Knowledge Factors Preventing Japanese Home Builders from Multinationalization: A Case Study of Sekisui House, Ltd

The housing industry, with its strong technical characteristics and practices, uses explicit knowledge embedded in a specific local context, leading to stickiness even for know-how. This makes it difficult for firms to expand abroad without overcoming this strong stickiness. Success or failure in multinationalization depends on their absorptive capacity, which is supported by prior knowledge. It is difficult to create internalization advantages through vertical integration; therefore, selective vertical integration is necessary. Vertical integration at the global level is difficult; however, if established, it can provide strong competitive advantages. Nonetheless, the mechanism of creating competitive advantage hinders the multinationalization of firms. This case study examines the theoretical compatibility of the multinationalization of Sekisui House, a leading house manufacturer in Japan. We show that there is potential for advancing global procurement along with international expansion, but the unique standards of Japanese architecture pose a barrier to global procurement. For companies in this industry, it is reasonable to adopt a strategy that creates synergy between the overseas expansion of housing businesses and their own building materials. M&As focus on acquiring local knowledge and capabilities through talent acquisition. Finally, as the know-how of sales has high information viscosity, it is difficult to share it even within the same organization, and even more difficult for organizations across countries.