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Firm capabilities and technology ladders: sequential foreign direct investments of Japanese electronics firms in East Asia
Author(s) -
Song Jaeyong
Publication year - 2002
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.219
Subject(s) - multinational corporation , subsidiary , foreign direct investment , offset (computer science) , east asia , business , panel data , industrial organization , international trade , parent company , economics , international economics , finance , china , macroeconomics , computer science , law , political science , econometrics , programming language
Abstract This paper investigates how investments in capabilities offer platforms for the upgrading or downgrading of overseas subsidiaries' activities along a ‘technology ladder’ in response to macroeconomic changes. By analyzing panel data on Japanese electronic firms in East Asia from 1988 to 1994, the empirical results confirm the importance of capabilities at host country, parent company, and local subsidiary levels in sequential foreign investment decisions. The results show that subsidiary capabilities offset macroeconomic factors influencing location decisions of multinational corporations. Copyright © 2002 John Wiley & Sons, Ltd.