TY  - JOUR
AU  - Blonigen,Bruce A.
AU  - Ellis,Christopher J.
AU  - Fausten,Dietrich
TI  - Industrial Groupings and Strategic FDI: Theory and Evidence
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8046
PY  - 2000
Y2  - December 2000
UR  - http://www.nber.org/papers/w8046
L1  - http://www.nber.org/papers/w8046.pdf
N1  - Author contact info:
Bruce Blonigen
Department of Economics
1285 University of Oregon
Eugene, OR 97403-1285
Tel: 541/346-4680
Fax: 541/346-1243
E-Mail: bruceb@uoregon.edu
AB  - We show that industrial ownership structures, such as keiretsu groupings in Japan, may significantly impact firms' incentives to engage in FDI.  While the previous literature has mainly focused on the cost of capital advantages enjoyed by keiretsu firms, this paper examines two relatively unexplored channels by which ownership structure matters for FDI incentives.  The first channel involves the direct incentives generated via standard product and factor market interactions whereby keiretsu firms with cross-ownership consider more directly the congestion effects of further FDI into a market. The second channel involves the indirect incentives generated by sharing of information across keiretsu firms which reduces entry costs for subsequent FDI.  Using data on Japanese FDI activity by both keiretsu and non-keiretsu manufacturing firms, we find evidence to support the importance of the second channel (information-sharing incentives) as an explanation for firm-level FDI patterns, but not for the first channel.
ER  -