Would You Buy a Honda Made in the U.S.? The Impact of Production Location on Manufacturing Quality
Are location-specific factors--such as the education and attitude of the local workforce, supplier networks, institutional infrastructure, and local "culture"--important for understanding persistent heterogeneities among firms? We address this question in the context of the automobile industry. Using a unique data set of over 565,000 used-car transactions at wholesale auctions, we test whether the long-run value and quality of otherwise identical cars depends on the country of assembly. We exploit the natural experiment provided by the establishment of assembly plants in the U.S. by Japanese auto manufacturers, and the fact that some of the most popular Japanese car models are assembled both in Japan and the U.S. We find evidence that the Japan-assembled cars on average sell for more than those built in the U.S., but the estimated difference is only $62. The average differences are driven almost entirely by older-model Toyotas, for which we find a more meaningful difference between the Japanese and U.S. built cars. For Hondas and more recent models of Toyotas, the Japan-built cars are no more valuable than those built in the U.S. These results suggest that Japanese automakers have been successful, though perhaps with some lag, at transferring their high-quality practices to their U.S. transplants. Our findings also suggest that there is not an inherent limitation to the U.S. manufacturing environment that prevents the production of high-quality cars in America.
|Date of creation:||Apr 2012|
|Date of revision:|
|Publication status:||published as Would You Buy a Honda Made in the U.S.? The impact of Production Location on Manufacturing Quality. (with Justin Sydnor), Review of Economics and Statistics, forthcoming|
|Contact details of provider:|| Postal: |
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chad Syverson, 2003.
"Product Substitutability and Productivity Dispersion,"
NBER Working Papers
10049, National Bureau of Economic Research, Inc.
- Chad Syverson, 2004. "Product Substitutability and Productivity Dispersion," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 534-550, May.
- Richard B. Freeman & Kathryn L. Shaw, 2009. "International Differences in the Business Practices and Productivity of Firms," NBER Books, National Bureau of Economic Research, Inc, number free07-1, December.
- Chad Syverson, 2010.
"What Determines Productivity?,"
NBER Working Papers
15712, National Bureau of Economic Research, Inc.
- Anita M McGahan & Rogerio Victer, 2010. "How much does home country matter to corporate profitability?," Journal of International Business Studies, Palgrave Macmillan, vol. 41(1), pages 142-165, January.
- Schon Beechler & John Zhuang Yang, 1994. "The Transfer of Japanese-Style Management to American Subsidiaries: Contingencies, and Competencies," Journal of International Business Studies, Palgrave Macmillan, vol. 25(3), pages 467-491, September.
- Wilbur Chung & W Mitchell & B Yeung, 2003. "Foreign direct investment and host country productivity: the American automotive component industry in the 1980s," Journal of International Business Studies, Palgrave Macmillan, vol. 34(2), pages 199-218, March.
- Barber, Brad M & Darrough, Masako N, 1996. "Product Reliability and Firm Value: The Experience of American and Japanese Automakers, 1973-1992," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 1084-99, October.
- Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
- Alexandre Mas, 2008. "Labour Unrest and the Quality of Production: Evidence from the Construction Equipment Resale Market," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 229-258.
- Philippe Aghion & Peter Howitt, 2009.
"The Economics of Growth,"
MIT Press Books,
The MIT Press,
edition 1, volume 1, number 0262012634, June.
- Peter B. Doeringer & Edward Lorenz & David G. Terkla, 2003. "The adoption and diffusion of high-performance management: lessons from Japanese multinationals in the West," Cambridge Journal of Economics, Oxford University Press, vol. 27(2), pages 265-286, March.
- S.A. Lippman & R.P. Rumelt, 1982. "Uncertain Imitability: An Analysis of Interfirm Differences in Efficiency under Competition," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 418-438, Autumn.
- Meric S. Gertler, 2001. "Best practice? Geography, learning and the institutional limits to strong convergence," Journal of Economic Geography, Oxford University Press, vol. 1(1), pages 5-26, January.
- Sako, Mari & Helper, Susan, 1998. "Determinants of trust in supplier relations: Evidence from the automotive industry in Japan and the United States," Journal of Economic Behavior & Organization, Elsevier, vol. 34(3), pages 387-417, March.
- Mari Sako, 2004. "Supplier development at Honda, Nissan and Toyota: comparative case studies of organizational capability enhancement," Industrial and Corporate Change, Oxford University Press, vol. 13(2), pages 281-308, April.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:18005. 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: ()
If references are entirely missing, you can add them using this form.