Methodological Issues in Researching Internationalisation
Strategies of Australian Firms1
Geoffrey Lewis
Visiting Professor, Melbourne Business School
21 Osborne Street, Hackney, S.A. 5069
Tel (618) 8362 0621 glewis@camtech.net.au
Tatiana Minchev
Doctoral Candidate, Flinders University of South Australia
16 Dotterel Drive, Semaphore Park S.A. 5019
Tel. (618) 8449 8215 tminchev@iweb.net.au
SCHOOL OF COMMERCE
RESEARCH PAPER SERIES: 01-3
ISSN: 1441-3906
Abstract
The central issue of research into internationalisation of Australian companies is under what
circumstances geographical diversification improves the financial performance of a firm.
Significant methodological problems related to operationalising internationalisation and
performance are confronted. Of these, difficulties associated with the collection of firm-level
data in Australia are the most pressing. A mechanism needs to be established for the
collection of such data relevant to internationalisation. This is consistent with calls for
greater disclosure by Australian companies in general.
1. Introduction
At the heart of research into the patterns and processes of internationalisation of Australian
companies is the issue of under what circumstances geographical diversification improves the
financial performance of a firm. Despite the theoretical and empirical advances, many authors
note the increased inconsistencies between the findings of different studies on the
geographical diversification-performance relationship (Grant et al., 1988; Sullivan, 1994;
Hitt, Hosskisson & Kim, 1997; Gomes & Ramawasamy, 1999, Delios & Beamish, 1999;
Geringer, Tallman & Olsen, 2000).
Although the process of firms’ internationalisation is a well-researched area, studies in the
Australian context are limited and focus on either industry-level policy (The Global
Challenge, 1990: Yetton et al., 1992; Industry Commission Report No 53, 1996), the
1
An earlier draft of this paper was presented in the interactive stream at the 12 th ANZAM International
Conference, 6-9 December, 1998
1
behavioural characteristics of exporting firms (Barrett, 1986; Welch, 1993) or the behaviour
of multinationals in Australia (Bora, 1998). The overwhelming majority of research on the
international diversification-performance paradigm comes from the USA and Europe
(Rugman, 1983; Michael & Shaked, 1986; Grant, 1987; Grant et al.; 1988, Geringer et al.,
1989; Olusoga, 1993; Sullivan, 1994; Tallman & Li, 1996; Hitt et al., 1997; Gomes &
Ramawasamy, 1999).
The study of the relationship between internationalisation and performance of Australian
companies is of considerable practical importance, as many of these firms have failed to
match their record of success in domestic markets with performance in overseas markets.
Well-known examples include TNT, Burns Philp, Westpac, CSR and ANI (Ferguson &
James, 1998).
2. Area of research interests
Discussion of previous research
Early research (Stopford & Wells, 1972; Rumelt, 1974) does not specifically explore the
important relationship between geographical diversification and the performance of an
international firm. Most of the subsequent studies, as Kim et al. (1993) observe, are still
dominated by Rumelt’s product diversification-based approach. Therefore, they fail to capture
both the diversity of foreign markets served by a firm and the dispersion patterns of a firm’s
activities around the globe.
Empirical studies which were focussed on international diversification and performance, and
patterned on product diversification research began to appear in the late 1980s. A concise
review of the state of knowledge in this area is given in Lewis & Minchev (2000). More
comprehensive reviews of the product and international diversification and performance
literature are provided by Dess, Gupta, Hennart & Hill (1995), Delios & Beamish (1999),
Gomes & Ramaswamy (1999), Geringer, Tallman and Olsen (2000), and Palich, Cardinal &
Miller (2000). Despite more than a decade of research into the area and increasingly more
sophisticated statistical techniques, the precise nature of the relationship between
geographical diversification and performance remains problematic. For example, Sullivan
(1994) cites six previous studies that report a positive, six an intermediate and five a negative
relationship. Geringer et al. (1989) establish a deterministic relationship between financial
performance and internationalisation, and theorise about the existence of a certain "threshold
2
of internationalisation". Another issue is whether the relationship is linear or quadratic (Grant
et al., 1988; Gomes & Ramaswamy, 1999). Furthermore, causation of the relationship is
ambiguous, i.e. whether multinational diversification promotes profitability or whether profits
generated at home are financing overseas investments (Grant, 1987).
