What is a Multinational Company? Classifying the Degree of Firm-Level Multinationality

Abstract

The degree of firm-level multinationality is a key dimension that spans all theoretical frameworks, levels of empirical analysis and domains of investigation in international business research. There is, however, no agreed approach to defining or measuring firm-level multinationality. This is reflected in inconsistent approaches to sample selection and empirical testing, and it has curtailed the advancement of the discipline. We propose that instead of searching for the elusive, all-encompassing definition of an MNC, international business scholars should instead agree on a classification system for the degree of firm-level multinationality. We illustrate the advantages of this approach by constructing a simple classification system that takes into account the firm’s breadth and depth of multinational engagements. We illustrate our matrix of firm multinationality by classifying a novel sample of over 1,000 firms from seven countries, and we demonstrate how it can guide theory development and empirical testing. We also provide examples of potential future research directions.

Keywords: Multinational Companies, Internationalization Theory, Classification Systems

JEL Classification: F23