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Foreign Investment, Divestment and Relocation by Japanese Electronics Firms in East Asia*

Published on Mar 1, 2006in Asian Economic Journal0.20
· DOI :10.1111/j.1467-8381.2006.00222.x
Rene Belderbos30
Estimated H-index: 30
(Katholieke Universiteit Leuven),
Jianglei Zou5
Estimated H-index: 5
(Katholieke Universiteit Leuven)
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Abstract
Although foreign divestment and international relocation by multinational firms carry important economic implications for the industrialization of East Asian countries, there has been little empirical research on these issues. In this paper we analyze the magnitude and pattern of foreign divestment and relocation by Japanese electronics firms in nine East Asian countries during 1995-2003. The average annual divestment rate of electronics manufacturing affiliates is 3 percent, but divestment patterns diverge strongly across countries. Divestments are much more frequent in higher labor cost countries and in approximately one-third of cases are accompanied by relocations to lower wage countries, particularly to China. Evidence is found for rivalry between China and ASEAN countries in attracting foreign direct investment, but the growing attractiveness of China has not been accompanied by a reduction in employment in Japanese affiliates in ASEAN countries (with the exception of Singapore). Divestments and relocations are related to Japanese firms' strategy to reconfigure their Asian production networks in response to changing competitiveness, regional integration, and changes in local investment environments. Copyright 2006 East Asian Economic Association.
  • References (36)
  • Citations (64)
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References36
Newest
Published on Mar 1, 2008in Asia Pacific Journal of Management2.74
Tony W. Tong19
Estimated H-index: 19
(CU: University of Colorado Boulder),
Jing Li19
Estimated H-index: 19
(SFU: Simon Fraser University)
Asia Pacific offers a lot of promising growth opportunities, but it also presents high levels of uncertainty for multinational enterprises (MNEs). In this paper, we introduce real options theory as a theory of investment under uncertainty, and we discuss its implications for MNEs and their strategies with a focus on the emerging economies in Asia Pacific. We suggest that MNEs must recognize the various sources of uncertainty, as well as the various options embedded in their investments, and real...
Published on Jan 1, 2006
Rene Belderbos30
Estimated H-index: 30
(Katholieke Universiteit Leuven),
Jianglei Zou5
Estimated H-index: 5
(Katholieke Universiteit Leuven)
We develop hypotheses concerning the impact of multinational firms' international plant configuration and host country foreign investor agglomeration on the divesture of manufacturing affiliates, drawing on real option theory and location and agglomeration theory. We test our hypotheses on a comprehensive sample of 1080 Asian manufacturing affiliates of Japanese multinational firms in the electronics industry during the turbulent years preceding and into the Asian financial crisis (1995-1999). W...
Published on Jun 1, 2004in Asian Economic Journal0.20
William E. James6
Estimated H-index: 6
,
Oleksandr Movshuk3
Estimated H-index: 3
(Kyushu University)
In the present study we conduct constant market share analysis of the imports and apparent consumption of the manufacturing industries of four major economies-Korea, Japan, Taiwan and the USA. Additionally, the current study disaggregates import penetration in manufacturing, including sectors with relatively high technological requirements. Statistical tests of the significance of changes in import penetration in manufacturing industries are also conducted. The real growth of exports and apparen...
Published on Jul 1, 2003in Australian Economic History Review0.50
Prema-chandra Athukorala33
Estimated H-index: 33
(ANU: Australian National University)
Is foreign direct investment more resilient at the onset of an economic crisis and the subsequent economic collapse in a host country compared to other forms of foreign capital inflows? Are affiliates of multinational enterprises in a crisis-hit country better equipped to withstand a crisis and aid the recovery process by readjusting their investment, production and sales strategies compared to local firms? This article examines these issues in the context of the 1997-1998 economic crisis in Tha...
Published on Apr 1, 2003in Third World Quarterly2.16
Greg Felker9
Estimated H-index: 9
(HKUST: Hong Kong University of Science and Technology)
The diversion of foreign direct investment ( fdi ) flows into developing Asia, from Southeast Asia to China, has renewed doubts about whether Southeast Asia's traditional reliance on fdi has left the region without the local capabilities required to sustain the region's long-term competitiveness. Southeast Asia's industrialisation has involved deepening integration into international production networks, comprising internal exchanges between multinational corporations ( mnc s) and their subsidia...
