Multinationality of UK firms – a longitudinal study based on sales and subsidiaries data

Abstract

Purpose This paper aims to contribute to the regionalisation–globalisation debate in international business (IB) by providing a longitudinal analysis of firm-level multinationality. The analysis uses a unique hand-collected data set of both accounting (sales) and non-accounting (subsidiaries) data. The percentage of foreign sales is also used as an additional measure of multinationality. Design/methodology/approach This paper categorises constituent firms of the Financial Times Stock Exchange 350 index over an 18-year time period from 1998 to 2015. Firms are categorised using the multinationality classification system developed by Aggarwal et al. (2011). The paper also conducts an industrial analysis across ten industries. Findings The evidence shows increasing multinationality over time that suggests a “trans-regional” operational strategy rather than a global or regional one. The results also show that UK firms are more multinational based on subsidiaries than sales. This contradicts the traditional stages theory of internationalisation where firms first expand sales, then subsidiaries. While some support for triad regions is found, there is also evidence of firm-level operations expanding beyond the triad regions of North America, Asia and Europe to non-triad regions such as Africa, Oceania and South America. The industrial analysis shows that non-service firms are more multinational than service firms. Originality/value To the best of the authors’ knowledge, this is the first paper to provide an in-depth longitudinal analysis of the geographical dispersion using both sales and subsidiaries data for UK firms. This paper provides a unique perspective on the regionalisation–globalisation debate in IB and presents evidence contrary to traditional stages theories of firm-level internationalisation.

Measuring and assessing international diversification strategies of Indian companies

“…India's strong interconnectedness with other nations serves as a push factor for companies to enter into unrelated markets by internalizing their firm-specific and home-country advantages. Moreover, our results that suggest gradual increase in overseas expansion of firms from low distant countries to high distance countries commensurate with the findings of Berrill (2015), Chadha and Berrill (2016), Berrill and Hovey (2018) and Chadha and Berrill (2020). Thus studies from even the developed countries coincide with our findings to some extent.…”

“…1999 and 2000 in Australia, Europe and North America. Even with respect to the nature of diversification our results go parallel with Chan-Olmsted and Chang (2003), Van Kranenburg et al (2004), Berrill (2015), Chadha and Berrill (2016), Berrill and Hovey (2018) and Chadha and Berrill (2020) who found preference for unrelated diversification against the related ones as even our results show that companies prefer IHD strategy, the inter-region category, rather than IFD representing related moves. India's strong interconnectedness with other nations serves as a push factor for companies to enter into unrelated markets by internalizing their firm-specific and home-country advantages.…”

“…This classification includes all the countries of the world and remains unchanged with the change in time (Yildirim and Efthyvoulou, 2018). Further, in order to capture the presence of firms in these international markets, the study considers the firm’s number of foreign subsidiaries in each country as firm’s foreign investment and takes it as the basis of measuring international diversification (Oh, 2009; Rugman and Hoon Oh, 2011, Rugman and Oh, 2013; Berrill, 2015; Chadha and Berrill, 2016, 2020).…”

“…Results disclosed that most of the Fortune Global firms and G7 countries’ firms showed inter-regional behavior in terms of sales and subsidiaries. Chadha and Berrill (2016) and Chadha and Berrill (2020) on a sample of Japanese and UK firms respectively depicted preference for inter-regional strategy in terms of both sales and subsidiaries. Berrill and Hovey (2018) too on the basis of sales, found higher preference for trans-regional strategy among UK firms.…”

The ambiguity and limitations of measuring firm-level multinationality: a theoretical and empirical exploration

“…The second stream is represented by commentary and critique papers (Elango, 2004; Stevens and Bird, 2004; Hejazi, 2007; Osegowitsch and Sammartino, 2008; Oh, 2009; Rugman et al , 2012; Berrill, 2015; Rosa et al , 2020; Ietto-Gillies, 2022) which cover issues of measuring FLM for reviewed methods. The third stream compares different approaches based on a single aspect (Dörrenbächer, 2000; Czychon, 2020), and the fourth stream includes empirical papers applying proposed methods in various geographies and sectors (Rugman et al , 2012; O’Hagan‐Luff and Berrill, 2016; Mullen and O’Hagan-Luff, 2018; Berrill et al , 2019; Geiger and O’Hagan-Luff, 2020; Chadha and Berrill, 2021).…”