The Theory of Transnational Firms: an empirical reassessment

Janis Kapler

International Review of Applied Economics, 1997, vol. 11, issue 2, 195-211

Abstract: Theories of the transnational firm that stress the profit advantages of international operations in high-technology industries with high entry barriers are not supported for a sample of US-based transnational and domestic firms from Standard & Poor's Compustat database. Replacing the accounting-based profit rate with a measure of economic rate of return, designed to better assess enterprise performance, yields no significant difference in returns to transnational and domestic firms in high-technology manufacturing. Transnational firms do experience profit advantages over domestic firms in the less innovative industries, but this pattern does not fit the theories stressing advantages accuring from intangible assets, entry barriers, and technological accumulation.

Date: 1997
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DOI: 10.1080/02692179700000013

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