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The implicit return on domestic and international sales: An empirical analysis of US and Japanese firms

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  • Kiyohiko Ito

    (Shidler College of Business, University of Hawaii at Manoa, Honolulu, HI, USA)

  • Elizabeth L Rose

    (Department of Marketing and Management, Aalto University School of Economics, Helsinki, Finland)

Abstract

An empirical analysis of imputed returns on international and domestic sales suggests that neither US nor Japanese manufacturing firms consistently used domestic profits to subsidize foreign operations. Apart from the early 1990s, when the yen was particularly strong, Japanese firms generally realized higher profits in foreign markets than in their domestic market, opposite to the conventional direction for cross-subsidization. US firms also tended to have higher estimated returns from foreign markets after 1985. Our results are consistent with Hymer's theory of ownership advantage, which posits that firms with successful foreign operations must have specific advantages, relative to local firms.

Suggested Citation

  • Kiyohiko Ito & Elizabeth L Rose, 2010. "The implicit return on domestic and international sales: An empirical analysis of US and Japanese firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(6), pages 1074-1089, August.
    • Handle: RePEc:pal:jintbs:v:41:y:2010:i:6:p:1074-1089
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    Cited by:

    1. Karafyllia, Maria & Zucchella, Antonella, 2017. "Synergies and tensions between and within domestic and international market activities of firms," International Business Review, Elsevier, vol. 26(5), pages 942-958.

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