items, and Ramaswamy et al. (1996) have cast serious doubts on this measure based on problems with content validity, criterion validity, and reliability. In turn, Ramaswamy et al. (1996) have argued for the use of single-item measures. Other measures used, besides the FSTS measure, in some studies include the number of countries in which the firm operates (e.g., Tallman and Li, 1996) and the ration of foreign assets to tota...

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... new markets in transition and other emerging economies. Measures Dependent variable. Prior studies on international diversification have recommended the use of multiple measures to improve validity (=-=Sullivan, 1994-=-). Following prior research, we measured international diversification by combining three widely used measures: (1) firm sales from foreign operations divided by total firm sales, (2) foreign assets d...

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...aped relationship between a firm’s export intensity and its labour productivity growth. This optimal level of a firm’s international engagement is also called the “threshold of internationalisation” (=-=Sullivan 1994-=-a). In the economic literature, only few studies investigate empirically the influence of varying export-sales ratios on performance, among them the study by Castellani (2002) who finds a positive lin...

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...gate foreign sales, (2) ratio of foreign sales to assets, (3) export, i.e., domestic production sold in foreign markets, and (4) number of subsidiaries. Other studies (e.g., Errunza and Senbet, 1984; =-=Sullivan, 1994-=-) have also employed a similar combination of factors to capture a firm’s multi-nationality. If the firm is classified as a multinational, it is coded as one, otherwise zero. Statistical Analyses The ...