Japanese direct investment in United States manufacturing: Management strategies and location decisions

In the 1980s, Japanese firms intensified their competition with American industry by establishing production facilities in the United States. The geographical distribution of new Japanese plants did not mirror the location pattern of new domestic plants, as would have been expected if both sets of plants sought similar types of locations. The hypothesis of this dissertation is that the Japanese firms sought a different mix of location attributes because they intended to implement a special set of workplace practices in their plants. They sought an environment conducive to adapting these practices to the American workplace.; The dissertation traces location preferences back to management strategies through a series of case studies of Japanese and domestic start-up factories. Seventy-five percent of the Japanese transplants had instituted High Performance Workplace (HPW) practices, compared to twenty percent of the domestic start-ups. The different management practices led to different perceptions of regional advantage between the Japanese and domestic start-ups, especially in labor quality, industrial relations, and business climate. For example, a cooperative labor-management environment and effective local government were more important to high-performance firms than to traditionally-managed firms. Similarly, firms that emphasized the intensive use of high performance management practices were more interested in indicators of a region's potential labor productivity---such as ability to learn, work in teams, and participate in solving problems---than in either wage levels or the supply of labor.; Insights from the case studies are used to build a discrete choice model of state location selection, which is estimated using a national data set of domestic and Japanese start-ups established between 1978 and 1988. This larger data set allows a more general test of the hypothesis that high-performance strategy matters to location preferences. The conditional logit model of location decisions is first estimated using a standard specification of core location attributes, including wages, unionization, taxes, market size and transportation infrastructure. Adding proxies for some intangible attributes of labor quality and public policy improves the explanation of location choice for the Japanese start-ups. Disaggregating by start-up industry and size enhances the explanatory power of the model for both sets of plants. The econometric results largely validate the case study findings that traditional and high-performance management strategies lead to different perceptions of regional advantage.