Andrew Delios

Uncertainty, Imitation, And Plant Location: Japanese Multinational Corporations, 1990-1996

In a study of a sample of 2,705 international plant location decisions by listed Japanese multinational corporations across a possible set of 155 countries in the 1990-1996 period, we use neoinstitutional theory and research on political institutions to explain organizational entry into new geographic markets. We extend neoinstitutional theorys proposition that prior decisions and actions by other organizations provide legitimization and information to a decision marked by uncertainty, showing that this effect holds when the uncertainty comes from a firms lack of experience in a market but not when the uncertainty derives from the structure of a markets policymaking apparatus.

Survival and Profitability: The Roles of Experience and Intangible Assets in Foreign Subsidiary Performance

This study integrates research on the financial performance of multinational firms with research on foreign subsidiary survival. We examined the influences a firms intangible assets and its experience have on foreign subsidiary survival and profitability using a sample of 3,080 subsidiaries of 641 Japanese firms. The results show survival and profitability have different antecedents. Host country experience has a direct effect on survival but a contingent relationship with profitability. The entry mode moderated the nature of these relationships.

Japanese Firms' Investment Strategies in Emerging Economies

This study jointly examines the effects of organizational capabilities and public and private expropriation hazards on the level of equity ownership chosen for foreign subsidiaries in emerging markets. Specifically, we explore the mechanisms by which 660 Japanese multinational corporations draw upon industry-specific, country-specific and total international experience to mitigate these hazards in FDI for their 1,727 subsidiaries in 18 emerging markets. Results strongly support a novel specification that forges a link between the capabilities and the public and private expropriation hazards literatures.

Geographic Scope, Product Diversification and the Corporate Performance of Japanese Firms

The study extends research on the geographic scope, product diversification and performance relationship by exploring both the antecedents and consequences of geographic scope. In so doing, it addresses a fundamental criticism of the geographic scope-performance relationship; namely, that the observed positive relationship between geographic scope and performance is spurious because it is the possession of proprietary assets that are the foundation of superior performance, not expansion into international markets per se. We tested the research model with data on the corporate performance of 399 Japanese manufacturing firms. In the Partial Least Squares analyses used to examine the study’s six main hypotheses, we demonstrate that geographic scope was positively associated with firm profitability, even when the competing effect of proprietary assets on firm performance was considered. Further, we find that performance was not related to the extent of product diversification; although investment levels in rent-generating, proprietary assets were related to the extent of product diversification.

Locational Determinants of Japanese Foreign Direct Investment in China

This study examines 2,933 cases of Japanese investment in 27 provinces and regions in China to identify the role that policy determinants had in influencing the sub-national location decision of Japanese firms in China. The empirical results show that the Special Economic Zones (SEZs) and Opening Coastal Cities (OCCs) were a successful policy instrument initially, as SEZs and OCCs had a strong influence on Japanese foreign investment during the early years of Chinas liberalized foreign investment environment. Since the mid-1990s SEZs and OCCs have attracted proportionally less foreign investment as competition from other special investment zones has intensified in China. From these observations, we discuss the periodic influence of SEZs and OCCs and introduce and review the influence of newly emerging investment zones. We also draw inferences to the location choice literature in terms of understanding the variable influence of policy factors and traditional locational indicators as driven by temporal changes in investor motivations and preferences in a country.

Foreign expansion in service industries: Separability and human capital intensity

We investigate the effect of operating in service industries, in which separability and human capital intensity factors influence the choice of foreign entry mode and expatriate staffing decisions. To look into this issue, we compared 14,863 instances of Japanese foreign direct investment (FDI) into manufacturing and three service industries (wholesale trade, retail trade, and financial services). Our theoretical and empirical analyses support the assertion that in situations where required capabilities must be developed through (1) close contacts with end customers and (2) high levels of professional skills, specialized know-how, and customization, wholly owned subsidiaries and expatriate staff are preferred. From our results, we draw implications for the FDI literature and offer a novel perspective on the factors influencing the internationalization of service firms. D 2002 Elsevier Science Inc. All rights reserved.

Do Shareholders or Stakeholders Appropriate the Rents from Corporate Diversification? The Influence of Ownership Structure

Prior work on the performance consequences of corporate diversification has treated all powerful owners as seeking the same benefits from diversification (i.e, higher profit rather than growth) and therefore limiting value appropriation by other stakeholders such as employees and managers. In contrast, we distinguish between domestic “relational” owners and foreign “transactional” owners in Japanese corporations. Although transactional owners do indeed prioritize profitability when diversifying, relational owners primarily seek growth rather than profits from diversification. Furthermore, relational owners also allow managers and employees to appropriate more of the rents arising from diversification than do transactional owners.

A New Perspective on Ownership Identities in China's Listed Companies

We introduce a new perspective on the conceptualization and measurement of ownership identities of Chinas listed companies. Previous work analyzing the strategy and performance implications of the ownership structure in Chinese firms has used the official categorization provided by state bodies in China. In this categorization, state shareholding, legal person shareholding and A-shares dominate. This official categorization, however, obscures the ultimate identity of a shareholder; this can confound conceptual and empirical work on the strategy and performance implications of ownership identity. We refine the existing classification by recategorizing shareholders into 16 types, which can then be regrouped into relevant categories of shareholders, such as government or private, to enable analysis of ownership identity and ownership concentration issues in Chinas listed companies. Our new classification can help provide consistency in the burgeoning research on the strategy and performance implications of the concentration and identity aspects of ownership structure in Chinas listed companies.

Learning about the institutional environment

Cross-national variation in institutional environments adds uncertainty to foreign operations, which in turn affects international strategy decisions such as when to enter a market, the entry mode used if entering, as well as the performance of foreign entries. Although all firms are exposed to the influence of a host countrys institutional environment, firms exhibit differential responses to this influence based on resident knowledge and capabilities. Managers in a multinational firm must therefore work to align their strategies with both the hazards and opportunities they face in a given institutional environment, as well as with the firm-specific knowledge and capabilities at their disposal. Rather than taking institutions as an immutable constraint when making decisions, a firm can cultivate and exploit its ability to successfully manage diverse institutional hazards in its host country environments.

Information or influence? The benefits of experience for managing political uncertainty

We examine the extent to which two sources of uncertainty over the future policy environment - political hazards and regime change - influence foreign-owned subsidiary exit rates. We find that prior exits by peer firms enhance exit rates, particularly when political hazards are high. We also find that a multinational firm’s own experience under the current political regime has a moderating influence on subsidiary exit rates in the presence of political hazards, but it enhances exit rates after a change in the political regime. These findings support the argument that in contrast to the informational benefit conferred by prior peer firms’ exits, own firm experience proxies for actual or perceived influence in a nation’s policy-making process.