Advanced Search
MyIDEAS: Login to save this paper or follow this series

Divesture of Foreign Manufacturing Affiliates: Country Platforms, Multinational Plant Networks, and Foreign Investor Agglomeration

Contents:

Author Info

  • Rene Belderbos
  • Jianglei Zou

Abstract

We develop hypotheses concerning the impact of multinational firms' international plant configuration and host country foreign investor agglomeration on the divesture of manufacturing affiliates, drawing on real option theory and location and agglomeration theory. We test our hypotheses on a comprehensive sample of 1080 Asian manufacturing affiliates of Japanese multinational firms in the electronics industry during the turbulent years preceding and into the Asian financial crisis (1995-1999). We find evidence that multinational firms both create flexibility options through maintaining a multinational plant network of platform affiliates in multiple Asian countries, and exercise this flexibility option through divestments and relocation of manufacturing activities within the network. Firms most responsive to Japanese investor agglomeration or inter-firm buyer-supplier agglomeration within vertical business groups have a higher probability of divesture, suggesting that agglomeration leads to 'adverse selection' of firms and affiliates with weaker competitiveness.

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://hi-stat.ier.hit-u.ac.jp/research/discussion/2004/pdf/D04-72.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Institute of Economic Research, Hitotsubashi University in its series Hi-Stat Discussion Paper Series with number d04-72.

as in new window
Length:
Date of creation: Jan 2005
Date of revision:
Handle: RePEc:hst:hstdps:d04-72

Contact details of provider:
Postal: 2-1 Naka, Kunitachi City, Tokyo 186
Phone: +81-42-580-8327
Fax: +81-42-580-8333
Email:
Web page: http://www.ier.hit-u.ac.jp/
More information through EDIRC

Related research

Keywords: Divsture; agglomeration; multinational firms; networks;

This paper has been announced in the following NEP Reports:

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. Bartik, Timothy J, 1985. "Business Location Decisions in the United States: Estimates of the Effects of Unionization, Taxes, and Other Characteristics of States," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(1), pages 14-22, January.
  2. Mata, Jose & Portugal, Pedro & Guimaraes, Paulo, 1995. "The survival of new plants: Start-up conditions and post-entry evolution," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 459-481, December.
  3. Belderbos, Rene & Sleuwaegen, Leo, 1996. "Japanese Firms and the Decision to Invest Abroad: Business Groups and Regional Core Networks," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 214-20, May.
  4. McCloughan, Patrick & Stone, Ian, 1998. "Life duration of foreign multinational subsidiaries: Evidence from UK northern manufacturing industry 1970-93," International Journal of Industrial Organization, Elsevier, vol. 16(6), pages 719-747, November.
  5. Mata, Jose & Portugal, Pedro, 1994. "Life Duration of New Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 42(3), pages 227-45, September.
  6. José Mata & Pedro Portugal, 2001. "The Survival of New Domestic and Foreign Owned Firms," Working Papers w200101, Banco de Portugal, Economics and Research Department.
  7. Pennings, Enrico & Sleuwaegen, Leo, 2000. "International relocation: firm and industry determinants," Economics Letters, Elsevier, vol. 67(2), pages 179-186, May.
  8. Keith Head & John Ries & Deborah Swenson, 1994. "Agglomeration Benefits and Location Choice: Evidence from Japanese Manufacturing Investment in the United States," NBER Working Papers 4767, National Bureau of Economic Research, Inc.
  9. Belderbos, Rene & Carree, Martin, 2002. "The Location of Japanese Investments in China: Agglomeration Effects, Keiretsu, and Firm Heterogeneity," Journal of the Japanese and International Economies, Elsevier, vol. 16(2), pages 194-211, June.
  10. Martin, X.Y.F. & Mitchell, W. & Swaminathan, A., 1995. "Recreating and extending Japanese automobile buyer-supplier links in North America," Open Access publications from Tilburg University urn:nbn:nl:ui:12-384649, Tilburg University.
  11. David, Paul A. & Rosenbloom, Joshua L., 1990. "Marshallian factor market externalities and the dynamics of industrial localization," Journal of Urban Economics, Elsevier, vol. 28(3), pages 349-370, November.
  12. A Delios & W J Henisz, 2003. "Policy uncertainty and the sequence of entry by Japanese firms, 1980–1998," Journal of International Business Studies, Palgrave Macmillan, vol. 34(3), pages 227-241, May.
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:hst:hstdps:d04-72. 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: (Tatsuji Makino).

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.