To our knowledge, there are few recent Australian studies that address this topical issue at a
firm level. A notable exception is a study by Lewis & Jarvie (1997) that show that there is no
consistent relationship between the degree of diversification and performance of the 63
Australian companies studied. Their study, because it uses Rumelt’s (1974) methodology for
comparability, does not incorporate geographical diversification. The other study by Mangos
& OBrien (1999), who studied 50 Australian public firms, establishes an inverse U-shaped
curvilinear relationship between international diversification and economic performance.
International diversification beyond the low- to moderate levels (where the Foreign Sales to
Total Sales Ratio was >35%) tends to depress performance.
Yet there are several reasons to expect multinational corporations (MNCs) to have high levels
of profitability. These include returns on intangible assets such as technological know-how
and brand names, market power resulting from scope and scale economies, a wider range of
investment opportunities, competitive retaliation, lower factor costs, and lower systematic, or
beta, risk (Grant, 1987, Rivera, 1991, Kim et al., 1993). In addition to these, the diversity of
environments in which a MNC operates “exposes the MNC to multiple stimuli, allows it to
develop diverse capabilities, and provides it with a broader learning opportunity than is
available to a purely domestic firm” (Bartlett & Ghoshal, 1995).
Research currently being undertaken by the authors will attempt to fill in the gap in the body
of Australian strategic management research by answering the following questions:

How the internationalisation of Australian public companies influenced their
performance, and

Whether Australian companies have indeed increased shareholder value as a
result of internationalisation.
3. Methodological issues
General methodological problems
In this research, significant methodological problems are confronted. Of these, difficulties
associated with the collection of firm-level data in Australia are the most pressing.
3
One of the obvious reasons for the reported conflicting results is lack of a robust methodology
to measure the degree of internationalisation. Hence the difficulty in comparability of results
as different studies use different measures of internationalisation, such as the ratio of Foreign
Sales to Total Sales, Foreign Assets to Total Assets and Overseas Subsidiaries to Total
Subsidiaries. These difficulties are compounded by the use of different measures of
performance, such as Return on Sales, Return on Assets and Rate of Return.
Grant et al. (1988) argue that findings on the relationship between diversity and profitability
are highly susceptible to the choice of profitability measures, time period, control variables,
choice of data and method of analysis. Other authors (Hoskisson et al., 1993) also attribute
much of the confusion regarding the relationship between internationalisation and
performance to measurement deficiencies.
Another factor that may account for the conflicting findings is the composition of the sample,
whereby the sampling frame is heavily biased toward companies in a single industry, rather
than being cross-sectional. The differences in the time frame may also have a significant
influence, reflecting either a stable or uncertain economic environment under which a
particular study was undertaken. A further difficulty is associated with collecting and
interpreting data on the firm’s internationalisation strategies and performance due to
confidentiality and differences in management accounting practices across firms and countries
(Woodcock et al., 1994). Lastly, as noted by Varadarajan & Ramanujam (1987) and Bartlett
& Ghoshal (1989), managers’ ability to handle diversity may have undergone significant
changes as a result from their experience with diversification.
Tallman & Li (1996) suggest that further research should be carried using new larger samples
and different approaches. In their view, a longitudinal approach might better capture the
complexities of the firms’ organisational structures, which cannot be studied using secondary
data.
International strategy research has traditionally been based on the dichotomy between case
studies, or fine-grained methodologies, and database surveys (such as COMPUSTAT and
PIMS), or coarse-grained methodologies (Harrigan, 1983). While fine-grained methodologies
lack generalisibility, replicability and statistical rigour, they have the benefits of attention to
important details and access to multiple viewpoints. On the other hand, coarse-grained
methodologies are generalisible, comparable and often suited to cross-sectional studies of the
market. However, they fail to incorporate the nuances in a firm’s strategy.
