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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

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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
    DOI: 10.22004/ag.econ.127311
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    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.
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    3. Jean-François 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.
    4. Gary Hamel, 1991. "Competition for competence and interpartner learning within international strategic alliances," Strategic Management Journal, Wiley Blackwell, vol. 12(S1), pages 83-103, June.
    5. Jan Johanson & Jan-Erik Vahlne, 1977. "The Internationalization Process of the Firm—A Model of Knowledge Development and Increasing Foreign Market Commitments," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 8(1), pages 23-32, March.
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