Implications of firm experiential knowledge and sequential FDI on performance of Japanese subsidiaries in Brazil

• Published in: Review of quantitative finance and accounting Vol. 33; no. 1; pp. 37 - 58
• Main Authors: Ogasavara, Mário Henrique, Hoshino, Yasuo
• Format: Journal Article
• Language: English
• Published: Boston Springer US 01.07.2009; Springer Nature B.V
• Subjects: Accounting/Auditing; Brazil; Corporate Finance; Developing countries; Econometrics; Economics and Finance; Employees; Experiential learning; Finance; Foreign direct investment; Foreign investment; Foreign subsidiaries; Globalization; Host country; Investigations; Investment; Japan; Knowledge; LDCs; Literature reviews; Market; Market entry; Multinational corporations; Operations Research/Decision Theory; Original Research; Strategic management; Studies; Subsidiaries; Subsidiary; Brazil; General knowledge; Sequential investment; Market-specific knowledge; F23; Subsidiary performance; Japanese FDI
• ISSN: 0924-865X; 1573-7179
• DOI: 10.1007/s11156-008-0103-x

A foreign firm investing in a culturally different market usually faces a certain level of uncertainty. This study proposes that as a multinational company accumulates experiential knowledge, it develops more capabilities and know-how and consequently reflects on subsidiary performance. Based on a subsidiary level sample of Japanese firms located in Brazil, the empirical findings of this study demonstrate that the accumulation of both international and local experiential knowledge can positively affect subsidiary performance. Moreover, a firm’s sequential foreign direct investment decision in the local market is a key strategy to achieving a higher level of subsidiary profitability in comparison with a first-time investment firm.