Interorganizational relationships and international expansion: Influences of intangible skills on supplier foreign entry timing and buyer links

I develop and test hypotheses about the effects of a supplier's intangible skills on the timing of supplier foreign direct investment and on the development of buyer-supplier links in a foreign location. I investigate how two types of intangible skills influence supplier expansion: relation-specific skills that reflect the bilateral adaptation between a buyer and a supplier, and reside between the two firms; and general skills that reside within a supplier and can be applied to incumbent and non-incumbent buyers alike. I also assess the effect of a supplier's dependence on home-country buyers.;I argue that general skills will make the supplier more likely to expand internationally regardless of whether the incumbent buyer has expanded into a foreign location, and will then promote the establishment of links with current and new buyers alike. I argue that relation-specific skills will only promote supplier expansion following buyer expansion, and will then strongly promote the recreation of links with incumbent buyers and indirectly promote the creation of extension links with non-incumbent buyers. I expect that highly dependent suppliers will follow their incumbent buyers in expanding internationally and establish links in the host location only with these incumbent buyers.;Empirically, I use event history analysis to examine the relative timing of Japanese automotive investments into the United States and Canada. The sample includes 563 suppliers and 11 buyers for the period 1978-1990. The results show that general skills promote supplier expansion at all times, while relation-specific skills only make a difference following buyer expansion. I use logistic regression to examine whether links were established by 1991 between 109 transplanted suppliers and 8 incumbent or non-incumbent transplanted buyers or 3 host-location buyers; and between the transplanted buyers and 611 host-location suppliers. The results show that following international expansion, relation-specific skills are the most important determinant of foreign buyer-supplier links.;The results extend research on the nature and influence of intangible skills as they affect international expansion. More generally, this research shows how factors that promote local search can also promote a firm's propensity to engage in distant search.