Bruce Kogut, Sea Jin Chang, Platform Investments and Volatile Exchange Rates: Direct Investment in the U.S. by Japanese Electronic Companies, The Review of Economics and Statistics, Vol. 78, No. 2 (May, 1996), pp. 221-231

This article examines the effect of relative technological capabilities on Japanese direct investment into the United States by looking simultaneously at industry conditions in the two markets. A negative binomial regression model is specified to estimate the effects of R & D capability and industry structure on a count measure of Japanese entries across 297 industries. The results indicate that Japanese direct investment in the United States is drawn to industries intensive in R & D expenditures summed across both countries; voluntary restraints on Japanese exports encourage direct investment. When the entries are disaggregated by mode (e.g., new plant or acquisition), there is a significant indication that joint ventures are used for the sourcing and sharing of U.S. technological capabilities.