The aim of this exploratory study is to develop a definition of conceptual understanding for teaching in international business. In international business, professionals face complex problems like what to produce, where to manufacture, which markets to target, and when to expand abroad. A clear definition of conceptual understanding needed to solve such problems would provide design input for international business education. In three cycles, two independent expert panels with backgrounds in academic research, international business education, and international business practice identified and validated key components of conceptual understanding in international business. Key components are the global and local contexts, general and specific business practices, and theoretical business concepts and mechanisms. Other key characteristics include factual knowledge, explanation, and out-of-the-box thinking.