A Study of Strategic Themes in the Internationalisation of Japanese Industry
New Horizons in International Business series
Chapter 4: Organisation and Structure
OVERVIEW The organisational structure of Japanese subsidiaries has a predominate focus on an international marketing, sales and distribution network to facilitate exports and imports. There is also a strong bias towards intraﬁrm trade, investment and technology ﬂows in the corporate boundary between parents and overseas subsidiaries and aﬃliates. In theory, a ﬁrm is likely to invest in the creation of foreign aﬃliates if the ‘transaction costs’ of ﬁnding and monitoring the performance of a foreign partner or agent are too high – or the ﬁrm fears the loss of proprietary technology through licensing. If these costs are low, the ﬁrm may prefer to export from the home country (Hennart and Park, 1993). In the case of Japanese FDI, there has also been a management and cultural preference to maintain ownership and control by the parent company, based on expatriate management of aﬃliates. In the international business operations of Japanese ﬁrms there is often a close relationship between the overseas aﬃliates of parents which have ties in Japan – which has led to sales and procurement being tied to customary linkages and traditional suppliers and customers. In the manufacturing sector, this organisational pattern has led to the domestic supply chains between automotive assemblers and parts and component producers being replicated in other economies, such as in the United States, Europe and East Asia. Typically, the international subsidiaries of Japanese services ﬁrms, such as business services, communications and transport services, construction, real estate and ﬁnancial services, have also been...
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