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Firm-Specific Characteristics and the Timing of Foreign Direct Investment Projects

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Author Info
Ryan, Michael
Raff, Horst

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Abstract

This paper uses a proportional hazard model to study foreign direct investment by Japanese manufacturers in Europe between 1970 and 1994. We divide each firm?s investment total into a sequence of individual investment decisions and analyze how firm-specific characteristics affect each decision. We find that total factor productivity is a significant determinant of a firm?s initial and subsequent investments. Parent-firm size does not have a significant influence on the initial decision to invest. Large firms simply have more investments than smaller firms. Other firm-specific characteristics, such as the R&D intensity, export share and keiretsu membership, also play a role in the investment process.

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Paper provided by Christian-Albrechts-University of Kiel, Department of Economics in its series Economics Working Papers with number 2007,22.

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Date of creation: 2007
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Handle: RePEc:zbw:cauewp:5863

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Web page: http://www.wiso.uni-kiel.de/econ/

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Related research
Keywords: Foreign direct investment; productivity; hazard model; Japan; keiretsu;

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Find related papers by JEL classification:
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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References listed on IDEAS
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  1. Lindbeck, Assar & Snower, Dennis J., 2003. "The Firm as a Pool of Factor Complementarities," Working Paper Series 598, Research Institute of Industrial Economics. [Downloadable!]
    Other versions:
  2. Drake, Tracey A. & Caves, Richard E., 1992. "Changing determinants of Japanese foreign investment in the United States," Journal of the Japanese and International Economies, Elsevier, vol. 6(3), pages 228-246, September. [Downloadable!] (restricted)
  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. [Downloadable!] (restricted)
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  5. Head, Keith & Ries, John, 2003. "Heterogeneity and the FDI versus export decision of Japanese manufacturers," Journal of the Japanese and International Economies, Elsevier, vol. 17(4), pages 448-467, December. [Downloadable!] (restricted)
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  6. Len Trevino & John Daniels, 1994. "An empirical assessment of the preconditions of Japanese manufacturing foreign direct investment in the United States," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 130(3), pages 576-599, September. [Downloadable!] (restricted)
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  8. Rafael Rob & Nikolaos Vettas, 2003. "Foreign Direct Investment and Exports with Growing Demand," PIER Working Paper Archive 03-001, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania. [Downloadable!]
  9. Horst, Thomas, 1972. "Firm and Industry Determinants of the Decision to Invest Abroad: An Empirical Study," The Review of Economics and Statistics, MIT Press, vol. 54(3), pages 258-66, August. [Downloadable!] (restricted)
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  11. David Greenaway & Richard Kneller, 2007. "Firm heterogeneity, exporting and foreign direct investment," Economic Journal, Royal Economic Society, vol. 117(517), pages F134-F161, 02. [Downloadable!] (restricted)
  12. Raff, Horst & Ryan, Michael & Stähler, Frank, 2008. "Firm Productivity and the Foreign-Market Entry Decision," Economics Working Papers 2008,02, Christian-Albrechts-University of Kiel, Department of Economics. [Downloadable!]
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  15. Blonigen, Bruce A. & Ellis, Christopher J. & Fausten, Dietrich, 2005. "Industrial groupings and foreign direct investment," Journal of International Economics, Elsevier, vol. 65(1), pages 75-91, January. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Horst Raff & Michael Ryan & Frank Stähler, 2008. "Whole versus Shared Ownership of Foreign Affiliates," Kiel Working Papers 1433, Kiel Institute for the World Economy. [Downloadable!]
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