IDEAS home Printed from https://ideas.repec.org/a/pal/jintbs/v51y2020i2d10.1057_s41267-019-00278-w.html
   My bibliography  Save this article

Keeping it within bounds: Regression analysis of proportions in international business

Author

Listed:
  • Jesper N Wulff

    (Aarhus University)

  • Anders R Villadsen

    (Aarhus University)

Abstract

International business researchers commonly estimate proportions, percentages, rates, or fractions – so-called “proportional dependent variables”. In this paper, we posit that two regression strategies are particularly pertinent to the international business field: Tobit and fractional regression. Reviewing recent international business research, we find that, while fractional regression is rarely used, analyses from Tobit regression are often incomplete or erroneously interpreted with consequences for the validity of the reported results. Accordingly, we clarify how researchers should choose between Tobit and fractional regression and interpret their results. We present insights based on simple simulations and data examples with associated Stata code and a decision tree for choosing between types of models for use with proportional dependent variables.

Suggested Citation

  • Jesper N Wulff & Anders R Villadsen, 2020. "Keeping it within bounds: Regression analysis of proportions in international business," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(2), pages 244-262, March.
    • Handle: RePEc:pal:jintbs:v:51:y:2020:i:2:d:10.1057_s41267-019-00278-w
    DOI: 10.1057/s41267-019-00278-w
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41267-019-00278-w
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1057/s41267-019-00278-w?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Estrin, Saul & Meyer, Klaus E. & Nielsen, Bo B. & Nielsen, Sabina, 2016. "Home country institutions and the internationalization of state owned enterprises: A cross-country analysis," Journal of World Business, Elsevier, vol. 51(2), pages 294-307.
    2. Jesper N. Wulff, 2019. "Generalized two-part fractional regression with cmp," Stata Journal, StataCorp LP, vol. 19(2), pages 375-389, June.
    3. Warren Bailey & Alok Kumar & David Ng, 2008. "Foreign Investments of U.S. Individual Investors: Causes and Consequences," Management Science, INFORMS, vol. 54(3), pages 443-459, March.
    4. Mark Ottoni Wilhelm, 2008. "Practical Considerations for Choosing Between Tobit and SCLS or CLAD Estimators for Censored Regression Models with an Application to Charitable Giving," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(4), pages 559-582, August.
    5. Gerald Yong Gao & Janet Y Murray & Masaaki Kotabe & Jiangyong Lu, 2010. "A “strategy tripod” perspective on export behaviors: Evidence from domestic and foreign firms based in an emerging economy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(6), pages 1090-1091, August.
    6. Piening, Erk P. & Salge, Torsten Oliver & Schäfer, Sebastian, 2016. "Innovating across boundaries: A portfolio perspective on innovation partnerships of multinational corporations," Journal of World Business, Elsevier, vol. 51(3), pages 474-485.
    7. Joaquim J.S. Ramalho & Jacinto Vidigal da Silva, 2009. "A two-part fractional regression model for the financial leverage decisions of micro, small, medium and large firms," Quantitative Finance, Taylor & Francis Journals, vol. 9(5), pages 621-636.
    8. Gerald Yong Gao & Janet Y Murray & Masaaki Kotabe & Jiangyong Lu, 2010. "A “strategy tripod” perspective on export behaviors: Evidence from domestic and foreign firms based in an emerging economy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(3), pages 377-396, April.
    9. Sergio Mariotti & Riccardo Marzano, 2019. "Varieties of capitalism and the internationalization of state-owned enterprises," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(5), pages 669-691, July.
    10. Margarethe F. Wiersema & Harry P. Bowen, 2009. "The use of limited dependent variable techniques in strategy research: issues and methods," Strategic Management Journal, Wiley Blackwell, vol. 30(6), pages 679-692, June.
    11. Keld Laursen & Francesca Masciarelli & Andrea Prencipe, 2012. "Trapped or spurred by the home region? The effects of potential social capital on involvement in foreign markets for goods and technology," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 43(9), pages 783-807, December.
