Are Joint Ventures with Local Firms an Efficient Way to Enter a Culturally Distant Market? The Case of Japanese Entry into the United States
Hennart, Jean-Francois; Roehl, Thomas; Hagen, James M.
We empirically test the proposition that foreign direct investors should use joint ventures with local firms for their first investment in unfamiliar markets. By tracking the expansion paths of Japanese investors in the US, we find no evidence that the growth of Japanese firms which first entered the US in a joint ventures with local firms is different from that of Japanese counterparts which used wholly-owned subsidiaries for initial US market entry.
WP 2002-27 August 2002JEL Classification Codes: F2; F21; L22; D2; L6
Charles H. Dyson School of Applied Economics and Management, Cornell University
Joint venture; Foreign market entry; Japan; Transaction costs