The influence of Japanese domestic interfirm networks in Japanese cooperative ventures in North America: Partner choice, speed of venture establishment, and survival

Numerous previous studies have reported that cooperative domestic interfirm networks in Japan are a major reason for Japan's success in international competition. With the recent globalization of Japanese business, however, Japanese firms have to worry about losing the advantages flowing from their cooperative interfirm relationships at home. The foreign operations are inevitably managed to some degree in isolation from the domestic institutional relationships in Japan. The objective of this research is to investigate the extent to which these Japanese firms utilize their domestic relationships to effectively cope with the challenges of internationalization. I focus on three types of Japanese networks--Keiretsu groups, buyer-supplier networks and spinoff relationships.;Observing the proliferation of CVs (equity joint venture) established between Japanese firms in North America, this research investigates the influence of those networks on Japanese CVs along the three key issues: (i) partner choice, (ii) speed of CV establishment, and (iii) stability of venture partnership. Several empirical models are tested on a data set of Japanese CVs in North America, using binomial logistic regression, multivariate linear regression, and event history methods. The results indicate that the influence of domestic interfirm networks are more salient in Keiretsu groups, auto parts supplier networks, and electronics supplier networks. Keiretsu member firms had a tendency to extend their domestic relationships through CVs more frequently and earlier. Japanese firms affiliated with domestic auto parts or electronics supplier networks undertook many manufacturing CVs with other participants in the same networks, at the same time establishing many manufacturing CVs with North American partners. Another important finding is that partner relationship was more stable when a CV was established only between Japanese firms.;Taken together, the findings of this research suggest that Japanese firms have mobilized their domestic network relationships to reduce the risk of internationalization. Yet, the research also shows that the Japanese firms have not entered into these domestic relationships to the exclusion of ventures with North American firms. In addition, the influence of the domestic relationships differs depending on the goals of the overseas CVs, and evolves as the firms accumulate experience with the host country.