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Measuring Globalization of Industries Using a National Industry Approach: Empirical Evidence Across Five Countries and over Time

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This paper presents an objective measurement of industry globalization. Although crucial in understanding firm strategies, industry globalization has been largely subjectively measured, consisting of mostly case studies. This research develops a two-pronged measure of industry globalization based on (a) the extent of an industry's international linkages (LIT) and (b) the integration of value-added activities within the industry (IIT). In addition of providing a quantitative equivalent to Porter [1986] and Bartlett and Ghoshal's [1989] conceptual industry categorizations, this measure permits the examination of important but previously untested notions regarding globalization. Using data for chemical and manufacturing industries for five major trading nations, we find that (1) chemical industries are less global than manufacturing industries, despite high levels of FDI found in chemical industries; (2) U.S. globalization, frequently assumed to be representative of worldwide globalization of industries, is less than that of other major industrial countries; and (3) industries in both sectors are globalizing over time, consistent with the literature.

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*Mona V. Makhija (Ph.D., University of Wisconsin-Madison), is an Assistant Professor of Business Administration at the University of Pittsburgh. Her research interests focus on the control and informational implications of the institutional context for globalization, multinational firm-host government interaction, and the management of international strategic alliances. Her prior work has appeared in the Journal of International Business Studies, Organization Science, and Advances in International Comparative Management.

**Kwangsoo Kim (Ph.D., University of Pittsburgh), is a Visiting Assistant Professor of Strategic Management at the University of Maryland at College Park. His research interests include globalization, organizational learning, strategic alliances, and strategic planning.

***Sandra D. Williamson (M.A., Foreign Affairs, University of Virginia) is an Associate Professor at the Graduate School of Public and International Affairs at the University of Pittsburgh. Prior to joining GSPIA in 1990, she was a Senior Vice President at Mellon Bank. She began her career as an international economist with Chase and G.E.

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Makhija, M., Kim, K. & Williamson, S. Measuring Globalization of Industries Using a National Industry Approach: Empirical Evidence Across Five Countries and over Time. J Int Bus Stud 28, 679–710 (1997). https://doi.org/10.1057/palgrave.jibs.8490115

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