Electronic Thesis and Dissertation Repository

Thesis Format

Integrated Article

Degree

Doctor of Philosophy

Program

Business

Supervisor

Paul Beamish

Abstract

This dissertation examines the characteristics and performance of non-traditional investment motives, with a secondary focus on small-employment subsidiaries. It also investigates how firms re-evaluate and change their organizational control after an industry-wide consumer confidence crisis.

Essay 1 (Chapter 2) examines the characteristics and performance of subsidiaries according to different investment purposes, with a special emphasis on non-traditional investment motives. The key characteristics examined in Essay 1 include the size of an affiliate, the ownership mode, expatriate control, and performance. It finds that FDI with a support function differs substantially from a typical manufacturing facility. Meanwhile, there is a huge difference among sub-categories of major investment motives.

Essay 2 (Chapter 3) examines the relationship between subsidiary size and survival. The main theoretical lens is the liability of smallness and orchestration theory. Using a large sample of Japanese FDI, we found that small subsidiaries have a higher exit rate than large ones. Further, this relationship is moderated by four factors: (1) serving as a center of importance; (2) vertical investment; (3) being in a human-capital-intensive industry; and (4) being located in a developed country.

Essay 3 (Chapter 4) examines MNEs’ responses to an industry-wide consumer confidence crisis. This study draws on the theoretical lens of transaction cost economics (TCE) and institutional theory. This study finds that Japanese MNEs in the crisis sector undertook more entries, especially in the service segment. MNEs also undertook fewer exits in the crisis sector, especially in the manufacturing segment. Due to demand uncertainty induced by the crisis, MNEs lowered their ownership level to reduce their exposure to risk in the crisis sector, especially in the manufacturing segment. Moreover, majority owners were more likely to increase organizational control, compared with minority owners. Majority owners were also more likely to exit, compared with WOS or minority owners.

On the whole, this dissertation challenges our existing view of a “typical” subsidiary in a “typical” investment setting. It also reemphasizes the centrality of investment motives to firm internationalization research and recommends a routine inclusion of investment motives in IB research.

Summary for Lay Audience

This dissertation examines the characteristics and performance of non-traditional investment motives, with a secondary focus on small-employment subsidiaries. It also investigates how firms re-evaluate and change their organizational control after an industry-wide consumer confidence crisis.

Essay 1 (Chapter 2) examines the characteristics and performance of subsidiaries according to different investment purposes, with a special emphasis on non-traditional investment motives. The key characteristics examined in Essay 1 include the size of an affiliate, the ownership mode, expatriate control, and performance. It finds that FDI with a support function differs substantially from a typical manufacturing facility. Meanwhile, there is a huge difference among sub-categories of major investment motives.

Essay 2 (Chapter 3) examines the relationship between subsidiary size and survival. The main theoretical lens is the liability of smallness and orchestration theory. Using a large sample of Japanese FDI, we found that small subsidiaries have a higher exit rate than large ones. Further, this relationship is moderated by four factors: (1) serving as a center of importance; (2) vertical investment; (3) being in a human-capital-intensive industry; and (4) being located in a developed country.

Essay 3 (Chapter 4) examines MNEs’ responses to an industry-wide consumer confidence crisis. This study draws on the theoretical lens of transaction cost economics (TCE) and institutional theory. This study finds that Japanese MNEs in the crisis sector undertook more entries, especially in the service segment. MNEs also undertook fewer exits in the crisis sector, especially in the manufacturing segment. Due to demand uncertainty induced by the crisis, MNEs lowered their ownership level to reduce their exposure to risk in the crisis sector, especially in the manufacturing segment. Moreover, majority owners were more likely to increase organizational control, compared with minority owners. Majority owners were also more likely to exit, compared with WOS or minority owners.

On the whole, this dissertation challenges our existing view of a “typical” subsidiary in a “typical” investment setting. It also reemphasizes the centrality of investment motives to firm internationalization research and recommends a routine inclusion of investment motives in IB research.

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Creative Commons Attribution 4.0 License
This work is licensed under a Creative Commons Attribution 4.0 License.

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