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Are Joint Ventures with Local Firms an Efficient Way to Enter a Culturally Distant Market? The Case of Japanese Entry into the United States

Author

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  • Hennart, Jean-Francois
  • Roehl, Thomas
  • Hagen, James M.

Abstract

We empirically test the proposition that foreign direct investors should use joint ventures with local firms for their first investment in unfamiliar markets. By tracking the expansion paths of Japanese investors in the US, we find no evidence that the growth of Japanese firms which first entered the US in a joint ventures with local firms is different from that of Japanese counterparts which used wholly-owned subsidiaries for initial US market entry.

Suggested Citation

  • Hennart, Jean-Francois & Roehl, Thomas & Hagen, James M., 2002. "Are Joint Ventures with Local Firms an Efficient Way to Enter a Culturally Distant Market? The Case of Japanese Entry into the United States," Working Papers 127311, Cornell University, Department of Applied Economics and Management.
  • Handle: RePEc:ags:cudawp:127311
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    File URL: http://purl.umn.edu/127311
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    References listed on IDEAS

    as
    1. Kogut, Bruce & Chang, Sea Jin, 1991. "Technological Capabilities and Japanese Foreign Direct Investment in the United States," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 401-413, August.
    2. Gomes-Casseres, Benjamin, 1989. "Ownership structures of foreign subsidiaries : Theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 11(1), pages 1-25, January.
    3. Jean-Fran├žois Hennart, 1991. "The Transaction Costs Theory of Joint Ventures: An Empirical Study of Japanese Subsidiaries in the United States," Management Science, INFORMS, vol. 37(4), pages 483-497, April.
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    More about this item

    Keywords

    Joint venture; Foreign market entry; Japan; Transaction costs; Marketing; F2; F21; L22; D2; L6;

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • D2 - Microeconomics - - Production and Organizations
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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