Knowledge that Transforms

This study investigated whether small Japanese automobile ancillary firms followed the major Japanese automakers in setting up production facilities in the United States. Based on Dunning's eclectic theory of foreign direct investment and resource dependence theory, hypotheses were generated to explain the determinants of foreign investment of Japanese suppliers. It was hypothesized that mutual dependencies between the major Japanese automobile firms and their suppliers, firm-specific ownership advantages, profitability, and keiretsu affiliation influenced the foreign direct investment of the first-tier automobile ancillary firms into the United States. Data on the entire population of 446 Japanese automobile ancillary manufacturers were obtained from archival sources. Logistical regression analyses indicated that keiretsu affiliation, previous international experience, small size, lower dependence of supplier firms on the automobile assembly firm, and higher dependence of core firms on affiliate firms all contributed to this foreign direct investment.

This study investigated the formation and outcomes of trust between partners in a specific form of strategic alliance not often studied, the non-equity-based international cooperative alliance (ICA). Because a component of the investigation involved the reciprocal effects of trust in the ICA relationship, dyadic data were gathered from Japanese and U.S. partners in 101 ICAs based in Japan. Results showed that partner cultural sensitivity is an important contributor to trust building for both sides of the dyad. Complementarity with partner contributed to trust for the U.S. but not for the Japanese. Similarity between ICA partners led to trust for the Japanese but not the U.S. partner. The results also showed strong reciprocal effects of trust in the relationship, and that trust of the ICA partner leads the individual firm to integrate the ICA into its own strategic framework.

Most current research on technology alliances assumes that trading partners are free to select an optimal governance structure. However, for international scientific research centers working with advanced technologies, the choices for industrial collaboration are often limited to short-term contracts. This research investigates whether in high technology settings, such short-term contracts can substitute for longer-term cooperative alliances. While the short-term transaction costs are high, the results suggest that, similar to alliances, certain market-based contracts do result in long-term learning and transferable firm-specific advantages.

This paper examines the relationship between attributes of Japanese electronics firms and the sequence of their investments in the U.S. and Canada. It is argued that a useful way to model foreign direct investment (FDI) decisions is to recognize explicitly the uncertainties involved in them. A probabilistic model of FDI is specified. The following hypotheses are incorporated in the model: 1) the higher the risk-adjusted expected net benefits from foreign direct investment, ceteris paribus, the higher the probability of making an investment at any particular moment and thus the probability of investing earlier; 2) risk-adjusted expected net benefits from FDI by a firm are a function of its possession of certain types of intangible, transportable assets; 3) the uncertainties involved with FDI may be reduced with the passage of time and with increased experience with foreign operations; 4) parent company attributes that facilitate market intelligence capabilities permit early recognition of investment opportunities; and 5) timing of entry may reflect strategic considerations such as responding to growing foreign market opportunities, the need to ensure market access and the presence of opportunities to obtain abnormal profits due to market concentration. The models are estimated using Cox's proportional hazards regression model. Results generally confirm the hypotheses that size and financial capabilities, as well as possession of some knowledge-based, firm-specific strategic assets, are significantly related to early FDI. They also confirm that timing of entry is affected by market opportunities and in some cases by the need to ensure market access. We did not find evidence in this sector that differences in market concentration significantly affected the timing of FDI. Analyses are also provided of inter-period changes in the importance of different types of intangible assets in explaining earlier FDI as well as changes that reflect differences in host country environments.

Existing research on international partnerships focuses primarily on the ex ante structuring of interorganizational relationships. This study departs from this research by taking a behavioral approach to understand the ex post maintenance of cross-border marketing partnerships. A conceptual model is developed by identifying the antecedents of trust and performance in such partnerships. The model is empirically tested on a sample of U.S. firms having distributor and licensing relationships with firms from Asia, Europe, and Central/South America. Findings support the importance of bilateral relational norms and informal monitoring mechanism in building interorganizational trust and improving market performance of international partnerships.