IDEAS home Printed from https://ideas.repec.org/a/bla/stratm/v15y1994i6p419-436.html
   My bibliography  Save this article

Location, governance, and strategic determinants of japanese manufacturing investment in the united states

Author

Listed:
  • Jean‐Francois Hennart
  • Young‐Ryeol Park

Abstract

A firm's decision to manufacture abroad depends on location, governance, and strategic factors. Governance factors are firm‐specific. In spite of this, most empirical studies of foreign direct investment (FDI) have been conducted at the industry level (making it impossible to look at firm‐specific determinants), and only a handful have considered governance, location, and strategic factors simultaneously. This paper is the first large sample study of the determinants of foreign direct investment at the product and firm‐level. It examines the impact of location and governance factors, and of four types of strategic interactions, on a Japanese firm's propensity to manufacture in the U.S. The results support the view that foreign direct investment is explained by location, governance, and strategic variables. Economies of scale and trade barriers encourage Japanese FDI in the U.S. The larger a Japanese firm's R & D expenditures, the greater the probability it will manufacture in the U.S., but this is not the case for advertising expenditures. Some strategic factors are also important: Japanese firms with medium domestic market shares have the highest propensity to invest in the U.S. There is evidence of follow‐the‐leader behavior between firms of rival enterprise groups, but none of ‘exchange‐of‐threat’ between American and Japanese firms. Japanese investors are also attracted by concentrated and high‐growth U.S. industries.

Suggested Citation

  • Jean‐Francois Hennart & Young‐Ryeol Park, 1994. "Location, governance, and strategic determinants of japanese manufacturing investment in the united states," Strategic Management Journal, Wiley Blackwell, vol. 15(6), pages 419-436, July.
  • Handle: RePEc:bla:stratm:v:15:y:1994:i:6:p:419-436
    DOI: 10.1002/smj.4250150602
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/smj.4250150602
    Download Restriction: no

    File URL: https://libkey.io/10.1002/smj.4250150602?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:stratm:v:15:y:1994:i:6:p:419-436. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1111/0143-2095 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.