4
Harrigan (1983) suggests that the gap should be bridged by devising a hybrid, or ‘mediumgrained’, methodology. This methodology is characterised by multiple sites, multiple data
sources (eg. published data, databases, archival materials, field interviews), and intricate
sample designs (incorporating testable hypothesis into sampling design). This approach is also
consistent with Hill's (1994) view that the diversification-performance research needs to be
undertaken within organisations and use internal company data.
Measures of geographical diversification
The measurement of diversification per se is not straightforward. The measurement of
geographical diversification is even less straightforward, which is evidenced by
terminological confusion and lack of a single accepted measure of internationalisation. Thus,
at least 7 definitions of geographical diversification can be established from the literature:
1. International diversity having two dimensions, multinationality and country scope
(Tallman & Li, 1996);
2. International involvement (Johanson & Valhne, 1977, Rivera, 1991);
3. Degree of internationalisation, or DOI (Grant, 1987 and Sullivan, 1994);
4. Degree of multinationality (Rugman, 1983) and multinationality (Gomes & Ramaswamy,
1999);
5. Degree of multinational diversity (Grant, 1987) and international diversity (Geringer et al.,
2000);
6. Global market diversification measure (Kim, 1989); and
7. Geographic scope (Delios & Beamish, 1999).
These measures are operationalised by different indices, while different authors may have
their own interpretation of a single index. Furthermore, while some authors adhere to the
dichotomy of the domestic versus foreign markets, other segment global markets into several
zones. These indices are summarised in Table 1 below.
Measures of performance
Measurement of performance also presents significant challenges. In the majority of previous
studies, two types of financial performance measures are used:
 accounting-based performance measures, which are most common, and
5
 market-based performance measures, which are becoming increasingly popular.
As Hoskisson et al. (1993) observe, accounting and market-based measures represent
different approaches to performance. Nevertheless, there is sufficient evidence to suggest that
past performance as expressed by accounting-based measures is a good predictor of future
market performance suggesting a close correlation between accounting-based and marketbased measures (Keats & Hitt, 1988). Several authors (eg. Grant, 1987; Kim et al., 1993,
Habib & Victor, 1991) defend the use of accounting measures on the premise that managers
and external analysts use these as a measure of efficiency of top managers. On the other hand,
market-based measures more directly measure the performance of a firm in terms of returns to
shareholders (Lewis & Jarvie, 1997). Dubofsky & Varadarajan (1987) argue that marketperformance measures are positively correlated with each other but are negatively correlated
with the accounting measures. Lewis & Minchev (2000) suggest that economic value added
(EVA) may be a more appropriate measure of performance. This is because the underlying
motive for overseas expansion, at least for a proportion of firms, is the increase in the amount
of profits, not profitability per se. The reason EVA is not widely used in diversification
research is that it is very time-consuming to assemble as well as difficult to access.
Table 1 – Summary of geographical diversification and performance measures
Study
Rugman
(1972)
Kim & Lyn
(1986)
Michel &
Shaked
(1986)
Grant (1987)
Geringer,
Beamish &
DaCosta
(1989)
Markusen
(1989)
Kim (1989)
and Kim et al.
(1993)
Habib &
Victor (1991)
Measure of geographical diversification
1. FSTS, where FS includes exports plus sales
of subsidiaries
2. Number of countries
1. FSTS
2. No of foreign affiliates
FSTS
Measure of performance
E/K, whereE=net income after taxes,
K=value of shareholders’ equity, or net
worth
FSTS
FSTS
RONA,  profit, ROE, ROS
ROS, ROA
Stong correlation between multinationality and
the following proxies for intangible assets:
1. R&D expenditure
2. Adverstising expenditure
3. Life span of the firm
4. Accumulated production experience
1. Unrelated diversification (2-digit SIC codes)
2. Global market diversification (dispersion of
operations across 7 zones)
3. Global related diversification (4-digit SICcodes)
1. Product/service diversity (2-digit SIC
codes)
ROA (risk adjusted)
Rate of return using Sharpe, Treynor and
Jensen measures
ROA
6
2.
