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Acquisition versus Greenfield Investment: The Location and Growth of Japanese Manufacturers in the United States

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Author Info

  • Breandan O Huallachain
  • Neil Reid

Abstract

O HUALLACHAIN B. and REID N. (1997) Acquisition versus greenfield investment: the location and growth of Japanese manufacturers in the United States, Reg. Studies 31, 403-416. Investigating foreign direct investment by principal modes of entry helps explain the location of Japanese manufacturers in the United States. Japanese greenfield start-ups and acquired plants had distinct interregional distributions in different decades. We use ordinary least squares and tobit regression analyses to account for interstate variation in the levels of Japanese acquired and greenfield establishment in 1979, 1989 and 1992 and their expansion in the 1970s, 1980s and early 1990s. The greenfield plants propelled the formation of automobile-based industrial complexes in the Midwest and Southeast regions. Greenfield investors also avoided states with strong unions and, over time, they became unconstrained by the general distribution of American manufacturing. Although supplies of procurable assets consistently constrained acquisition flows, the Pacific Coast region was a focus of Japanese acquisition activity from the 1970s to the 1990s. During the 1980s, acquirers contributed to the development of the Japanese automobile complexes in the Midwest and Southeast. They also avoided strong unions. Those latter factors, however, were not significant locational determinants of acquisition flows in the 1990s. O HUALLACHAIN B. et REID N. (1997) La prise de participation par opposition a la creation d'entreprise sur terrain vierge: la localisation et la croissance de l'industrie japonaise aux Etats-Unis, Reg. Studies 31, 403-416. Examiner l'investissement direct etranger a partir des principales methodes d'entree contribue a une explication eventuelle de la localisation de l'industrie japonaise aux Etats-Unis. La creation d'entreprise sur terrain vierge et la prise de participation par l'industrie japonaise montrent des distributions interregionales nettes au cours des differentes decennies. A partir des analyses de regression par les moindres carres et des analyses de regression du type tobit, on explique la variation regionale de l'importance de la prise de participation et de la creation d'entreprise sur terrain vierge par l'industrie japonaise en 1979, 1989 et 1992, et leur expansion aux annees 70, aux annees 80 et au debut des annees 90. Les etablissements situes sur terrain vierge ont alimente la creation des complexes industriels bases sur l'industrie automobile dans le Midwest at dans le Sud-Est. Ceux qui investissent dans les terrains vierges evitent aussi les regions caracterisees par un taux de syndicalisation eleve, et sur le temps ils n'ont pas ete limites par la distribution generale de l'industrie americaine. Bien que la cession d'actifs disponibles a regulierement limite le flux des prises de participation, le littoral du Pacifique s'est montrele centre d'interet des prises de participation japonaises des annees 70 jusqu'aux annees 90. Au cours des annees 80, les prises de participation ont contribue au developpement des complexes japonais du secteur automobile dans le Midwest et dans le Sud-Est. En outre, on a eviteun taux de syndicalisation eleve. Toujours est-il que ces facteurs-ci n'ont pas ete d'importants determinants geographiques des flux des prises de participation aux annees 90. O HUALLACHAIN B. und REID N. (1997) Erwerb gegen Investierung im Grunen? Standort und Wachstum japanischer Hersteller in den Vereinigten Staaten, Reg. Studies 31, 403- 416. Die Untersuchung auslandischer Direktinvestierungen mittels Hauptarten der Eingange tragt dazu bei, den Standort japanischer Hersteller in den Vereinigten Staaten zu erklaren. Japanische Neugrundungen im Grunen und erworbene Betriebe weisen in verschiedenen Jahrzehnten ausgepragte interregionale Verteilungsmuster auf. Hier werden gewohnliche Mindestquadrate und tobit Regressionsanalysen zur Berechnung interstaatlicher Abweichungen im Umfang der von japanischer Seite in den Jahren 1979, 1989 und 1992 erworbenen und im Grunen begonnener Unternehmen, sowie deren Erweiterung in den siebziger, achtziger und fruhen neunziger Jahren benutzt. Die Unternehmen im Grunen trieben die Bildung von auf Benutzung von Automobilen beruhenden Industriekomplexen in den Regionen des mittleren Westen und des Sudostens voran. Im Grunen Investierende vermeiden auch Staaten mit aktiven Gewerkschaftsorganisationen, und warfen im Laufe der Zeit die Beschrankungen ab, die die allgemeine Verteilung amerikanischer herstellender Betriebe mit sich brachte. Obwohl die Versorgung mit beschaffbaren Vermogenswerten von den siebziger bis zu den neunziger Jahren Erwerbszuflusse standig beschrankte, war die Region der pazifischen Kuste in dem Zeitraum ein Brennpunkt japanischer Erwerbstatigkeit. In den achtziger Jahren trugen Kaufer zur Entwicklung des japanischen Kraftfahrzeugkomplexes im mittleren Westen und im Sudwesten bei. Auch sie wichen aktiven schaften aus. In den neunziger Jahren stellten diese letzteren Faktoren jedoch keine signifikanten standortlichen Determinanten der Erwerbsstromungen dar.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Regional Studies.

