The Strategic Rationale for Japanese Foreign Direct Investment in the United States
Park, Young-Ryeol
This item is only available for download by members of the University of Illinois community. Students, faculty, and staff at the U of I may log in with your NetID and password to view the item. If you are trying to access an Illinois-restricted dissertation or thesis, you can request a copy through your library's Inter-Library Loan office or purchase a copy directly from ProQuest.
Permalink
https://hdl.handle.net/2142/72310
Description
Title
The Strategic Rationale for Japanese Foreign Direct Investment in the United States
Author(s)
Park, Young-Ryeol
Issue Date
1993
Doctoral Committee Chair(s)
Hennart, Jean-Francois
Department of Study
Business Administration
Discipline
Business Adminstration
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Business Administration, Management
Abstract
A firm's decision to integrate into foreign manufacturing should depend on its own capabilities and on the behavior of its rivals. Yet empirical studies on Foreign Direct Investment (FDI) have concentrated exclusively on the former or on the latter, but almost never on both. In addition, the main focus of previous studies of FDI has been the choice between wholly-owned subsidiaries and joint ventures, or greenfield investments and acquisitions. The order of entry (first-entrant vs. late-entrant, and the speed of a rival's competitive response to a first-mover) has been frequently mentioned in previous international business research, but not thoroughly researched empirically.
This thesis constitutes the first large scale product- and firm-level study to investigate the strategic rationale for Japanese manufacturing investment in the U.S. The objectives of this study are twofold: (1) to investigate four types of strategic interactions among Japanese and/or U.S. firms (e.g. avoidance or collusion, exchange-of-threat, follow-the-leader, and competitive dynamics), and their effect on whether a Japanese firm produces a product in the U.S., with location and governance factors held constant, and (2) to examine firm-specific and strategic determinants of the order of entry of Japanese investors in the U.S. market.
Four empirical models employing a binomial logistic model and an accelerated event-time method are tested on a database of Japanese manufacturing firms listed in the Japan Company Handbook as of 1986. The results of the determinants of Japanese manufacturing FDI in the U.S. support the prediction of the modern theory of FDI, which combines location and governance factors. In addition, I find strategic factors to be also important.
Market rivalry, rather than firm-specific factors, is the most significant determinant of the order of entry of Japanese firms in the U.S. The speed of competitive response of a Japanese firm to entry by its rivals is explained, on the other hand, by both firm-specific and strategic factors. The main conclusion of this study is that firms are heterogeneous and strategically linked to each other, and that both firm-specific and strategic aspects are crucial in studying a firm's foreign direct investment behavior.
Use this login method if you
don't
have an
@illinois.edu
email address.
(Oops, I do have one)
IDEALS migrated to a new platform on June 23, 2022. If you created
your account prior to this date, you will have to reset your password
using the forgot-password link below.