FSTS
Hoskisson et
al. (1993)
Sullivan
(1994)
Olusoga
(1993)
Sambharya
(1995)
Tallman & Li
(1996)
Hitt,
Hoskisson &
Kim (1997)
Qian (1997)
Gomes &
Ramaswamy
(1999)
Mangos &
OBrien (1999)
Delios &
Beamish
(1999)
Geringer et al.
(2000)
1. ROA, ROE, ROS
2. Sharpe, Treynor, Jensen
3. No of employees, leverage, R&D
intensity
DOI=FSTS+FATA+OSTS+PDIO+TMIE
1. FSTS
2. Market concentration
3. Market diversification
Multiple measures:
1. Wrigley/Rumelt
2. Entropy SIC-based
3. NSD and BSD
4. FSTS
5. FATA
6. FSUBS
1. FSTS
2. No of countries
Entropy measure (FS weighted by a global
market region)
Product diversification: SIC-based
International diversification: entropy measure
(subsidiaries)
Composite index incorporating:
1. FSTS
2. FATA
3. Country scope
FSTS
Geographical scope (No of geographical
segments)
Geographic scope:
1. No of FDIs
2. No of countries in which FDIs occurred
FSTS
ESTS
Explanation of terms:
BSD
Broad Spectrum Diversification
ESTS Export Sales to Total Sales
FDI
Foreign Direct Investment
FSTS Foreign Sates to Total Sales
FATA Foreign Assets to Total Assets
NSD
Narrow Spectrum Diversification
OSTS Overseas Subsidiaries to Total Subsidiaries
PDIO
ROA
ROE
RONA
ROS
SD
TMIE
ROA, ROS, accounting profit stability, SD
ROS, ROA, ROE
ROS
ROA, ROS and ROE
ROA, ROE
ROA
Ratio of operating cost to sales
ROA
ROA, ROE, ROS
ROA, ROS,  sales
Psychic Distance
Return on Assets
Return of Equity
Return on Net Assets
Return on Sales
Standard Deviation
Top Management’s International Experience
Most of the measures of internationalisation in the literature are unidimensional and
operationalised primarily by the FSTS ratio. Therefore, two studies, by Sullivan (1994) and
Gomes & Ramaswamy (1999), which use multi-dimensional indices, warrant special
attention. Sullivan's multi-factor measure of DOI incorporates three attributes – performance,
structural and attitudinal – and is operationalised via five measures: FSTS, FATA, OSTS
7
(ratio of overseas subsidiaries to total subsidiaries), PDIO (psychic distance) 2 and TMIE (top
management’s international experience). Critics of Sullivan’s DOI index (Ramaswamy,
Kroeck & Renforth, 1996) correctly point out that it focuses on the later stages of
internationalisation, i.e. foreign direct investment. A further methodological deficiency is the
use of FATA: many authors agree that asset valuation may differ depending on the accounting
practices in host countries. Ramaswamy, Kroeck & Renforth (1996) are particularly critical of
the attitudinal dimension (PDIO and TMIE). Indeed, while exploring the role of psychic
distance in the internationalisation of Australian firms, Fletcher (1997) establishes that
managers perceive New Zealand as seven times more distant than the USA (indices of 0.7 and
0.1, respectively), which is a somewhat counterintuitive result.
The recent study by Gomes & Ramaswamy (1999) uses a different index of multinationality,
incorporating sales, assets and countries of operation and thus capturing different facets of
foreign involvement.
Sectoral composition of the study
The majority of the previous studies explore the internationalisation-performance paradigm
for the manufacturing sector. Services (with the exception of banking and financial services)
are less studied despite the growing demand for services worldwide coupled with strong
financial performance of leading service firms3.
As Enderwick (1989) suggests, there are marked differences between service and non-service
companies, including degrees of internationalisation, growth strategies, size and
specialisation. According to Dunning (1993), most service firms (with the exception of
finance, investment banking, up-market hotels and some types of consultancy) do not need to
pursue internationalisation strategies to compete. Other researchers (Ellis & Williams, 1995),
although generally agreeing with this proposition, note that services are likely to follow
manufacturing in becoming increasingly subject to international competition.
Dunning (1993) acknowledges the following differences in internationalisation between the
service and other sectors:
2
Psychcic distance reflects willingness to undertake business in specific overseas markets and is based on
perceptions which are culturally influenced (Fletcher, 1997).
