Policy Uncertainty and the Sequence of Entry by Japanese Firms, 1980-1998

We extend the stages model of internationalization to incorporate a sophisticated consideration of temporal and cross-national variation in the uncertainty of the policy environment. Using a sample of 6465 international expansions of 665 Japanese manufacturing firms in 49 countries, we develop argum...

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Bibliographic Details
Published in:Journal of international business studies 2003-05, Vol.34 (3), p.227-241
Main Authors: Delios, Andrew, Henisz, W. J.
Format: Article
Language:English
Subjects:
Business and Management
Business strategies
Business Strategy/Leadership
Business structures
Business studies
Competition
Consumers
Cultural differences
Culture
Economic conditions
Economic policy
Economic theory
Economic uncertainty
Enterprises
Expansion
Expansionism
Experiential learning
Factories
Financial investments
Foreign direct investment
Globalization
Government policy
Host country
Hypotheses
Influence
International Business
Investment policy
Investment strategies
Japan
Japanese
Japanese culture
Joint ventures
Knowledge
Management
Manufacturing
Manufacturing industries
Market entry
Multinational corporations
Multinational enterprises
Organization
Organizational behavior
Qualitative research
Risk
Studies
Uncertainty
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Summary:We extend the stages model of internationalization to incorporate a sophisticated consideration of temporal and cross-national variation in the uncertainty of the policy environment. Using a sample of 6465 international expansions of 665 Japanese manufacturing firms in 49 countries, we develop arguments from internationalization and bargaining power perspectives to show how Japanese firms manage policy uncertainty in host country environments through the within-country sequencing of investments. Although a distribution to manufacturing entry sequence tends to prevail in countries with low levels of policy uncertainty, as uncertainty in the policy environment increases, initial entry by distribution is increasingly likely to be eschewed in favor of an initial entry by a joint venture manufacturing plant. We suggest that this change in investment sequence occurs as firms shift from an emphasis on developing knowledge about local markets and consumers in low-hazards markets to an international expansion strategy in uncertain policy environments that places knowledge development of the policy environment at the forefront of a firm's strategy.
ISSN:0047-2506
1478-6990
DOI:10.1057/palgrave.jibs.8400031