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Domestic Profit Advantages of Multinational Firms

Anita M. Benvignati
The Journal of Business
Vol. 60, No. 3 (Jul., 1987), pp. 449-461
Stable URL: http://www.jstor.org/stable/2352880
Page Count: 13
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Domestic Profit Advantages of Multinational Firms
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Abstract

This study uses confidential corporate data from the U.S. Federal Trade Commission's Line of Business Program to test if U.S. multinational firms earn higher rates of profit on domestic undertakings than do their nonmultinational rivals. Domestic profits are regressed on various industry and firm characteristics, including three different measures of "multinationality" that correspond to industry, overall-firm, and firm-by-industry classifications. The evidence suggests that multinationals do have profit advantages when foreign activities are in the same or related lines of business. The effects of foreign trade as a separate influence appear to be much as in previous studies but with richer interpretations.

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