3
For example, between 1973 and 1983 the Fortune service 500 firms outranked the top 500 industrial
corporations in performance, while their profits increased at a rate of 124% above the CPI (Enderwick, 1989).
8
 Services are less geographically concentrated (as contrasted, for example, with the oil and
minerals industries);
 Service firms have low foreign production ratio due to lower tradeability of services; and
 Since many services are not capital-intensive, assets are not an appropriate measure of
internationalisation. Internationalisation is thus better captured by sales, net output or
employment.
Research into internationalisation strategies of resources companies is even more scarce. Most
of prior Australian studies on internationalisation are narrowly focused in that they examine
manufacturing firms, thus excluding service and resource-based industries. Given the
importance of resources4 and services in the Australian economy, the emphasis on
manufacturing could be misleading in terms of the overall experience of internationalisation
of Australian companies.
Operationalisation of a firm's internationalisation strategy
In the absence of a unified methodology for measuring the degree of internationalisation, the
variables listed in Table 2 are believed to adequately reflect the complexity of the
internationalisation construct. These are established from a comprehensive review of the
relevant literature and the authors’ own judgement. The choice of measures is based on the
premise that the internationalisation process can be best conceptualised when decomposed
into discrete stages corresponding to the following internationalisation strategies:

Exporting;

Licensing/franchising;

Joint venturing; and

Establishment of a wholly owned subsidiary.
Most of the empirical evidence, and hence the variables used to operationalise firms’
international involvement, tend to emphasise strategies requiring the establishment of foreign
subsidiaries. Therefore, it is critical to include those variables that address other strategic
options, such as joint venturing and licensing/franchising.
4
Include primary production
9
Furthermore, a single measure of internationalisation, such as the widely used Foreign Sales
to Total Sales, is intrinsically unreliable. It is thus worthwhile to include other indices, such as
Foreign Assets to Total Assets, Number of Overseas Subsidiaries to Total Subsidiaries and
Number of Overseas Employees to Total Employees.
Table 2 - Operationalisation of a firm’s internationalisation strategies
Variables
1.
Reason for selection
Exports to a host country and from a
Exporting is the earliest stage in the internationalisation process. Export
host country by an overseas subsidiary
sales to total sales ratio reflects a firm’s exporting activity and
operationalises the performance attribute of the firm
2.
Foreign
sales
and
total
sales,
distribution of foreign sales by country
3.
Profits (EBIT) by country
4.
Foreign
5.
6.
assets
and
total
These measures are widely used to operationalise the performance
attributes of the firm.
assets,
Commonly used measures to operationalise the structural component of
distribution of foreign assets by country
internationalisation, which shows the ‘material’ international character of
Number of employees overseas and
the firm. These measures are related to the latest stage of
total employees
internationalisation, i.e. foreign direct investment.
Number of overseas subsidiaries and
total subsidiaries
7.
Countries in which a company has
subsidiaries
8.
R&D overseas and R&D total
The R&D intensity is found to be the principal means of gaining market
share in international markets and is also used as a proxy for intangible
assets.
These variables are used to measure the extent of a firm’s involvement
9.
Licence/franchise fees paid and
received by country
10. Number of franchisees/licencees
into the second-stage internationalisation. Licensing/franchising is often
utilised by Australian companies as an alternative ‘residual’strategy to
exporting.
11. Number of joint ventures by country
These variables operationalise both the structural and performance
12. Joint
attributes of a joint venture.
ventures’
sales,
and
asset
commitments by country
If it were possible to get access to these data, then multiple measures of firm
internationalisation could be factor analysed. There is no a priori expectation that
internationalisation will be a uni-dimensional construct. The practical problem, however, is
more of gathering data than of analysis.
10
4. Data access problems
Empirical firm-level research into internationalisation of Australian companies could rely on
data from primary (e.g. surveys) and secondary (e.g. databases) sources. Response rates to
academic mail surveys by businesses worldwide have been dropping sharply in the past
decade, and increasingly response rates of around 20% are being reported (Tootelian &
Gaedeke, 1987). Anecdotal evidence suggests that Australia lacks a research culture, and even
lower response rates might be expected5. It appears, therefore, that secondary sources would
provide the most reliable and accurate data.
