Foreign Direct Investment by Japanese Electronics Firms in the United States and Canada: Modelling the Timing of Entry
This paper examines the relationship between attributes of Japanese electronics firms and the sequence of their investments in the U.S. and Canada. It is argued that a useful way to model foreign direct investment (FDI) decisions is to recognize explicitly the uncertainties involved in them. A probabilistic model of FDI is specified. The following hypotheses are incorporated in the model: 1) the higher the risk-adjusted expected net benefits from foreign direct investment, ceteris paribus, the higher the probability of making an investment at any particular moment and thus the probability of investing earlier; 2) risk-adjusted expected net benefits from FDI by a firm are a function of its possession of certain types of intangible, transportable assets; 3) the uncertainties involved with FDI may be reduced with the passage of time and with increased experience with foreign operations; 4) parent company attributes that facilitate market intelligence capabilities permit early recognition of investment opportunities; and 5) timing of entry may reflect strategic considerations such as responding to growing foreign market opportunities, the need to ensure market access and the presence of opportunities to obtain abnormal profits due to market concentration. The models are estimated using Cox's proportional hazards regression model. Results generally confirm the hypotheses that size and financial capabilities, as well as possession of some knowledge-based, firm-specific strategic assets, are significantly related to early FDI. They also confirm that timing of entry is affected by market opportunities and in some cases by the need to ensure market access. We did not find evidence in this sector that differences in market concentration significantly affected the timing of FDI. Analyses are also provided of inter-period changes in the importance of different types of intangible assets in explaining earlier FDI as well as changes that reflect differences in host country environments.© 1996 JIBS. Journal of International Business Studies (1996) 27, 655–681
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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 27 (1996)
Issue (Month): 4 (December)
|Contact details of provider:|| Web page: http://www.palgrave-journals.com/|
|Order Information:|| Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK|
Web: http://www.palgrave-journals.com/pal/subscribe/index.html Email:
When requesting a correction, please mention this item's handle: RePEc:pal:jintbs:v:27:y:1996:i:4:p:655-681. 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: (Iulia Badea)
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.