Published on Apr 1, 2003in Asean Economic Bulletin
Thitapha Wattanapruttipaisan3
Estimated H-index: 3
Chinas accession to the World Trade Organization and the proposed ASEAN-China Free Trade Agreement will provide greater market access in resource- and agro-based products and some manufactured goods for the ASEAN-4 countries (Cambodia, Laos, Myanmar, and Vietnam). At the same time, there will be much greater competition from China in both ASEAN-4's home and third-country markets, especially in a wide range of labour- and technology-intensive manufactures. Special and differential (S&D) treatment...
Published on Mar 1, 2003in Review of World Economics1.19
Rene Belderbos30
Estimated H-index: 30
(Catholic University of Leuven)
This paper explores the relationship between the closure of “antidumping jumping” manufacturing plants and the repeal of antidumping measures. Of 67 identified Japanese “antidumping jumping” production lines in the EU in 1990 only 31 remained in operation in 1999. Analysis of the probability of divestment for 209 Japanese plants in the broadly defined electronics industry shows that Japanese plants of manufacturing products for which antidumping duties had been repealed are significantly and sub...
Published on Dec 1, 2002in Industry and Innovation3.16
Boy Lüthje5
Estimated H-index: 5
The paper examines recent developments in the international division of labor in the electronics industry resulting from the emergence of electronics contract manufacturing. The transnational production networks of major contract manufacturers are analyzed before the background of the seminal shift to vertical specialization in the information technology industry, as epitomized by the "Wintelist" model of competition and technology development. The author discusses the development of contract ma...
Published on Sep 1, 2002in Journal of Asian Economics
Suthiphand Chirathivat3
Estimated H-index: 3
(Chula: Chulalongkorn University)
Abstract ASEAN–China economic linkages are moving into a new direction. In November 2001, ASEAN and China agreed to establish an ASEAN–China free trade agreement in 10 years. More than a strategic move to signal China’s interest in Southeast Asia, there are implications of such an agreement. For both sides, there should be net trade gains: trade creation would offset trade diversion with ASEAN getting a slight trade diversion while the same trade diversion would not be obvious for China. With Ch...
Rene Belderbos30
Estimated H-index: 30
(UM: Maastricht University),
Martin Carree35
Estimated H-index: 35
(UM: Maastricht University)
Abstract Conditional logit analysis of locational choices by Japanese electronics manufacturers in China's regions and provinces during 1990–1995 confirms a major impact of general industry, Japanese, and keiretsu-specific agglomeration benefits. The effects of key determinants of locational choice vary substantially by investor size and market orientation of manufacturing plants. Small and medium-sized enterprises are more sensitive to Japanese agglomeration and prefer locations closer to Japan...
Cited By64
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Published on Apr 1, 2019in Contemporary Economic Policy0.91
Jianhong Zhang6
Estimated H-index: 6
(Nyenrode Business University),
D. Gorp2
Estimated H-index: 2
(Nyenrode Business University),
Haico A. Ebbers6
Estimated H-index: 6
(Nyenrode Business University)
Despite the international status of China and India rising dramatically in the previous decades, trade between the two countries did not grow accordingly. This paper investigates the determinants of the bilateral trade performance during the period of 2008–2012 from two perspectives: comparative advantage and trade protection. Two cases, Chinese exports to India, and Indian exports to China, are analyzed by using product‐level data. The results suggest that (1) the law of comparative advantage a...
Published on Jan 14, 2019in European Business Review
Francesco Ciabuschi12
Estimated H-index: 12
(Uppsala University),
Olof Lindahl2
Estimated H-index: 2
(Uppsala University)
+ 1 AuthorsLuciano Fratocchi13
Estimated H-index: 13
(University of L'Aquila)
Purpose This paper aims to theorize on the internationalization process model to explain cases of manufacturing reshoring as decisions taken to manage risk when internationalizing. Design/methodology/approach The paper is of a conceptual nature. Building on the logic of the internationalization process model, the authors extend previous work by focusing on firms’ risk perception (determined by commitment, knowledge and uncertainty as key variables) to explain also reshoring decisions. Findings F...
