Are Proxies Valid Measures of Internalisation?

International business literature is replete with empirical studies that attempt to measure the concept of internalisation. These studies use surrogate or proxy measures (e.g., R&D intensity) often based on aggregate statistics to investigate the relationships between internalisation and foreign direct investment (FDI). It is the premise of this paper that such aggregate statistics used in the calculation of proxy measures are inappropriate and should be interpreted with caution. Further, the attempt to operationalise internalisation proves difficult due to its intangible nature and may mean that proxy measures could be unsuitable. In order to advance theory, this paper advocates the use of firm level investigations based on surveys of managerial perceptions which could provide more accurate insights into the relationship between internalisation and FDI.