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Domestic Profit Advantages of Multinational Firms

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  • Benvignati, Anita M

Abstract

This study uses confidential corporate data from the U.S. Federal Trade Commission's Line of Business P rogram to test if U.S. multinational firms earn higher rates of profi t on domestic undertakings than do their nonmultinational rivals. Dom estic profits are regressed on various industry and firm characterist ics, including three different measures of "multinationality" that correspond to industry, overall-firm, and firm-by-industry classifica tions. The evidence suggests that multinationals do have profit advan tages when foreign activities are in the same or related lines of bus iness. The effects of foreign trade as a separate influence appear to be much as in previous studies, but with richer interpretations. Copyright 1987 by the University of Chicago.

Suggested Citation

  • Benvignati, Anita M, 1987. "Domestic Profit Advantages of Multinational Firms," The Journal of Business, University of Chicago Press, vol. 60(3), pages 449-461, July.
    • Handle: RePEc:ucp:jnlbus:v:60:y:1987:i:3:p:449-61
    DOI: 10.1086/296406
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    Cited by:

    1. Nigel Driffield & Jun Du & Sourafel Girma, 2008. "Optimal geographic diversification and firm performance: evidence from the U.K," Journal of Productivity Analysis, Springer, vol. 30(2), pages 145-154, October.
    2. Cravens, Karen S. & Shearon, Winston Jr., 1996. "An outcome-based assessment of international transfer pricing policy," The International Journal of Accounting, Elsevier, vol. 31(4), pages 419-443.
    3. Cooper, Maggie & Nguyen, Quyen T.K., 2020. "Multinational enterprises and corporate tax planning: A review of literature and suggestions for a future research agenda," International Business Review, Elsevier, vol. 29(3).
    4. Vergara, Sebastián, 2013. "The performance of transnational corporations: Evidence for the manufacturing industry in Chile," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    5. Yong Yang & Pedro S. Martins & Nigel Driffield, 2013. "Multinational Performance and the Geography of FDI," Management International Review, Springer, vol. 53(6), pages 763-794, December.
    6. Cravens, Karen S., 1997. "Examining the role of transfer pricing as a strategy for multinational firms," International Business Review, Elsevier, vol. 6(2), pages 127-145, April.
    7. Garbe, Jan-Nicolas & Richter, Nicole Franziska, 2009. "Causal analysis of the internationalization and performance relationship based on neural networks -- advocating the transnational structure," Journal of International Management, Elsevier, vol. 15(4), pages 413-431, December.
    8. Jiménez, Alfredo & Delgado-García, Juan Bautista, 2012. "Proactive management of political risk and corporate performance: The case of Spanish multinational enterprises," International Business Review, Elsevier, vol. 21(6), pages 1029-1040.
    9. Nicole Franziska Richter, 2014. "Information Costs in International Business: Analyzing the Effects of Economies of Scale, Cultural Diversity and Decentralization," Management International Review, Springer, vol. 54(2), pages 171-193, April.

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