Published on Jan 1, 2019
Ahmed Sayem2
Estimated H-index: 2
(SUST: Shahjalal University of Science and Technology),
Miguel Ortega-Mier7
Estimated H-index: 7
(UPM: Technical University of Madrid),
Andreas Feldmann7
Estimated H-index: 7
(KTH: Royal Institute of Technology)
Published on Dec 1, 2018in Journal of World Business5.79
Jean-Luc Arregle9
Estimated H-index: 9
(EMLYON Business School),
Toyah L. Miller14
Estimated H-index: 14
(UTD: University of Texas at Dallas)
+ 1 AuthorsPaul W. Beamish59
Estimated H-index: 59
(UWO: University of Western Ontario)
Abstract Multinational enterprises (MNEs) use the regional aggregation and integration of their foreign direct investments as an important part of their internationalization. Internationalization decisions are integrated at the region level; however, little work has focused on explaining the extent of this regional integration. We develop theoretical arguments and test new hypotheses about MNEs’ general international experience and international geographic scope (i.e., institutional diversity an...
Published on Nov 26, 2018in Journal of International Business Studies7.72
Viacheslav Iurkov1
Estimated H-index: 1
,
Gabriel R.G. Benito24
Estimated H-index: 24
(BI Norwegian Business School)
We investigate the role of domestic interfirm networks for the foreign divestment decisions of firms. We argue that firms’ foreign operations risk being divested when a firm becomes more central in its domestic network. Positive changes in firm centrality at home facilitate access to information about new business opportunities, but they may also lead firms to consider reconfiguring their value chain activities and resources across locations. The resulting opportunity costs of maintaining foreig...
Published on Sep 1, 2018in Journal of International Business Studies7.72
Alexander T. Mohr15
Estimated H-index: 15
(WU: Vienna University of Economics and Business),
Georgios Batsakis5
Estimated H-index: 5
(Brunel University London),
Zita Stone2
Estimated H-index: 2
(UKC: University of Kent)
We adopt a Penrosean perspective to study the effect of rapid international expansion on the subsequent divestment of international operations. We draw on regional strategy theory and differentiate Penrosean managerial resources by their geographical fungibility to argue that the effect of rapid international expansion on the divestment of international operations varies with the regional patterns of firms’ international expansion and international experience. We test our hypotheses using two-st...
Published on Jul 1, 2018in Strategic Change
Andrei Panibratov8
Estimated H-index: 8
(SPbU: Saint Petersburg State University),
Tashauna Brown1
Estimated H-index: 1
(SPbU: Saint Petersburg State University)
Richard Nyuur6
Estimated H-index: 6
(Northumbria University),
Joseph Amankwah-Amoah15
Estimated H-index: 15
(UoB: University of Bristol),
Ellis L.C. Osabutey3
Estimated H-index: 3
(Middlesex University)
Much of the existing literature on foreign ethical divestment has been developed in isolation and scattered across multiple disciplines. This paper reviews the existing literature on foreign ethical divestment to extract emerging themes and outline new directions for future research. Our review uncovered that foreign ethical divestment decisions can be attributed to macro, firm and individual level factors. We therefore develop an integrated model to link the dynamics of ethical foreign divestme...
Published on Aug 1, 2017in Journal of Business Research4.03
Jesús F. Lampón6
Estimated H-index: 6
(University of Vigo),
Pablo Cabanelas3
Estimated H-index: 3
(University of Vigo),
Francisco Carballo-Cruz2
Estimated H-index: 2
(University of Minho)
This paper reviews location theory to formulate a model for international relocation of production. The results highlight the role of internal factors and the appropriateness of the behavioural approach of location theory for explaining international production relocation. From a theoretical standpoint, the operational flexibility of multinational enterprises for transferring resources internationally proposes a transition from an economic geography perspective to a managerial perspective. With ...
Published on Jun 5, 2017in British Food Journal1.72
Daisuke Takahashi , Tsaiyu Chang (UTokyo: University of Tokyo)
Purpose The purpose of this paper is to analyze the factors that have influenced the withdrawal of Japanese overseas food industry subsidiaries from Asia. Design/methodology/approach The data refer to Asian subsidiaries of Japanese companies engaged in food production activities. The data set covers 545 overseas subsidiaries from 2003 to 2014, and the total number of observations is 3,513. A linear probability model examines the factors influencing the probability of a subsidiary withdrawing. Fi...
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