Article

Journal of International Business Studies (2008) 39, 864–879. doi:10.1057/palgrave.jibs.8400391

Competitive interactions: the international investment patterns of Japanese automobile manufacturers

Elizabeth L Rose1,2 and Kiyohiko Ito2

  1. 1School of Marketing and International Business, Victoria University of Wellington, New Zealand
  2. 2Shidler College of Business, University of Hawai'i at Manoa, Honolulu, HI, USA

Correspondence: K Ito, Shidler College of Business, University of Hawai'i at Manoa, Honolulu, HI 96822, USA. Tel: +1 808 956 7397; Fax: +1 808 956 2774; E-mail: k.ito@hawaii.edu

Received 1 November 2002; Revised 21 June 2007; Accepted 28 December 2007; Published online 1 May 2008.

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Abstract

Analyzing the timing, patterns, and competitive interactions of foreign direct investments (FDIs), we find evidence that Japanese automobile manufacturers compete selectively with their domestic rivals. While some firms appear to follow rivals' investments, they also steer away from markets with incumbent Japanese competitors. Competing in some key markets, these firms also avoid unnecessary competition in other markets. This finding provides evidence that the "bandwagon effect" is not universal for FDI within oligopolistic industries.

Keywords:

FDI location and timing, internationalization theories and foreign market entry, oligopolistic reaction