Uncertainty, Imitation, and Plant Location: Japanese Multinational Corporations, 1990-1996

59 Pages Posted: 1 May 2002

See all articles by Witold J. Henisz

Witold J. Henisz

University of Pennsylvania - Management Department

Andrew Delios

National University of Singapore (NUS) - Department of Business Policy

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Abstract

This paper combines neoinstitutional theory and research on the institutional environment to explain the process of organizational entry into new geographic markets. We extend neoinstitutional theory's proposition that prior decisions and actions by other organizations provide legitimization and information to a decision marked by uncertainty, by showing that the prevalence of this effect varies across imitation modes as determined by levels of organizational and market uncertainty. We exploit interorganizational cross-sectional and inter-temporal variation in organizational uncertainty, to demonstrate not only that mimetic strategies are pursued, but also that they are more commonly pursued when the level of uncertainty is high. To test the influence of policy uncertainty in the institutional environment, we rely upon observable inter-temporal and cross-national differences in the structure of a country's political environment to craft an internationally comparable measure of policy uncertainty in a potential host country. We test these ideas on a sample of international plant location decisions for the population of listed Japanese multinational corporations, across a possible set of 155 countries in the 1990-1996 period.

Keywords: FDI, Political risk, Japan, International

Suggested Citation

Henisz, Witold Jerzy and Delios, Andrew, Uncertainty, Imitation, and Plant Location: Japanese Multinational Corporations, 1990-1996. Available at SSRN: https://ssrn.com/abstract=305341 or http://dx.doi.org/10.2139/ssrn.305341

Witold Jerzy Henisz

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States
215-898-0788 (Phone)
215-898-0401 (Fax)

HOME PAGE: http://www-management.wharton.upenn.edu/henisz/

Andrew Delios (Contact Author)

National University of Singapore (NUS) - Department of Business Policy ( email )

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Singapore 117591
Singapore
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(65) 6779-5059 (Fax)

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