Overseas experience
Similar empirical studies overseas rely on readily available and low-cost data sources.
Rigorous quantitative research in the USA has been possible due to the existence of
computerised company-accounts data, corporate filings made with the Securities Exchange
Commission now available through the Web-supported EDGAR database, and databanks. The
widely used COMPUSTAT PC Plus6, for example, provides seven years of data by
geographical segments, as well as 20 years of annual financial statements for publicly held
US and Canadian companies and selected non-US companies that file with the Securities and
Exchange Commission. The data are compiled from income statements, balance sheets,
statements of cash flow, and other information from 10-K and 10-Q reports, annual and
quarterly shareholder reports, press releases and prospectuses.
In response to growing demand for international business information, publishers have
created numerous directories and handbooks. The most popular sources include The World
Directory of Multinational Enterprises, Directory of Multinationals, The Directory of
American Firms Operating in Foreign Countries and the Directory of Foreign Firms
Operating in the United States. For example, Directory of Multinationals7, a regularly
updated reference classic, provides geographical and product analyses, five-year financial
summaries and a list of subsidiaries and affiliates for top 500 companies worldwide. The
World Directory of Multinational Enterprises (Stopford, Dunning & Haberich, 1980),
provides 5-year data on 11 variables that have been used to study firms’ internationalisation
5
Private communication with Amal Karunaratna, Department of Commerce, University of Adelaide.
COMPUSTAT is supplied by Standard & Poor’s Compustat, a division of McGraw-Hill Inc.
7
Directory of Multinationals is published by Waterlow Specialist Information Publishing and distributed by
Gale Research.
6
11
strategies8. The data are drawn from publicly available information, such as annual reports to
shareholders, reports to regulatory bodies (e.g. Securities and Exchange Commission in the
USA) and general publicity. Good quantitative research from Sweden could be attributed to
the regularly updated database of Swedish multinational manufacturing firms developed by
the Industrial Institute for Economic and Social research. A major advantage of these
directories and databases is that the data are standardised and thus comparable across the
companies.
Australian experience
Part of the problem associated with the dearth of quantitative empirical firm-level research in
Australia, as highlighted by the participants in the Workshop on Globalisation Statistics
organised by the Australian Bureau of Statistics (ABS) in November 1997, is the lack of
reliable, accessible data. This lack of data makes the task of an Australian researcher
extremely difficult.
This study will focus on Australian public companies on the premise that firm-level
information should be readily available for public companies from Annual Reports, general
publications by the Australian Stock Exchange (ASX), the ABS and commercial
organisations. Private companies have been excluded from the sample in this study in
anticipation of problems with getting access to their data.
Under AASB9 1005, Australian public companies in their Annual Reports are required to
disclose material geographical segments, if a particular segment revenue, result or assets are
10% or more of the total of all segments. These data are therefore inadequate to research the
early stages of internationalisation, such as exporting and licencing. The segment result
(profit) is reported using different accounting bases and thus does not lend itself to inter-firm
comparison. In addition to that, p.30(ii) of the Standard specifically states that the usefulness
of segment information can be limited for making direct comparisons between the results of
the segments of different companies.
Annual Reports do not equally disclose information on R&D expenditure overseas. This
variable, serving as a proxy for knowledge as a key intangible asset, is critical to
understanding the competitive advantage of a firm in the global market. Disclosure of the
number of overseas employees is arbitrary. Finally, in many cases Australian companies
8
For example, Rugman (1983) uses this directory in his research.
12
chose to report their overseas subsidiaries in an arbitrary fashion, indicating only major
subsidiaries.
All of the above limits the reliability and usefulness of Annual Reports as a major source for
researching internationalisation strategies of Australian firms.
An alternative source of data could be the ABS. However, most of the firm-level data on the
international operations of Australian firms are not currently collected. Furthermore, under
the Census and Statistics Act 1905, the ABS is required to release aggregate estimates only,
so that an individual business cannot be identified. Overall, the ABS has limited data on
globalisation statistics, and whatever is available, is difficult to access for confidentiality
reasons.