    12. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    13. Agnihotri, Arpita & Bhattacharya, Saurabh, 2015. "Determinants of export intensity in emerging markets: An upper echelon perspective," Journal of World Business, Elsevier, vol. 50(4), pages 687-695.
    14. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-844, September.
    15. McDonald, John F & Moffitt, Robert A, 1980. "The Uses of Tobit Analysis," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 318-321, May.
    16. Herman Aguinis & Wayne F. Cascio & Ravi S. Ramani, 2017. "Science’s reproducibility and replicability crisis: International business is not immune," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(6), pages 653-663, August.
    17. Christopher F Baum, 2008. "Stata tip 63: Modeling proportions," Stata Journal, StataCorp LP, vol. 8(2), pages 299-303, June.
    18. Newey, Whitney K., 1987. "Specification tests for distributional assumptions in the Tobit model," Journal of Econometrics, Elsevier, vol. 34(1-2), pages 125-145.
    19. Narjess Boubakri & Omrane Guedhami & Chuck C Y Kwok & Walid Saffar, 2016. "National culture and privatization: The relationship between collectivism and residual state ownership," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 47(2), pages 170-190, February.
    20. Hao Liang & Bing Ren & Sunny Li Sun, 2015. "An anatomy of state control in the globalization of state-owned enterprises," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 46(2), pages 223-240, February.
    21. Hottenrott, Hanna & Lopes-Bento, Cindy, 2014. "(International) R&D collaboration and SMEs: The effectiveness of targeted public R&D support schemes," Research Policy, Elsevier, vol. 43(6), pages 1055-1066.
    22. Tailan Chi & Jing Li & Lenos G Trigeorgis & Andrianos E Tsekrekos, 2019. "Real options theory in international business," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(4), pages 525-553, June.
    23. Barbosa, Natália & Faria, Ana Paula, 2011. "Innovation across Europe: How important are institutional differences?," Research Policy, Elsevier, vol. 40(9), pages 1157-1169.
    24. Lin Cui & Fuming Jiang, 2012. "State ownership effect on firms' FDI ownership decisions under institutional pressure: a study of Chinese outward-investing firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 43(3), pages 264-284, April.
    25. Joaquim Ramalho & J. Silva, 2013. "Functional form issues in the regression analysis of financial leverage ratios," Empirical Economics, Springer, vol. 44(2), pages 799-831, April.
    26. Shavin Malhotra & Ajai S Gaur, 2014. "Spatial geography and control in foreign acquisitions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 45(2), pages 191-210, February.
    27. Stephanie Lu Wang & Dan Li, 2019. "Responding to public disclosure of corporate social irresponsibility in host countries: Information control and ownership control," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1283-1309, October.
    28. Harry P Bowen & Dirk De Clercq, 2008. "Institutional context and the allocation of entrepreneurial effort," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(4), pages 768-768, June.
    29. Cook, Douglas O. & Kieschnick, Robert & McCullough, B.D., 2008. "Regression analysis of proportions in finance with self selection," Journal of Empirical Finance, Elsevier, vol. 15(5), pages 860-867, December.
    30. Petrou, Andreas P. & Thanos, Ioannis C., 2014. "The “grabbing hand” or the “helping hand” view of corruption: Evidence from bank foreign market entries," Journal of World Business, Elsevier, vol. 49(3), pages 444-454.
    31. Alvaro Cuervo-Cazurra & Mehmet Genc, 2008. "Transforming disadvantages into advantages: developing-country MNEs in the least developed countries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(6), pages 957-979, September.
    32. Jing Li & Yong Li, 2010. "Flexibility versus commitment: MNEs’ ownership strategy in China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(9), pages 1550-1571, December.
    33. Yigang Pan & Lefa Teng & Atipol Bhanich Supapol & Xiongwen Lu & Dan Huang & Zhennan Wang, 2014. "Firms’ FDI ownership: The influence of government ownership and legislative connections," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 45(8), pages 1029-1043, October.
    34. Margarethe F. Wiersema & Harry P. Bowen, 2008. "Corporate diversification: the impact of foreign competition, industry globalization, and product diversification," Strategic Management Journal, Wiley Blackwell, vol. 29(2), pages 115-132, February.
