| This study focuses on the recently growing intrafirm division of labor of Japanese multinational enterprises (MNEs) in the electric machinery industry in the high-growth region of the Asia-Pacific basin.; The intrafirm transfer of production along an item's life cycle is designated as one of the dominant patterns of the intrafirm division of labor, where (1) recently developed items in the early stages of the life cycle are produced by Japanese parents, while (2) mature items in the latter stages of their life cycle are produced by Asian affiliates. In other words, new items are continually innovated by Japanese parents, and a transfer in production location from Japanese parents to Asian affiliates occurs with a certain time lag. The study discusses the determinant mechanism as well as the dynamics of this stylized pattern.; In the theoretical analysis, the main hypothesis argues that this pattern of intrafirm division of labor arises because of an increase in production costs of Japanese parents relative to Asian affiliates along an item's life cycle. Using a formal model, six determinant factors which lead to the increase in production costs of Japanese parents are derived. The subhypothesis argues that the time lag involved in the intrafirm transfer of production is likely to decline in the near future due to recent changes in exogenous variables arising from the development of the multiple catching-up process in the Asia-Pacific basin.; Empirical facts which corroborate the main hypothesis are provided using the data obtained from interviews of and questionnaires to Japanese MNEs in the electric machinery industry. Of the twenty-eight cases across eight product lines, a stylized pattern of intrafirm transfer of production along an item's life cycle is identified in twenty-four cases. For those cases where the stylized pattern is identified, the six determinant factors are found to be significant in determining the stylized pattern, although their relative importance varies across factors and across product lines. Finally, in examining the recent changes in the exogenous variables, evidence supporting the subhypothesis is presented. |
