This paper develops an index of internationalizationcommitment or foreign expansion index(FEI) of the firm. The FEI integrates variousdimensions of commitment tointernationalization that, although interrelated,have usually been analyzed independently, i.e.exports, foreign penetration operations (suchas foreign commercial agreements, sales outletsabroad and so on) and FDI. Because of itsprominent inter-firm relationships andNorth-South discrepancies, this study focuseson Italy, constructing FEIs for each of some4,000 firms for three periods characterized bydifferent exchange rate regimes. Thedeterminants of FEI in each period are studiedat both the macro and micro levels, the latterthrough the use of an ordered probit model. Thefindings suggest that: (a) firm size,inter-firm relations, innovation capabilities,location and technology are all highly significantdeterminants of FEI, but their relative impacton the foreign expansion is influenced by theexchange rate regime; and (b) although still lowand especially so in the South, Italy's FEIshave risen somewhat during the 1990s.
Review of Industrial Organization – Springer Journals
Published: Oct 4, 2004
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