| This dissertation examines how Japanese multinational enterprises (MNEs) invest abroad. While it is well documented that Japanese MNEs incrementally increase their commitment to foreign markets through frequent small investments over a long period of time, previous empirical Japanese FDI studies typically employ a probabilistic analysis of count data. A static view of FDI is created as the duration between investments is not considered, leaving a firm's FDI pattern unexplained.; Hazard models allow for an examination of how investment influences change as firms proceed through the FDI sequence. One particular influence is the Japanese keiretsu, a horizontal or vertical industry group whose membership may assist firms to overcome barriers to entry and provide location-specific agglomeration benefits. Previous empirical studies, citing the lack of available data, often exclude keiretsu membership from analysis. In this study, annual data on keiretsu affiliation is incorporated into the unique panel data set created for this dissertation. A more comprehensive data set than previously employed, parent-specific, affiliate-specific, and host-country specific information on the European investment patterns of over 1100 Japanese MNEs is examined between 1970–1995. Through the investment sequence; illustrating how firms incorporate market experience into subsequent investment decisions. This allows host-countries the opportunity to better tailor investment policy to a firm's position in the investment sequence. Keiretsu membership is found to be a significant influence only at later investment stages, while it appears that the role of exchange rates in FDI decisions cannot be accurately determined in a sequential investment framework.; European integration has increased the rate at which host nations have established policies to attract inward FDI. It can be shown that the dynamic domestic characteristics of alternate hosts, including the agglomeration of Japanese investment, do have an effect on FDI location choice. Such effects differ by host- and alternate country, allowing nations to isolate with whom countries compete for FDI. A firm's initial investment location significantly influences future investment choice, indicating that firms use several countries as springboards for future investment elsewhere in Europe. |
