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Methodological issues in the measurement of multinationality of US firms

Methodological issues in the measurement of multinationality of US firms Purpose – The purpose of this paper is to provide a critical discussion of the scope and correct scale metrics used in the measurement of multinationality. Design/methodology/approach – There are two ways of measuring the degree of multinationality (sometimes called the international diversification) of firms. The literature is reviewed using both types of metric, and then both are applied to tests of the regional nature of international business. Findings – It is found that the correct method is to use a scale metric which captures the degree of multinationality, such as the ratio of foreign to total sales. This paper provides empirical evidence that the scope metric, which counts the number of countries in which a firm has a foreign subsidiary, is unsatisfactory. Originality/value – The paper provides a new scale metric of the intra‐regional activities of large US firms. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Multinational Business Review Emerald Publishing

Methodological issues in the measurement of multinationality of US firms

Multinational Business Review , Volume 19 (3): 11 – Aug 19, 2011

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References (58)

Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1525-383X
DOI
10.1108/15253831111172630
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to provide a critical discussion of the scope and correct scale metrics used in the measurement of multinationality. Design/methodology/approach – There are two ways of measuring the degree of multinationality (sometimes called the international diversification) of firms. The literature is reviewed using both types of metric, and then both are applied to tests of the regional nature of international business. Findings – It is found that the correct method is to use a scale metric which captures the degree of multinationality, such as the ratio of foreign to total sales. This paper provides empirical evidence that the scope metric, which counts the number of countries in which a firm has a foreign subsidiary, is unsatisfactory. Originality/value – The paper provides a new scale metric of the intra‐regional activities of large US firms.

Journal

Multinational Business ReviewEmerald Publishing

Published: Aug 19, 2011

Keywords: United States of America; Large enterprises; Scope metric; Foreign to total sales; Multinationality; International diversification; Regional sales; Regional sales; Multinational companies

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