The Role of Experiential Knowledge and Subsequent Investment Decisions on the Profitability of Japanese Companies in Brazil
Journal Title: BAR: Brazilian Administration Review - Year 2010, Vol 7, Issue 1
Abstract
This study attempts to empirically investigate how firms’ experiential knowledge and the decision to invest sequentially in the host country are associated with the performance of their overseas subsidiaries. This research advances prior studies by adopting an objective performance measure based on the profitability ratio at the subsidiary level. Using a random-effect model of GLS regression applied to a panel data of Japanese firms established in Brazil, the results provide theoretical and practical implications showing that experiential knowledge is positively associated with subsidiary profitability. Local experiential knowledge can be acquired by managing subsidiaries for a long time in the host country, but also by increasing the number of investments in the local market. In practical terms, the subsidiary profitability ratio becomes higher when the parent firms have established more than five investments in the host country, although further investigation is needed to examine the direction of this relationship. Moreover, there is a significant association between subsidiary performance and the parent firms’ experience in culturally similar markets to Brazil. The benefit of learning from international markets suggests that operating in countries with a similar culture transforms their experience into a competitive advantage.
Authors and Affiliations
Ogasavara, Mário Henrique
Keywords
Related Articles
- EP ID EP40461
- DOI -
- Views 288
- Downloads 0
Brand Personality Dimensions in the Brazilian Context
Brands may be perceived as possessing a set of distinct traits or characteristics, i.e., a personality, similar to a person. Thus, the personality of a brand is relevant as a source of differentiation in an increasingly...
An Introduction to the 5M Framework: Reframing Change Management Education
The purpose of this paper is to introduce a reflective and critical rhetorical framework capable of replacing traditional approaches to change management and its education. This framework conceptualises managing change...
Willingness to Try Innovative Food Products: a Comparison between British and Brazilian Consumers
In this study we investigate the consumer’s willingness to try innovative food products in the context of the metropolitan area of Porto Alegre in Brazil and Cirencester in England, UK. Innovation in the food industry i...
Brazilian Credit Union Member Groups: Borrower-dominated, Saver-dominated or Neutral Behavior?
Theoretical models concerning Credit Unions (CUs) suggest that the type of CU domination determines the way it allocates the monetary value it generates. A borrower- (saver-) dominated CU benefits borrower (saver) memb...
Exploring the Black Box in Brazilian Work Groups: a Study of Diversity, Conflict and Performance
Over the last few decades, several studies have been conducted to examine the complex relationships between team diversity and individual and organizational outcomes. Although, in theory, team diversity can foster posi...