A new approach to measuring firm-level globality: the degree of globalization index

Abstract In this paper, previously developed indices to assess company internationalization are examined and classified. Particular emphasis is placed on globality indices and a new composite index of firm globalization is introduced: the Degree of Globalization (DOG). The previous indices, often based on ratios of foreign to domestic activity, only provide partial insights into the complex and multidimensional nature of firm globalization. The DOG index addresses their shortcomings by integrating both the intensity and the diversification of a firm’s international activities, grounded in measurements of market penetration and revenue distribution. An empirical application to the airline industry demonstrated that the DOG index yielded more accurate differentiation among firms, capturing variations in global reach that the other indices failed to register. The results indicated that the DOG offered greater methodological precision, ease of calculation, and interpretability, thereby providing a more rigorous instrument for assessing corporate globalization and contributing to the advancement of international business research.