Cutting Against the Grain: A Case Study of MacMillan Bloedel’s Japan Strategy

For many Western corporations, Japan poses formidable barriers to export and investment. Although trade policy confrontations with Japan have been scrutinized, the strategies pursued by Western corporations in attempting to penetrate the Japanese economy remain poorly understood. This paper addresses this lacuna via a corporate case study. Conceptually, we provide an alternative to the established theory of the international firm, outlining a model that integrates the related concepts of spatial entry advantages-spatial entry barriers, learning-bargaining processes, and control-efficiency considerations. We explore the model empirically by examining MacMillan Bloedel’s (MB’s) strategy of export (and investment) diversification toward Japan. The data come mainly from unstructured interviews with representatives inside and outside the firm. The analysis documents the extensive marketing initiatives undertaken by MB in pursuit of Japanese markets and the substantial changes required in its British Columbia-based production facilities. In the terms of the model presented, MB has invested to an unusual degree (among forest product corporations) in understanding Japanese markets and in gaining bargaining leverage in order to exploit its entry advantages effectively. More so than rival firms, which have relied on traditional ways of tapping into Japanese markets, MB has stressed the efficiency benefits of having greater control within the Japanese distribution system.