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Do exits proxy a liability of foreignness?: The case of Japanese exits from the US

  • Hennart, Jean-François
  • Roehl, Thomas
  • Zeng, Ming

Progress in understanding the liability of foreignness requires accurate measurement of this concept. This paper investigates whether exits of foreign affiliates from a given host market provide a reliable measure. We tackle this question by investigating 32 exits of Japanese manufacturing affiliates from the US. Our goal is to assess the extent to which exits are driven by a liability of foreignness and thus whether exits can serve as a reliable measurement of this liability. We find that less than half of our exits are attributable to a liability of foreignness. We conclude that while the data confirm a liability of foreignness for Japanese early entrants into the US, the presence of many other motives for exit suggests caution when inferring such a liability from exits, especially when exit costs are low.

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Article provided by Elsevier in its journal Journal of International Management.

Volume (Year): 8 (2002)
Issue (Month): 3 ()
Pages: 241-264

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Handle: RePEc:eee:intman:v:8:y:2002:i:3:p:241-264
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  1. Pennings, J.M. & Barkema, H.G. & Douma, S.W., 1994. "Organizational learning and diversification," Other publications TiSEM 2cabb122-340f-4729-afb3-9, Tilburg University, School of Economics and Management.
  2. 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.
  3. repec:ner:tilbur:urn:nbn:nl:ui:12-382776 is not listed on IDEAS
  4. José Mata & Pedro Portugal, 1999. "Closure and Divestiture By Foreign Entrants: The Impact of Entry and Post-Entry Strategies," Working Papers w199906, Banco de Portugal, Economics and Research Department.
  5. Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan, vol. 19(3), pages 411-432, September.
  6. Steven Kaplan & Michael S. Weisbach, 1990. "The Success of Acquisitions: Evidence From Disvestitures," NBER Working Papers 3484, National Bureau of Economic Research, Inc.
  7. Duane Kujawa, 1983. "Technology Strategy and Industrial Relations: Case Studies of Japanese Multinationals in the United States," Journal of International Business Studies, Palgrave Macmillan, vol. 14(3), pages 9-9, September.
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