Towards a new approach to measuring the internationalization degree of wine companies in China: the Internationalization Assessment Framework.

Abstract

The present study aims at investigating the dynamics shaping the internationalization of wine companies in China, and poses particular attention to the role played by organizational structures and human resource management practices in the process of such internationalization. Most importantly, this thesis wishes to suggest a new approach to defining and measuring a firm’s level of international outreach. Historical and economic evidence shows that the wine business underwent significant growth and expansion in the last two decades, resulting in wineries gaining international ground both in terms of production and export activities. The rise of New World countries such as China has presented wine businesses with the opportunity to tap into an increasing pool of consumers, leading them to expand their operations abroad to benefit from new, differentiated businesses. At the same time, emerging markets such as China itself have also seen the potential of developing their own international wineries and engaging in export activities. As a result, the last decade has been marked by the establishment of wine subsidiaries and joint ventures in China. These partnerships fostered the sharing of winemaking and technological expertise, therefore promoting the growth of the domestic wine sector. Recently, more and more Chinese-owned wineries have increased the quality of their products and are gaining global recognition, reaching a large number of foreign markets. These shifts have determined major changes at the organizational levels of both international and Chinese wineries, involving adaptation of HR practices, recruitment, and training. Previous research on the measurement of a firm’s level of internationalization has strongly relied on economic and performance factors aiming at highlighting companies’ profitability (such as foreign sales and foreign assets) as valid measures of international exposure. Through a review of measurement frameworks suggested by scholars such as the Uppsala Model, the Transnationality Index (TNI), the Transnational Activity Spread Index (TASI), and the Degree of Internationalization Scale, this study aims to expose the limitations of such models in effectively capturing the extent of business internationalization. Above all, it argues that human resource practices are key determinants of a company’s cross-border development, and thus should be thoroughly researched when assessing firms’ international engagement. Through an attentive analysis of the core HR and managerial practices of international wine companies, the thesis further highlights the importance of these variables and suggests a new framework aimed at evaluating the level of internationalization of such businesses: the Internationalization Assessment Framework (IAF). This model focuses on seven crucial parameters concerning various aspects of global talent management and offers an effective scoring system. By gathering data from both international and Chinese wineries through personal interviews, surveys and public data, this study will present a detailed examination of the level of internationalization of three major wine companies: Silver Heights, Penfolds and Pernod Ricard.