Shareholder Heterogeneity and Conflicting Goals: Strategic Investments in the Japanese Electronics Industry

28 Pages Posted: 30 Mar 2011

See all articles by Asli M. Colpan

Asli M. Colpan

Kyoto University - Graduate School of Management

Toru Yoshikawa

Singapore Management University - Lee Kong Chian School of Business

Takashi Hikino

Kyoto University

Esther Del Brio

University of Salamanca - Administration and Business Economics

Date Written: May 2011

Abstract

This article investigates the effects of the changing institutional environment on strategic orientations of Japanese electronics firms during the 1990s. We examine the effects of three different types of shareholders on strategic directions of their invested firms. The first one, foreign portfolio investors, characterizes the emerging influence that pressed for change in corporate strategies. The two domestic shareholders, corporate investors and financial institutions, represent the conventional forces for continuity. Between the two domestic forces, though, while corporate investors attempted to maintain status quo, financial institutions have shifted towards market-oriented behaviour of investment. Specifically, we explore: (1) the influence of each type of shareholder on a firm's diversification strategy and capital commitment; and (2) the moderating effects of firm performance on the relationships between ownership structure and strategic choices. The results suggest that foreign investors prefer the focused product portfolio and conservative capital commitment. They also prefer the reduction of capital investment when the financial performance of their invested firms is poor. Domestic financial institutions are now similarly sensitive to the performance of their invested firms when those firms make strategic investments. By contrast, domestic corporate shareholders remain indifferent to performance, while they aim to maintain relational business ties with invested firms.

Suggested Citation

Colpan, Asli M. and Yoshikawa, Toru and Hikino, Takashi and Del Brio, Esther, Shareholder Heterogeneity and Conflicting Goals: Strategic Investments in the Japanese Electronics Industry (May 2011). Journal of Management Studies, Vol. 48, Issue 3, pp. 591-618, 2011. Available at SSRN: https://ssrn.com/abstract=1799110 or http://dx.doi.org/10.1111/j.1467-6486.2010.00958.x

Asli M. Colpan

Kyoto University - Graduate School of Management ( email )

Yoshida-Honmachi
Sakyo-ku
Kyoto, 606-8501
Japan

Toru Yoshikawa

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409
Singapore

Takashi Hikino

Kyoto University ( email )

Yoshida-Honmachi
Sakyo-ku
Kyoto, 606-8501
Japan

Esther Del Brio

University of Salamanca - Administration and Business Economics ( email )

Campus Miguel de Unamuno
Salamanca, ES-37007
Spain
34 923 294400 (Phone)
34 923 294715 (Fax)

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