Analysis of Foreign Direct Investments Engaged by Japanese Multinational Companies

In recent years, the most visible feature of globalization was the new trend of the capital flow which moves from the stage of internalization to the stage of trans-nationalization. The decisive factor that led to this development was the trans-nationalization of production/distribution networks by multinational companies (MNCs). MNCs, which are also frequently referred to as transnational corporations (TNCs), are conglomerate organizations which carry out multiple and diverse economic activities and they consists of a parent company and a large number of subsidiaries operating in various countries of the world. Japan has been worthy of note on the international business scene not only by the high competitiveness of its companies on the global markets, but especially through the trans-nationalization of the activities of these enterprises, a process which has resulted in the implementation, via Foreign Direct Investments (FDI) of Japanese production units abroad, with significant positive impact both on the global economy and on the domestic economy. A great number of empirical studies since the mid-1990s, using firm-level data, have shown that multinational companies (MNCs) dominate today the Japanese business environment. The paper puts together the findings of some interesting working papers published by Japanese researchers in recent years, trying to provide a scientific answer to the following question: “In what way do FDI undertaken by MNCs influence the level of performances achieved by Japanese companies at home?” The conclusion is that FDI and the activity carried out by Japanese MNCs abroad have indubitable positive effects on both countries and firms involved - such as raises in production, employment and productivity at firms’ level or increases in competition intensity among firms, improvements in real wage and welfare at macroeconomic level.