The Impact of Prior Entries on the Foreign Investment Decision of Japanese Multinational Electronics Firms

Event details
Speaker : Dr Mário Henrique Ogasavara
               Postdoctoral Fellow, Department of Japanese Studies, NUS
Date      : Friday, 26 October 2007
Time      : 3:00pm - 4:00pm
Venue    : AS4/03-28 (JS Meeting Room)

Abstract

Japan has been traditionally a major player in the global electronics industry. With the rapid process of globalization and as a response to increasing market competition, many Japanese electronics firms have expanded their manufacturing operation to different countries and regions. In this way, Japanese multinational companies have to make an important strategic decision when investing in foreign markets. Firms are not only concerned about which country or region to invest in, but how to enter this particular market. This means that choosing a selected entry mode can have great consequences for the firm's strategy of international expansion. This paper provides a preliminary analysis of the effect of prior entries on the foreign entry strategy decision in sixty-four countries made by nine large Japanese electronics firms: Fujitsu, Hitachi, Matsushita Electric, Mitsubishi Electric, NEC, Sanyo, Sharp, Sony, and Toshiba. By considering a more comprehensive classification of entry mode and taking into account that entry strategy has to be viewed as a sequential process, this study shows that firms tend to follow the prior entry strategy of other firms in the case of first time investors. While for subsequent investments, both prior market entries by the parent firm and competitors have influence on the choice of entry mode in a particular country. The subsidiary data were collected from Toyo Keizai Inc. Databank – Japanese Overseas Investment: Listed by Firms, which resulted in a sample of over 1,400 subsidiaries established by these firms.