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Productivity Heterogeneity and Internationalization: Evidence from Japanese Firms

Author

Listed:
  • Ryuhei Wakasugi

    (Institute of Economic Research, Kyoto University, Yoshida-honmachi, Sakyo-ku, Kyoto, Japan. E-mail: wakasugi@kier.kyoto-u.ac.jp)

  • Ayumu Tanaka

    (Research Institute of Economy, Trade and Industry (RIETI), Tokyo, Japan. Email: info@rieti.go.jp)

Abstract

This paper examines whether the rank of Japanese firms’ (using 12,504 firm level dataset) productivity sorts the modes of their internationalization and how firms’ productivity affects their choice of export and FDI to destinations with similar income level. The empirical results in the paper demonstrate that the mode of firm’s internationalization in selected regions shifts from non- internationalization to export, and from export to FDI as the productivity of firms rises. It confirms the theoretical prediction of the HMY model. The paper also finds empirical evidence that the productivity of firms internationalizing in multiple region is much higher than that of firms internationalizing in a single region, regardless of the mode of internationalization. This finding can be justified on theoretical ground that higher share in the global markets by a firm will require higher productivity.

Suggested Citation

  • Ryuhei Wakasugi & Ayumu Tanaka, 2012. "Productivity Heterogeneity and Internationalization: Evidence from Japanese Firms," Millennial Asia, , vol. 3(1), pages 45-70, January.
    • Handle: RePEc:sae:millen:v:3:y:2012:i:1:p:45-70
    DOI: 10.1177/097639961200300103
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    Citations

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    Cited by:

    1. Michael Moritz & Veronika Hecht & Patricia Noska & Johannes Schaffler, 2020. "Types of FDI and Determinants of Affiliate Size: the Classification Makes the Difference," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 70(4), pages 312-331, October.
    2. HAYAKAWA Kazunobu & MATSUURA Toshiyuki, 2013. "Heterogeneous Impact of Trade Liberalization on Vertical FDI: Evidence from Japanese firm-level data," Discussion papers 13020, Research Institute of Economy, Trade and Industry (RIETI).
    3. WAKASUGI Ryuhei & Hongyong ZHANG, 2012. "Effects of Ownership on Exports and FDI: Evidence from Chinese firms," Discussion papers 12058, Research Institute of Economy, Trade and Industry (RIETI).
    4. WAKASUGI Ryuhei & NATSUHARA Takashi, 2012. "Productivity and FDI of Taiwan Firms: A review from a nonparametric approach," Discussion papers 12033, Research Institute of Economy, Trade and Industry (RIETI).

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