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Implications of firm experiential knowledge and sequential FDI on performance of Japanese subsidiaries in Brazil

  • Mário Henrique Ogasavara
  • Yasuo Hoshino
Original Research

Abstract

A foreign firm investing in a culturally different market usually faces a certain level of uncertainty. This study proposes that as a multinational company accumulates experiential knowledge, it develops more capabilities and know-how and consequently reflects on subsidiary performance. Based on a subsidiary level sample of Japanese firms located in Brazil, the empirical findings of this study demonstrate that the accumulation of both international and local experiential knowledge can positively affect subsidiary performance. Moreover, a firm’s sequential foreign direct investment decision in the local market is a key strategy to achieving a higher level of subsidiary profitability in comparison with a first-time investment firm.

Keywords

Market-specific knowledge General knowledge Sequential investment Japanese FDI Subsidiary performance 

JEL Classification

F23 

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Copyright information

© Springer Science+Business Media, LLC 2008

Authors and Affiliations

  1. 1.Department of Japanese StudiesNational University of SingaporeSingaporeSingapore
  2. 2.Graduate School of AccountingAichi UniversityNagoyaJapan
  3. 3.Professor EmeritusUniversity of TsukubaTsukubaJapan

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