Ayumu Tanaka

Productivity Heterogeneity and Internationalization: Evidence from Japanese Firms

This paper examines whether the rank of Japanese firms’ (using 12,504 firm level dataset) productivity sorts the modes of their internationalization and how firms’ productivity affects their choice of export and FDI to destinations with similar income level. The empirical results in the paper demonstrate that the mode of firm’s internationalization in selected regions shifts from non- internationalization to export, and from export to FDI as the productivity of firms rises. It confirms the theoretical prediction of the HMY model. The paper also finds empirical evidence that the productivity of firms internationalizing in multiple region is much higher than that of firms internationalizing in a single region, regardless of the mode of internationalization. This finding can be justified on theoretical ground that higher share in the global markets by a firm will require higher productivity.

Features of Japanese Internationalized Firms: Findings Based on Firm-Level Data

By using firm-level data on the Japanese manufacturing industry, we examine and compare the characteristics of internationalized Japanese firms, namely firms that engage in exports and/or foreign direct investment (FDI), with those from selected European countries. We find that the productivity of internationalized firms is higher than that of domestic firms, thus confirming the findings of previous studies on Japan and other countries. In addition, we show that the productivity differences between domestic firms, exporters, and FDI firms are substantially smaller in Japan than they are in European countries. This finding suggests that productivity differences alone cannot determine the export or FDI behavior of Japanese firms.

Heterogeneity and the Structure of Exports and FDI: A cross-industry analysis of Japanese manufacturing

The fraction of exporters and multinational enterprises (MNEs) varies substantially across industries. We extend the firm heterogeneity model presented by Helpman et al. (2004) to derive testable predictions about the prevalence of these internationalized modes. The model indicates that intra-industry firm heterogeneity and R&D intensity play large roles in inter-industry variation of the fraction of internationalized firms. We investigate whether these factors as well as import tariffs affect the structure of exports and foreign direct investment (FDI) using Japanese industry-level data. We obtain results that are consistent with the model. First, industries with larger productivity dispersion have a larger fraction of MNEs and a larger fraction of the sum of exporters and MNEs. Second, MNEs are heavily concentrated in R&D-intensive industries. In addition, we reveal that industries with lower import tariffs have a larger fraction of exporters and MNEs.

Recovery of the Supply Chain after the 2011 Mega-quake in Japan

The 2011 mega-quake in East Japan seriously affected Japanese manufacturers in the Tohoku region. Disaster-hit firms shutdown their operation for a long period after the quake. This article examines what factors prolonged the recovery of plants, using Research Institute for Economy, Trade and Industry’s (RIETI) survey of affected plants in the Tohoku area. Our study reveals that not only the loss of infrastructure, such as, electricity, water and transport, but also the collapse of the supply chain caused a nationwide fall in production and the breakdown of the supply chain extended the recovery period for plants even after the restoration of electricity, the industrial water supply and the transport network. Our study concludes that disaster-hit firms suffer for a longer period and can adversely affect firms untouched by disaster, if the recovery of the supply chain is delayed.

Productivity and Modes of Internationalization: Evidence from Japanese Firms

Firms decide to enter international markets, either through exports, or by engaging in foreign direct investments (FDI), based on not only their productivity advantages, but also market and firm-specific factors. This paper empirically investigates what modes of internationalization are chosen by Japanese firms internationalizing in US/European countries and East Asian countries, with a focus on the difference in market-specific factors between regions as well as the productivity heterogeneity between firms. Our analysis, using firm-level data pertaining to 12,000 Japanese organizations, confirms that internationalized firms have higher productivity relative to non-internationalized firms. Further, it reveals that firms engaged in FDI in the U.S. and/or Europe have higher productivity as compared to firms that export to these market destinations. However, this result does not hold for Japanese firms that operate in markets in East Asian markets. The estimated results indicate that the mode of internationalization chosen by a firm is not uniquely determined by its productivity levels, but also reflects market specific-factors in destination countries.