A large and robust emperical literature demonstrates that there is a strong relationship between the performance of a multinational enterprise (MNE) and its degree of multinationality. We develop a new metric to capture the return on foreign assets (ROFA), which we use as an alternative metric to return on total assets (ROTA) as a dependent variable representing performance. We find a significant S-shaped realtion between ROFA and the degree of multinationality across a large set of UK firms.

ROFA, multinational enterprise
We thank the UK's Economic and Social Research Council, and the Engineering and Physical Sciences Research Council for funding. We also thank AIM Research workshop participants for their comments. We have received helpful comments from Chang Hoon Oh, Ellie Banalieva, and Ian Lee.
ERIM Article Series (EAS)
Multinational Business Review
Erasmus Research Institute of Management

Yip, G.S, Kudina, A, & Rugman, A.M. (2009). Testing the Link Between Multinationality and the Return on Foreign Assets. Multinational Business Review, 17(3), 123–142. Retrieved from http://hdl.handle.net/1765/20438