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Characteristics of Japanese FDI in the East and the West: Understanding the strategic motives of Japanese investment

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  • Pak, Yong Suhk
  • Park, Young-Ryeol

Abstract

Key determinants that distinguish the investment behavior of Japanese manufacturing companies in two general regions (East and West) and two specific countries (China and the United States) were investigated to identify the underlying global strategic motives of Japanese investment. The West was preferred by Japanese firms that belonged to competitive domestic industries and that also had aggressive foreign ownership strategies. When China and the US were compared, additional variables, such as initial entry time and an industry's resource-intensiveness were found to influence the geographic choices of Japanese firms. A marginal effect of Japanese firms' R&D activities on the selection of location was also observed. Overall, an examination of different investment behaviors has allowed us to identify the global strategic approaches of Japanese firms in the two regions. Internalization theory, a knowledge-based view, and the OLI paradigm complemented each other in explaining the geographic preferences of Japanese firms.

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  • Pak, Yong Suhk & Park, Young-Ryeol, 2005. "Characteristics of Japanese FDI in the East and the West: Understanding the strategic motives of Japanese investment," Journal of World Business, Elsevier, vol. 40(3), pages 254-266, August.
    • Handle: RePEc:eee:worbus:v:40:y:2005:i:3:p:254-266
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    2. Ishida, Takashi & Kobayashi, Hiroaki & Inoue, Sotaro & Mori, Romio & Ito, Noriko & Higuchi, Tomoo, 2021. "Consumer Characteristics and Perceptions of Country-of-brand and Country-of-manufacture: Japanese Processed foods in urban China," 2021 ASAE 10th International Conference (Virtual), January 11-13, Beijing, China 329423, Asian Society of Agricultural Economists (ASAE).
    3. Tiago Loncan, 2021. "The Effects of Project Scale on FDI Location Choices: Evidence from Emerging Economies," Management International Review, Springer, vol. 61(2), pages 157-205, April.
    4. Jing Yang & Frank Tipton & Jiatao Li, 2011. "A review of foreign business management in China," Asia Pacific Journal of Management, Springer, vol. 28(3), pages 627-659, September.
    5. Nielsen, Bo Bernhard & Asmussen, Christian Geisler & Weatherall, Cecilie Dohlmann, 2017. "The location choice of foreign direct investments: Empirical evidence and methodological challenges," Journal of World Business, Elsevier, vol. 52(1), pages 62-82.
    6. Driffield, Nigel & Jones, Chris & Kim, Jae-Yeon & Temouri, Yama, 2021. "FDI motives and the use of tax havens: Evidence from South Korea," Journal of Business Research, Elsevier, vol. 135(C), pages 644-662.
    7. Lei, Han-Sheng & Chen, Yung-Shuan, 2011. "The right tree for the right bird: Location choice decision of Taiwanese firms' FDI in China and Vietnam," International Business Review, Elsevier, vol. 20(3), pages 338-352, June.
    8. Li, Xiaoqing & Quan, Rose & Stoian, Maria-Cristina & Azar, Goudarz, 2018. "Do MNEs from developed and emerging economies differ in their location choice of FDI? A 36-year review," International Business Review, Elsevier, vol. 27(5), pages 1089-1103.
    9. Stoian, Maria-Cristina & Tardios, Janja Annabel & Samdanis, Marios, 2024. "The knowledge-based view in international business: A systematic review of the literature and future research directions," International Business Review, Elsevier, vol. 33(2).
    10. Yipeng Liu & Ralf Bebenroth & Yi Yang, 2022. "East-Meets-West: Mergers and Acquisitions challenges and opportunities in and out of Asia," Asian Business & Management, Palgrave Macmillan, vol. 21(5), pages 715-744, November.
    11. Marius Chofor Asaba & Fabian Duffner & Florian Frieden & Jens Leker & Stephan von Delft, 2022. "Location choice for large‐scale battery manufacturing plants: Exploring the role of clean energy, costs, and knowledge on location decisions in Europe," Journal of Industrial Ecology, Yale University, vol. 26(4), pages 1514-1527, August.
    12. Naveen Kumar Jain & Tanvi Kothari & Vikas Kumar, 2016. "Location Choice Research: Proposing New Agenda," Management International Review, Springer, vol. 56(3), pages 303-324, June.
    13. Chris Wagner, 2020. "Deducing a state-of-the-art presentation of the Eclectic Paradigm from four decades of development: a systematic literature review," Management Review Quarterly, Springer, vol. 70(1), pages 51-96, February.
    14. Majocchi, Antonio & Presutti, Manuela, 2009. "Industrial clusters, entrepreneurial culture and the social environment: The effects on FDI distribution," International Business Review, Elsevier, vol. 18(1), pages 76-88, February.

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