ABSTRACT
Using a specially designed survey, this chapter identifies: (a) the characteristics of Japanese firms likely to undertake foreign investments-worldwide and in key Asian countries; and (b) country characteristics associated with Japanese investments in Asia. The survey-based, firm-level analysis here contrasts with the macro approach that correlates country characteristics with aggregate flows into that country (see Wheeler and Mody 1992; also Ch. 2 in this book). It contrasts also with the industry-level analysis where industry characteristics such as the degree of competition, the level of entry barriers, and the degree of technological sophistication are examined as determinants of foreign investment (e.g., Kogut and Chang 1991). The firm-level perspective is important because much of the theorizing on decision to invest abroad derive from the interplay of firm capacity and motives to invest abroad (see Caves 1982 for a literature review). This chapter confirms certain findings obtained from the more aggregative studies, but highlights the significant importance of firm characteristics (or capabilities) in the decision to undertake foreign investment.
