Profit Performance: Do Foreign Operations Make a Difference?

This paper examines 116 U.S. firms from eight industries during the ten year period from 1974 through 1983 in order to determine if higher profit performance was related to higher levels of reliance on foreign sales and/or foreign production. There was a significant positive relationship for the overall sample, for six of the eight industries, and for nine of the ten years. The results raise questions of whether firms fall short of their optimum profit potential from international operations, whether different levels of foreign involvement are appropriate for different industries, and whether we may see a slower foreign expansion pace by the leading U.S. international firms.