Government-funded surveys of Australian businesses are few and far between. The largescale Australian Workplace Industrial Relations Survey (1995) has an individual firm as a
unit of analysis and covers a wide range of issues, including firm structure and size, and
product market characteristics (Hawke & Wooden, 1997). However, it has limited
applicability for a researcher in international business.
Private organisations collect various data that could be useful within the context of this study.
The ASX collects data on the financial performance of listed companies, but not on
internationalisation. The cost of the ASX databases is prohibitive for an individual
researcher10. IBIS maintain a database which provides a limited number of data items relevant
to internationalisation, such as overseas subsidiaries and joint ventures. Data related to firms’
export activities are also available from other commercial organisations, but they do not
provide the detail required for a large-scale quantitative survey. A further major disadvantage
is that exports by service companies are not included.
It appears that given the constraints associated with the access to, and cost of data, the best
data source for researching internationalisation strategies of Australian companies would still
be their Annual Reports.
The analysis of segmental information could be supplemented by content analysis of Annual
Reports. For example, the study of the Annual Reports of Westpac reveals that the focus of
the firm’s internationalisation strategy has changed from global expansion in 1988 to
9
AASB – Australian Accounting Standard.
13
specialist international operations in support of core businesses in 1991, and building a strong
domestic base in 1997. This approach has the advantage of providing meaningful
interpretation to the measures of internationalisation and performance.
5. Conclusion
Under these circumstances, it is not surprising that firm-level studies on the international
strategies and performance of Australian businesses are lacking11. However, if Australia is to
have an informed debate about the benefits, and most effective means, of internationalisation,
Australian researchers must be able to find ways to gain access to firm-level data.
A study of 10-K reports by American firms shows that data on internationalisation which the
US firms are required to disclose are no more comprehensive than in Australian Annual
Reports. The US researchers have relied on databases supplied by private companies to
supplement 10-K data, and various directories. What appears to be missing in Australia is not
the data required by regulatory bodies but data through privately generated databases. A
mechanism needs to be established for the collection of firm-level data relevant to
internationalisation. This is consistent with calls for greater disclosure by Australian
companies in general.
6. References
Australian Bureau of Statistics (1997) Options for Australian globalisation statistics.
Discussion paper.
Australian Manufacturing Council (1990). The global challenge. Australian manufacturing in
the 1990s. Final report of the Pappas Carter Evans and Koop/Telesis study
Barrett, N. (1986). A study of the internationalisation of Australian manufacturing firms,
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Bartlett, C. & Ghoshal, S. (1989). Managing across borders: The transnational solution,
Harvard Business School Press, Boston, MA.
Bartlett, C. & Ghoshal, S. (1995). Transnational management.Text, cases and readings in
cross-border management, 2nd edition, Irwin ,Chicago.
Bora, B. (1998). ‘Characteristics and behaviour of multinationals in Australia’, Working
Paper, School of Economics, The Flinders University of South Australia.
10
For example, the costs of FinSelect, an ASX database of financial statements for all listed companies, include
an annual subscription fee of $4,500 and a one-off fee of $8,000 (1998 prices).
11
Private communication with Nicholas Mangos, School of Commerce, Flinders University of SA. According to
N. Mangos, their study (Mangos & OBrian, 1999, cited in this paper) is the only study of the geographical
diversification-performance relationship in the Australian context.
14
Delios, A. & Beamish, P. (1999). 'Geographic scope, product diversification, and the
corporate performance of Japanese firms', Strategic Management Journal, 20, pp. 711727.
Dess, G., Gupta, A., Hennart, J-F & Hill, C. (1995). 'Conducting and integrating strategy research at
the international, corporate, and business levels: Issues and directions', Journal of
Management, 21 (3), pp. 357-393.
Dubofsky, P. & Varadarajan, P. (1987). ‘Diversification and measures of performance:
additional empirical evidence’, Academy of Management Journal, 30(3), pp. 597-608.
Dunning, J. (1993). ‘The globalisation of service activities’ In: The globalization of business.
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