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

International Business Review, Vol. 20, No. 5, pp. 557-577, 2011

48 Pages Posted: 11 May 2006 Last revised: 26 Aug 2011

See all articles by Raj Aggarwal

Raj Aggarwal

University of Akron; Federal Reserve Banks - Federal Reserve Bank of Cleveland

Jenny Berrill

Trinity College (Dublin) - School of Business Studies

Elaine Hutson

Monash University - Dept of Banking and Finance; Financial Research Network (FIRN)

Colm Kearney

Monash University - Monash Business School

Date Written: December 7, 2010

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

Suggested Citation

Aggarwal, Raj and Berrill, Jenny and Hutson, Elaine and Kearney, Colm, What is a Multinational Company? Classifying the Degree of Firm-Level Multinationality (December 7, 2010). International Business Review, Vol. 20, No. 5, pp. 557-577, 2011. Available at SSRN: https://ssrn.com/abstract=900522 or http://dx.doi.org/10.2139/ssrn.900522

Raj Aggarwal

University of Akron ( email )

Akron, OH 44325-4803
United States

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

Jenny Berrill

Trinity College (Dublin) - School of Business Studies ( email )

AAP College Green
Dublin 2
Ireland
+353 1 608 3888 (Phone)

Elaine Hutson

Monash University - Dept of Banking and Finance ( email )

PO Box 197
Caulfield East, Victoria 3145
Australia
+61399032110 (Phone)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Colm Kearney (Contact Author)

Monash University - Monash Business School ( email )

Sir John Monash Drive
Caulfield
Melbourne, Victoria 3168
Australia
+353399031021 (Phone)

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