Sequential Investment, Firm Motives, and Agglomeration of Japanese Electronics Firms in the United States

32 Pages Posted: 14 Nov 2002

See all articles by Wilbur Chung

Wilbur Chung

University of Maryland - Robert H. Smith School of Business

Jaeyong Song

Yonsei University, Seoul Campus, College of Business and Economics

Multiple version iconThere are 2 versions of this paper

Date Written: August 2002

Abstract

A key strategic choice for multinational firms is where to locate. When investing abroad, firms may find collocating with their own and competitors' prior investments beneficial. Such agglomeration may provide knowledge and infrastructure spillovers. Yet, as a firm invests sequentially, its past and present motives often differ. A firm may initially invest for distribution but later to manufacture, which changes the value of agglomerating. For Japanese investment into the US in the electronics industry for 1980-1998, we find that firms tend to collocate only investments of similar motives. Also, competitors' presence attracts firms with little of their own experience; though on average, firms avoid states where their competitors previously located. These results suggest that agglomeration is not viewed as uniformly beneficial.

Keywords: FDI, agglomeration, motives, sequential investment

JEL Classification: F23, R30, L21

Suggested Citation

Chung, Wilbur C. and Song, Jaeyong, Sequential Investment, Firm Motives, and Agglomeration of Japanese Electronics Firms in the United States (August 2002). Available at SSRN: https://ssrn.com/abstract=331472 or http://dx.doi.org/10.2139/ssrn.331472

Wilbur C. Chung (Contact Author)

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

HOME PAGE: http://www.rhsmith.umd.edu/faculty/wchung/

Jaeyong Song

Yonsei University, Seoul Campus, College of Business and Economics ( email )

Yonsei University
Seoul
Korea
82-2-2123-2498 (Phone)
82-2-364-6887 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
160
Abstract Views
2,276
rank
207,260
PlumX Metrics