Japanese Ownership Strategies in Singapore, Malaysia and the Philippines: Japanese and US Foreign Direct Investment Preferences Compared

Abstract

This chapter examines the Japanese manufacturing industry’s ownership strategy in three South East Asian countries (Singapore, Malaysia, and the Philippines) to determine whether the same variables that have explained US overseas firms’ FDI preferences can also account for those of the Japanese. Vernon (1977), whose analysis was based on data from the Harvard Multinational Project, found that US firms preferred wholly owned subsidiaries (WOS), while Japanese firms preferred joint ventures (JV) over WOS (US firms, 66% WOS; Japanese firms, 6% WOS). Differences in ownership policies of US and Japanese parent companies and in the activities of the companies have been offered as explanation of the disparity in ownership preferences. The research reported here utilises hypothesis tests and regression analysis to determine the merit of a number of explanatory variables, key factors that may reflect the parent company’s decision-making policies regarding ownership.