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The Relationship of Industry Evolution to Patterns of Technological Linkages, Joint Ventures, and Direct Investment Between U.S. and Japan

Author

Listed:
  • Ellen R. Auster

    (Faculty of Administrative Studies, York University, North York, Ontario, Canada M3J 1P3)

Abstract

Although economic activity between the U.S. and Japan has skyrocketed in the last decade, there are few large sample, cross-industry studies analyzing multiple forms of investment by the Japanese in the U.S. This study analyzes the key characteristics of each stage of industry evolution and the costs and benefits of each form of resource investment to predict the patterns of technological linkages, joint ventures, and direct investment of Japanese companies in the U.S. The results find support for a model predicting a predominance of technological linkages in emerging industries, joint ventures in growing industries, and direct investment in maturing industries. Technological linkages are most attractive in emerging industries as firms struggle to acquire technology, information and expertise and share cost and risk, yet retain flexibility. Joint ventures proliferate in growing industries because they offer a means of acquiring and expanding customer bases, yet reducing vulnerability. In maturing industries, where firms' key competencies are more developed, direct investment allows the company to generate demand in new markets without the disadvantage of joint governance.

Suggested Citation

  • Ellen R. Auster, 1992. "The Relationship of Industry Evolution to Patterns of Technological Linkages, Joint Ventures, and Direct Investment Between U.S. and Japan," Management Science, INFORMS, vol. 38(6), pages 778-792, June.
  • Handle: RePEc:inm:ormnsc:v:38:y:1992:i:6:p:778-792
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    File URL: http://dx.doi.org/10.1287/mnsc.38.6.778
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    References listed on IDEAS

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    1. Leech, Dennis, 1985. "Ownership Concentration and the Theory of the Firm : A Simple-Game-Theoretic Approach to Applied US Corporations in the 1930's," The Warwick Economics Research Paper Series (TWERPS) 262, University of Warwick, Department of Economics.
    2. Guillermo Owen, 1972. "Multilinear Extensions of Games," Management Science, INFORMS, vol. 18(5-Part-2), pages 64-79, January.
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    Citations

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    Cited by:

    1. Ragatz, Gary L. & Handfield, Robert B. & Petersen, Kenneth J., 2002. "Benefits associated with supplier integration into new product development under conditions of technology uncertainty," Journal of Business Research, Elsevier, vol. 55(5), pages 389-400, May.
    2. Leiblein, Michael J. & Reuer, Jeffrey J., 2004. "Building a foreign sales base: the roles of capabilities and alliances for entrepreneurial firms," Journal of Business Venturing, Elsevier, vol. 19(2), pages 285-307, March.
    3. Sakakibara, Mariko & Serwin, Kenneth, 2000. "U.S. Distribution Entry Strategy of Japanese Manufacturing Firms: The Role of Keiretsu," Journal of the Japanese and International Economies, Elsevier, vol. 14(1), pages 43-72, March.
    4. Hagedoorn, John & Sedaitis, Judith B., 1998. "Partnerships in transition economies: international strategic technology alliances in Russia," Research Policy, Elsevier, vol. 27(2), pages 177-185, June.
    5. Iavor Marangozov, 2005. "Characteristics of the International Joint Ventures in Bulgaria (1989-2003)," Industrial Organization 0509003, EconWPA.
    6. Hans T. W. Frankort & John Hagedoorn & Wilko Letterie, 2016. "Learning horizon and optimal alliance formation," Computational and Mathematical Organization Theory, Springer, vol. 22(2), pages 212-236, June.
    7. Scott A. Shane & Karl T. Ulrich, 2004. "50th Anniversary Article: Technological Innovation, Product Development, and Entrepreneurship in Management Science," Management Science, INFORMS, pages 133-144.
    8. Iavor Marangozov, 2005. "From Practice to Theory of the International Joint Ventures," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 44-77.
    9. Yan, Yanni & Child, John, 2004. "Investors' resource commitments and information reporting systems: control in international joint ventures," Journal of Business Research, Elsevier, vol. 57(4), pages 361-371, April.
    10. Antonio Revilla & Zulima Fernández, 2013. "Environmental Dynamism, Firm Size and the Economic Productivity of R&D," Industry and Innovation, Taylor & Francis Journals, pages 503-522.
    11. Natalia Victorovna Kuznetsova, 2016. "Strategic Alliances: Industry-specifi c Characteristics of the Achievement of a Competitive Advantage," International Journal of Economics and Financial Issues, Econjournals, vol. 6(1), pages 109-117.
    12. Zahra, Shaker A. & Bogner, William C., 2000. "Technology strategy and software new ventures' performance: Exploring the moderating effect of the competitive environment," Journal of Business Venturing, Elsevier, vol. 15(2), pages 135-173, March.

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