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)...

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Bibliographic Details
Published in:Multinational business review 2011-08, Vol.19 (3), p.202-212
Main Authors: Rugman, Alan M, Hoon Oh, Chang
Format: Article
Language:English
Subjects:
Annual reports
Foreign subsidiaries
GDP
Geography
Globalization
Gross Domestic Product
Independent variables
Manufacturing
Methods
Multinational corporations
Organizational structure
Studies
Variables
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Summary: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.
ISSN:1525-383X
2054-1686
DOI:10.1108/15253831111172630