This study develops a comprehensive multi-level analysis, including firm-level and country-level drivers, that attempts to explain firms’propensities to internationalize their operations. Drawing on industrial organization, transaction cost economics, strategic management, and institutional theory literatures, we develop multi-level hypotheses regarding firms’internationalization. We test our hypotheses using data on 26,859 firms from 27 countries using Hierarchical Generalized Linear Modeling(HGLM). Results indicate that the presence of foreign competition, dependence on foreign materials and education of the top management team are positively associated with a firm’s propensity to expand internationally. However, market power, management ownership, and the top management team’s foreign company experience were not supported, as hypothesized. We studied two country-level drivers, cultural and social institutions. For the culture-level indicators, we confirm that uncertainty avoidance and in-group collectivism are negatively associated with internationalization, while power distance and performance orientation are positively associated with this construct. For the social institutions, we found a positive and significant relationship between educational attainment and internationalization but not for political stability.

Keywords : Internationalization, Multi-Level Analysis, Hierarchical Generalized Linear Modeling, Firm Specific Advantages, and Country Specific Advantages