Departmental Bulletin Paper Firms’ Investment Strategies and the Choice of Foreign Direct Investment

Tamura, Akiko

32pp.13 - 23 , 2018-03 , Institute of Comparative Economic Studies, Hosei University
In this paper, I examine firms’choice to undertake foreign direct investment (FDI) using the theoretical framework of Antras and Helpman [2004]. I clarify that more headquarter-intensive firms choose to undertake FDI, whereas less headquarter-intensive firms choose outsourcing. I use the strategic types of Miles and Snow to examine firm heterogeneity. Using the analyses of mail surveys of Japanese manufacturing firms in Shimizu and Tamura [2010] and Shimizu and Tamura [2013], I find that prospectors are more headquarter intensive than defenders, whereas analyzers fall in between these types. Thus, prospectors may choose to undertake FDI more than do defenders. From the mail survey of Shimizu and Ando [2011], prospectors perform FDI more aggressively than defenders, which is consistent with the theoretical analysis.

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