Advanced Search
MyIDEAS: Login

What determines the profitability of foreign direct investment? A subsidiary-level analysis of Japanese multinationals

Contents:

Author Info

  • Mariko Sakakibara

    (University of California, CA, USA)

  • Hideki Yamawaki

    (Claremont Graduate University, CA, USA)

Registered author(s):

    Abstract

    This article identifies key factors that determine the profitability of Japanese firms abroad by using panel-data regression models on new, large-scale, subsidiary-level data over the 1990-1996 period. The results show that the determinants of subsidiary profits differ across host regions, suggesting that the economic and institutional factors specific to host regions influence significantly the profit performances of overseas subsidiaries. While the size effect on the subsidiary profitability is present in all the regions, other effects, such as experience, local supplier networks, local sales and macroeconomic conditions affect the performance of subsidiaries in a different manner by region. Copyright © 2008 John Wiley & Sons, Ltd.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://hdl.handle.net/10.1002/mde.1392
    File Function: Link to full text; subscription required
    Download Restriction: no

    Bibliographic Info

    Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

    Volume (Year): 29 (2008)
    Issue (Month): 2-3 ()
    Pages: 277-292

    as in new window
    Handle: RePEc:wly:mgtdec:v:29:y:2008:i:2-3:p:277-292

    Contact details of provider:
    Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

    Related research

    Keywords:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Caves, R E & Gale, B T & Porter, M E, 1977. "Interfirm Profitability Differences: Comment," The Quarterly Journal of Economics, MIT Press, vol. 91(4), pages 667-75, November.
    2. Mancke, Richard B, 1974. "Causes of Interfirm Profitability Differences: A New Interpretation of the Evidence," The Quarterly Journal of Economics, MIT Press, vol. 88(2), pages 181-93, May.
    3. Markusen, James R., 2002. "Multinational Firms and the Theory of International Trade," MPRA Paper 8380, University Library of Munich, Germany.
    4. Caves, Richard E, 1971. "International Corporations: The Industrial Economics of Foreign Investment," Economica, London School of Economics and Political Science, vol. 38(149), pages 1-27, February.
    5. Walter Kuemmerle, 1999. "The Drivers of Foreign Direct Investment into Research and Development: An Empirical Investigation," Journal of International Business Studies, Palgrave Macmillan, vol. 30(1), pages 1-24, March.
    6. Donald J Lecraw, 1983. "Performance of Transnational Corporations in Less Developed Countries," Journal of International Business Studies, Palgrave Macmillan, vol. 14(1), pages 15-33, March.
    7. Schmalensee, Richard, 1985. "Do Markets Differ Much?," American Economic Review, American Economic Association, vol. 75(3), pages 341-51, June.
    8. Lall, Sanjaya, 1978. "The Pattern of Intra-Firm Exports by U.S. Multinationals," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 40(3), pages 209-22, August.
    9. Andersson, Thomas & Fredriksson, Torbjorn, 2000. "Distinction between intermediate and finished products in intra-firm trade," International Journal of Industrial Organization, Elsevier, vol. 18(5), pages 773-792, July.
    10. Ian Domowitz & R. Glenn Hubbard & Bruce C. Petersen, 1986. "Business Cycles and the Relationship Between Concentration and Price-Cost Margins," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 1-17, Spring.
    11. L. Wade, 1988. "Review," Public Choice, Springer, vol. 58(1), pages 99-100, July.
    12. Berry, Heather & Sakakibara, Mariko, 2008. "Resource accumulation and overseas expansion by Japanese multinationals," Journal of Economic Behavior & Organization, Elsevier, vol. 65(2), pages 277-302, February.
    13. Hackett, Steven C. & Srinivasan, Krishna, 1998. "Do supplier switching costs differ across Japanese and US multinational firms?," Japan and the World Economy, Elsevier, vol. 10(1), pages 13-32, January.
    14. Ingemar Dierickx & Karel Cool, 1989. "Asset Stock Accumulation and Sustainability of Competitive Advantage," Management Science, INFORMS, vol. 35(12), pages 1504-1511, December.
    15. Machin, Stephen & Van Reenen, John, 1993. "Profit Margins and the Business Cycle: Evidence from UK Manufacturing Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 41(1), pages 29-50, March.
    16. Banri Asanuma, 1985. "The Contractual Framework for Parts Supply in the Japanese Automotive Industry," Japanese Economy, M.E. Sharpe, Inc., vol. 13(4), pages 54-78, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:wly:mgtdec:v:29:y:2008:i:2-3:p:277-292. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).

    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.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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