Volume (Year): 31 (1997)
Issue (Month): 4 ()
Pages: 403-416

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Handle: RePEc:taf:regstd:v:31:y:1997:i:4:p:403-416

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Keywords: Japanese; Direct Investment; Acquisition; Greenfield; United States; Location; Growth;

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Cited by:
  1. Slangen, A.H.L. & Hennart, J-F., 2007. "Greenfield or Acquisition Entry: A Review of the Empirical Foreign Establishment Mode Literature," ERIM Report Series Research in Management ERS-2007-059-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
  2. Williams, David, 2003. "Explaining employment changes in foreign manufacturing investment in the UK," International Business Review, Elsevier, vol. 12(4), pages 479-497, August.
  3. Belderbos,R. & Carree,M., 2000. "The Location of Japanese Investments in China: Agglomeration Effects, Keiretsu, and Firm Heterogeneity," Research Memorandum 002, Maastricht University, Netherlands Institute of Business Organization and Strategy Research (NIBOR).
  4. Fung, K.C. & Korhonen, Iikka & Li, Ke & Ng, Francis, 2008. "China and Central and Eastern European Countries: Regional networks, global supply chain or international competitors?," BOFIT Discussion Papers 9/2008, Bank of Finland, Institute for Economies in Transition.
  5. Inui, Tomohiko & Matsuura, Toshiyuki & Pocet, Sandra, 2008. "The Location of Japanese MNCs Affiliates: Agglomeration Spillovers and Firm Heterogeneity," Discussion Paper Series a506, Institute of Economic Research, Hitotsubashi University.
  6. Gilroy, Bernard Michael & Lukas, Elmar, 2005. "The Choice between Greenfield Investment and Cross-border Acquisition: A Real Option Approach," MPRA Paper 18819, University Library of Munich, Germany.
  7. Bergman, Mats A. & Johansson, Per & Bergman, M.A., 2002. "Large investments in the pulp and paper industry: a count data regression analysis," Journal of Forest Economics, Elsevier, vol. 8(1), pages 29-52.
  8. Roberto Basile, 2002. "Acquisition versus greenfield investment: the location of foreign manufacturers in Italy," ISAE Working Papers 27, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
  9. Ayça Tekin-Koru, 2006. "Corruption and the ownership composition of the multinational firm at the time of entry: Evidence from Turkey," Journal of Economics and Finance, Springer, vol. 30(2), pages 251-269, June.
  10. Nguyen, Anh, 1997. "Japanese manufacturing investment in the UK 1972-1996: an econometric analysis," MPRA Paper 1920, University Library of Munich, Germany.
  11. Nguyen, Ngoc Anh & Nguyen, Thang, 2007. "Foreign direct investment in Vietnam: An overview and analysis the determinants of spatial distribution across provinces," MPRA Paper 1921, University Library of Munich, Germany.

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