Alina Kudina, Alan M. Rugman and George S. Yip
A large and robust empirical literature demonstrates that there is a strong relationship between the performance of a multinational enterprise (MNE) and its degree of…
Abstract
A large and robust empirical literature demonstrates that there is a strong relationship between the performance of a multinational enterprise (MNE) and its degree of multinationality. We develop a new metric to capture the return on foreign assets (ROFA), which we use as an alternative metric to return on total assets (ROTA) as a dependent variable representing performance. We find a significant S‐shaped relation between ROFA and the degree of multinationality across a large set of UK firms.
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Alan M. Rugman, Alina Kudina and George S. Yip
As multinational enterprises (MNEs) expand internationally (for example, as the ratio of foreign (F) to total (T) sales increases), there is a positive effect on firm performance…
Abstract
As multinational enterprises (MNEs) expand internationally (for example, as the ratio of foreign (F) to total (T) sales increases), there is a positive effect on firm performance (usually measured by return on total assets (ROTA). We advance this literature in three ways: (i) we focus on the recent performance of UK MNEs, in terms of ROTA, but also in terms of their return on foreign assets (ROFA); (ii) to supplement (F/T), we examine the ratio of European (E) to total (T) sales of these UK MNEs; and (iii) we test the relationship between (E/T) and both ROFA and ROTA, and find a significant non-linear fit.
This paper seeks to analyze the performance implications of the regional and global strategies pursued by multinational companies. It aims to argue that a firm could experience…
Abstract
Purpose
This paper seeks to analyze the performance implications of the regional and global strategies pursued by multinational companies. It aims to argue that a firm could experience different performance effects for its intra‐ and inter‐regional operations due to differences in the liability of foreignness between these two levels.
Design/methodology/approach
Using a large sample of multinational enterprises (MNEs) drawn from all triad regions during the period 1998‐2008, the paper uses panel data methods to analyze the relationships in the sample.
Findings
The paper finds significant support for the difference in the effects of intra‐ and inter‐regional operations on performance between firms that operate within their home region and those that venture outside it.
Originality/value
This is one of the first papers to examine an impact of regional sales dispersion on MNEs' performance. An exclusion of home country sales from the home region sales is a novel feature of this research.