Search results

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.

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.

The main objective of this paper is to assess how the degree of regulation that a company has to comply with affects its profitability. There is great variation within the internet value chain in the profitability of different players. The paper aims to analyse a large sample of companies that are leaders in different internet‐based businesses (network operators, search engines and other ASP, software, electronic retailing, content delivery networks, device manufacturers …). The paper's hypothesis is that regulation plays an important role in the profitability of a company and therefore also in how the market values them.

The methodology used to check the authors' hypothesis includes the following steps: identify leaders in the internet space; identify their core asset and group them according to it; calculate their profitability across a series of dimensions, with focus on return on fixed assets (ROFA); assess the degree of regulation of each group; and assess the statistical relationship between regulation and profitability and look for significant results.

The paper analyses the degree of regulation of the core asset of these companies and finds that is statistically related to their profitability. Companies with core assets free from regulation yield much higher profits on their investments than those with core assets curtailed by regulation.

This finding can cast light on some policy proposals under debate (net neutrality, access regulation, privacy …), especially how they can increase or decrease the current imbalance in the relative profitability of companies and the internet balance of payments and power between the European Union and the USA.

The traditional dependent variable in the multinationality and performance literature is the ratio of foreign (F) to total (T) sales, (F/T). This can now be supplemented by a new regional variable, the ratio of regional (R) to total (T) sales, i.e. (R/T). Data are presented on both (F/T) and (R/T) for both sales and assets for a five-year period, 2001–2005. Implications are drawn for future research on multinationality and performance in the light of this regional phenomenon.

In the field of international business one of the most basic issues is the relationship between multinationality and performance. Several hundred studies have examined the nature of this relationship, with somewhat inconclusive results. This literature is reviewed and extended in Part B of this book. However, the main contribution of this book lies in Parts A and C which explore the regional dimension of multinationality and performance.

This study examines the effect of a firm's level of intra-regional sales in the triad markets of North American, Europe, and Asia on its performance. The form of the relationship is explored. The results show that there exists a strong positive relationship between a firm's level of intra-regional sales and its performance (measured by return on equity (ROE) and return on assets, (ROA)). A firm tends to perform better when it has its sales in the home region of the triad. The hypothesis that there exists a non-linear relationship (second- and third-order curvilinear relationship) between performance and intra-regional sales is not supported.