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Survival of Japanese subsidiaries: impacts of sequential investment, institutional distances, and location factors


Most studies still consider foreign direct investment (FDI) a single and independent decision. However, FDI involves sequential and interdependent processes of investments, impacting subsidiary's performance. Surprisingly, little is known about the relationship between sequential FDI (SFDI) and investment failure. Based on institutional theory, this study evaluates how SFDI, institutional distances, and location factors affect subsidiary's survival. The findings indicate that location plays a vital role in a subsidiary's success/failure. Normative and regulatory distances have no impact on survival, and cultural–cognitive distance increases survival probability. However, when considering the moderation of ownership entry strategy, institutional distances play a central role for wholly owned subsidiaries' survival but are not vital for joint ventures. The results show that SFDI at the country level reduces the likelihood of survival. We contribute to the broad study of success/failure and its relationship to SFDI while showing that monitoring time is relevant when applying the institutional theory.

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Fig. 1

Source prepared by the authors. Note (−) Refers to reducing the probability of the subsidiary's survival, while (+) means increasing this probability

Fig. 2

Source prepared by the authors

Fig. 3

Source prepared by the authors. Note it has not considered the African region since there is no observation of the event (failure)


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The authors are grateful for insightful comments and suggestions received from the anonymous reviewers of the following conferences: 2021 AJBS Conference (Association of Japanese Business Studies), 2021 AIB-LAC (Academy of International Business, Latin America and Caribbean Chapter), and 2021 AIB Annual Meeting (Academy of International Business). In addition, this research would not have been possible without a Research Grant provided by CNPq (National Council of Technological and Scientific Development, Brazil), Bolsa de Produtividade de Pesquisa Nº 09/2018, Process 308007/2018-2.

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Correspondence to Mario Henrique Ogasavara.

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Battistuzzo, F.J.F.D.A., Ogasavara, M.H. Survival of Japanese subsidiaries: impacts of sequential investment, institutional distances, and location factors. Asian Bus Manage (2022).

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  • Sequential investment
  • Success
  • Failure
  • Survival
  • Institutional distance
  • Location factors
  • Japanese subsidiaries