This article highlights the current usages of firm size variables in the international marketing research. Our first study provides empirical evidence that suggests that firm size—across operationalizations—is not a significant factor
in explaining internationalization. The second study draws a similar conclusion: firm size is less important in choice of entry mode than other firm-specific variables such as R&D intensity and advertising intensity. In fact, the use of firm size raises internal validity concerns because most of the variance can be at- tributed to sampling error. These results are in line with the perspective of transaction costs theory on size: firm size, while it might capture the economies of scale of production costs, does not capture the economies scale of transactions nor relation-specific investments and related governance costs (Williamson, 1985; Verwaal & Donkers, 2002). Together, our results suggest that it is not valid to use firm size as a proxy for firm’s strategic resources as long as there are other direct indicators.
This article highlights the current usages of firm size variables in the international marketing research. Our first study provides empirical evidence that suggests that firm size—across operationalizations—is not a significant factor
in explaining internationalization. The second study draws a similar conclusion: firm size is less important in choice of entry mode than other firm-specific variables such as R&D intensity and advertising intensity. In fact, the use of firm size raises internal validity concerns because most of the variance can be at- tributed to sampling error. These results are in line with the perspective of transaction costs theory on size: firm size, while it might capture the economies of scale of production costs, does not capture the economies scale of transactions nor relation-specific investments and related governance costs (Williamson, 1985; Verwaal & Donkers, 2002). Together, our results suggest that it is not valid to use firm size as a proxy for firm’s strategic resources as long as there are other direct indicators.
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