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Sequential Investment, Firm Motives, and Agglomeration of Japanese Electronics Firms in the United States
Author(s) -
Chung Wilbur,
Song Jaeyong
Publication year - 2004
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/j.1430-9134.2004.00022.x
Subject(s) - competitor analysis , attractiveness , economies of agglomeration , investment (military) , business , foreign direct investment , industrial organization , distribution (mathematics) , inward investment , marketing , economics , microeconomics , macroeconomics , psychology , mathematical analysis , mathematics , politics , political science , psychoanalysis , law
Recent research finds that firms investing abroad tend to agglomerate with other foreign entrants. Yet firms often invest multiple times within the same host country, which raises the question of whether firms agglomerate with their competitors' or their own prior investments. Collocation's attractiveness also may vary as a firm's entry motives evolve. The activities of prior and present investments often differ—initial investment may be for distribution while later ones might be for manufacturing. For Japanese investment into the United States in the electronics sector from 1980 to 1998, we find that firms tend to collocate only with their own prior investments. The exception is firms with little of their own experience, who tend to collocate with competitors. These results demonstrate the importance of firm heterogeneity in determining agglomeration behavior.