An Internationalisation Readiness Score (IRS) is constructed and established as a diagnostic tool to get a more complete understanding of the internationalisation process of organisations.
The four concepts fundamental to the ability of an organisation to start internationalisation of its operations:
- Economic Conditions
- Commitment Evaluation
- Organisation Resources
- Inertia Factors
A critical success factor for an organisation is determined by its readiness to commit to engage in an international operation. The ability to determine an organisation’s level of readiness could mean either a success or failure for the organisation’s subsequent international venture.
Economic Conditions
A decision-maker’s access to sources of internal and external information input which act as intents and incentives, triggering push and pull factors.
This is represented by the Economic Score (ES).
Commitment Evaluation
The decision maker’s motivation and action are induced by the information received which impacts the level of commitment as an organisation’s investment in resources.
This is represented by the Commitment Score (CS).
Organisation Resources
The importance of an organisation resources investment and allocation in its long-term sustainable competitive advantage. Resources include an organisation’s financials, human capital, product unique selling proposition, investment in research and development, and technological innovation.
This is represented by the Resources Score (RS).
Inertia Factors
Inertia factors have a moderating effect in the planning and preparation process. They are preventive factors and behavioural characteristics that cause inelasticity in decision-making.
This is represented by the Inertia Score (IS).
Application of IRS
Economic conditions, Commitment Evaluation and Organisation Resources are treated as drivers of internationalisation readiness while those listed under the category of inertia factors are inhibitors.
When utilised as scales in the IRS, the drivers have a positive impact while the inhibitors have a negative impact.
The IRS is calculated as a composite measure made up of four categories of observed indicators: Economic Score (ES), Commitment Score (CS), Resources Score (RS) and Inertia Score (IS).
IRS presents an opportunity for the organisation to better understand its level of preparedness, its strengths and weaknesses for possible international commitment through an evaluation of its pre-internationalisation phase.
The multi-item scales in the IRS also allow an organisation to identify potential problem areas that deserve greater attention.
IRS is the total score of the four categories. It is an important analytical tool to access if an organization is internationally ready.