    35. Papke, Leslie E & Wooldridge, Jeffrey M, 1996. "Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 619-632, Nov.-Dec..
    36. Nell, Phillip C. & Ambos, Bjérn & Schlegelmilch, Bodo B., 2011. "The MNC as an externally embedded organization: An investigation of embeddedness overlap in local subsidiary networks," Journal of World Business, Elsevier, vol. 46(4), pages 497-505, October.
    37. Lars Oxelheim & Aleksandra Gregorič & Trond Randøy & Steen Thomsen, 2013. "On the internationalization of corporate boards: The case of Nordic firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 44(3), pages 173-194, April.
    38. Yigang Pan, 2002. "Equity Ownership in International Joint Ventures: The Impact of Source Country Factors," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 33(2), pages 375-384, June.
    39. Hoff, Ayoe, 2007. "Second stage DEA: Comparison of approaches for modelling the DEA score," European Journal of Operational Research, Elsevier, vol. 181(1), pages 425-435, August.
    40. Liou, Ru-Shiun & Chao, Mike Chen-Ho & Yang, Monica, 2016. "Emerging economies and institutional quality: Assessing the differential effects of institutional distances on ownership strategy," Journal of World Business, Elsevier, vol. 51(4), pages 600-611.
    41. Ilya RP Cuypers & Xavier Martin, 2010. "What makes and what does not make a real option? A study of equity shares in international joint ventures," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(1), pages 47-69, January.
    42. Tailan Chi & Jing Li & Lenos G Trigeorgis & Andrianos E Tsekrekos, 2019. "Correction to: Real options theory in international business," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(4), pages 554-554, June.
    43. Panagiotis Ganotakis & James H Love, 2012. "Export propensity, export intensity and firm performance: The role of the entrepreneurial founding team," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 43(8), pages 693-718, October.
    44. Glenn Hoetker, 2007. "The use of logit and probit models in strategic management research: Critical issues," Strategic Management Journal, Wiley Blackwell, vol. 28(4), pages 331-343, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yi Luo & Dong Huang & Fangfang Cao, 2022. "The Impact of Family Members Serving as Village Cadres on Rural Household Food Waste: Evidence from China," Sustainability, MDPI, vol. 14(5), pages 1-14, February.
    2. Sleuwaegen, Leo & Smith, Peter M., 2021. "Service characteristics and the choice between exports and FDI: Evidence from Belgian firms," International Economics, Elsevier, vol. 168(C), pages 115-131.
    3. Hu, Tiancheng, 2023. "Foreign ownership in joint ventures under knowledge leakage risks: The influence of industrial munificence and dynamism," Journal of Multinational Financial Management, Elsevier, vol. 68(C).
    4. Stallkamp, Maximilian & Hunt, Richard A. & Schotter, Andreas P.J., 2022. "Scaling, fast and slow: The internationalization of digital ventures," Journal of Business Research, Elsevier, vol. 146(C), pages 95-106.
    5. Hu, Tiancheng & Guo, Rui & Ning, Lutao, 2022. "Intangible assets and foreign ownership in international joint ventures: The moderating role of related and unrelated industrial agglomeration," Research in International Business and Finance, Elsevier, vol. 61(C).
    6. Eduardsen, Jonas & Marinova, Svetla Trifonova & González-Loureiro, Miguel & Vlačić, Božidar, 2022. "Business group affiliation and SMEs’ international sales intensity and diversification: A multi-country study," International Business Review, Elsevier, vol. 31(5).
    7. Lupton, Nathaniel C. & Baulkaran, Vishaal & No, Yeonji, 2022. "Subsidiary staffing, location choice, and shareholder rights effectiveness," Journal of Business Research, Elsevier, vol. 151(C), pages 222-231.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Buitrago R., Ricardo E. & Barbosa Camargo, María Inés, 2021. "Institutions, institutional quality, and international competitiveness: Review and examination of future research directions," Journal of Business Research, Elsevier, vol. 128(C), pages 423-435.
    2. Huang, Yuanyuan & Xie, En & Li, Yu & Reddy, K.S., 2017. "Does state ownership facilitate outward FDI of Chinese SOEs? Institutional development, market competition, and the logic of interdependence between governments and SOEs," International Business Review, Elsevier, vol. 26(1), pages 176-188.
    3. Manolopoulos, Dimitris & Chatzopoulou, Erifili & Kottaridi, Constantina, 2018. "Resources, home institutional context and SMEs’ exporting: Direct relationships and contingency effects," International Business Review, Elsevier, vol. 27(5), pages 993-1006.
    4. Jing Li & Klaus E Meyer & Hua Zhang & Yuan Ding, 2018. "Diplomatic and corporate networks: Bridges to foreign locations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(6), pages 659-683, August.
    5. Danchi Tan & Weichieh Su & Joseph T. Mahoney & Yasemin Kor, 2020. "A review of research on the growth of multinational enterprises: A Penrosean lens," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 498-537, June.
    6. Weilei (Stone) Shi & Sunny Li Sun & Daying Yan & Zhu Zhu, 2017. "Institutional fragility and outward foreign direct investment from China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(4), pages 452-476, May.
    7. Xu, Kai & Hitt, Michael A. & Brock, David & Pisano, Vincenzo & Huang, Lulu S.R., 2021. "Country institutional environments and international strategy: A review and analysis of the research," Journal of International Management, Elsevier, vol. 27(1).
    8. Yadong Luo & Huan Zhang & Juan Bu, 2019. "Developed country MNEs investing in developing economies: Progress and prospect," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(4), pages 633-667, June.
    9. Conti, Claudio Ramos & Parente, Ronaldo & de Vasconcelos, Flávio C., 2016. "When distance does not matter: Implications for Latin American multinationals," Journal of Business Research, Elsevier, vol. 69(6), pages 1980-1992.
    10. Harald Oberhofer & Michael Pfaffermayr, 2014. "Two-Part Models for Fractional Responses Defined as Ratios of Integers," Econometrics, MDPI, vol. 2(3), pages 1-22, September.
    11. Na Yang & Jue Wang & Xiaming Liu & Lingyun Huang, 2022. "Home-country institutions and corporate social responsibility of emerging economy multinational enterprises: The belt and road initiative as an example," Asia Pacific Journal of Management, Springer, vol. 39(3), pages 927-965, September.
    12. McDonald, John, 2009. "Using least squares and tobit in second stage DEA efficiency analyses," European Journal of Operational Research, Elsevier, vol. 197(2), pages 792-798, September.
    13. Pei Sun & Jonathan P. Doh & Tazeeb Rajwani & Donald Siegel, 2021. "Navigating cross-border institutional complexity: A review and assessment of multinational nonmarket strategy research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(9), pages 1818-1853, December.
    14. Cheung, Zeerim & Aalto, Eero & Nevalainen, Pasi, 2020. "Institutional Logics and the Internationalization of a State-Owned Enterprise: Evaluation of International Venture Opportunities by Telecom Finland 1987–1998," Journal of World Business, Elsevier, vol. 55(6).
    15. Baranzini, Andrea & Borzykowski, Nicolas & Carattini, Stefano, 2018. "Carbon offsets out of the woods? Acceptability of domestic vs. international reforestation programmes in the lab," Journal of Forest Economics, Elsevier, vol. 32(C), pages 1-12.
    16. Lojacono, Gabriella & Misani, Nicola & Tallman, Stephen, 2017. "Offshoring, local market entry, and the strategic context of cross-border alliances: The impact on the governance mode," International Business Review, Elsevier, vol. 26(3), pages 435-447.
    17. Kashif Ahmed & Ralf Bebenroth & Jean-Francois Hennart, 2020. "Formal Institutional Uncertainty and Equity Sought on Foreign Market Entry: Does Industry Matter?," Discussion Paper Series DP2020-03, Research Institute for Economics & Business Administration, Kobe University.
    18. Wu, Xiaojuan & Dluhošová, Dana & Zmeškal, Zdeněk, 2023. "The moderating role of a corporate life cycle with the impact of economic value-added on corporate social responsibility: Evidence from China's listed companies," Emerging Markets Review, Elsevier, vol. 55(C).
    19. Li, Jing & Xia, Jun & Shapiro, Daniel & Lin, Zhouyu, 2018. "Institutional compatibility and the internationalization of Chinese SOEs: The moderating role of home subnational institutions," Journal of World Business, Elsevier, vol. 53(5), pages 641-652.
    20. Krammer, Sorin M.S. & Strange, Roger & Lashitew, Addisu, 2018. "The export performance of emerging economy firms: The influence of firm capabilities and institutional environments," International Business Review, Elsevier, vol. 27(1), pages 218-230.

    More about this item

    Keywords

    econometrics;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:jintbs:v:51:y:2020:i:2:d:10.1057_s41267-019-00278-w. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.