Globalizing activities and the rate of survival: Panel data analysis on Japanese firms

Fukunari Kimura, Takamune Fujii

Research output: Contribution to journalArticle

20 Citations (Scopus)

Abstract

This paper conducts a Cox-type survival analysis of Japanese corporate firms using census-coverage data collected by METI. A study of exiting firms confirmed several characteristics of Japanese firms in the 1990s. First, excessive internalization in the corporate structure and activities is harmful to corporate survival. Having too many establishments and affiliates weakens corporate performance. Efficient concentration on core competences increases the probability of survival. Second, global commitment helps Japanese firms be more competitive and more likely to survive. However, the channels of a firm's global commitment must be carefully selected. Small firms can benefit from exporting activities, though having foreign affiliates or conducting foreign outsourcing might aggravate their performance. Large firms, on the other hand, can conduct foreign direct investment and foreign outsourcing to possibly enhance the probability of their survival. Third, while corporate performance affects the choice of exits for affiliate firms, it does not affect the survival/exit of independent firms; suggesting the possible malfunctioning of the market mechanisms in the exits of independent firms. Fourth, we do not find any statistically significant evidence that firms with foreign shareholders are more likely to exit; there is little evidence of foot-loose behavior among foreign companies.

Original languageEnglish
Pages (from-to)538-560
Number of pages23
JournalJournal of the Japanese and International Economies
Volume17
Issue number4
DOIs
Publication statusPublished - 2003 Dec

Fingerprint

data analysis
firm
outsourcing
Panel data analysis
Japanese firms
commitment
foreign company
performance
market mechanism
internalization
shareholder
direct investment
foreign investment
Exit
evidence
census
coverage
Outsourcing
Corporate performance

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

Cite this

Globalizing activities and the rate of survival : Panel data analysis on Japanese firms. / Kimura, Fukunari; Fujii, Takamune.

In: Journal of the Japanese and International Economies, Vol. 17, No. 4, 12.2003, p. 538-560.

Research output: Contribution to journalArticle

@article{679a3fb5d6684b0797f5a583d8af8d2a,
title = "Globalizing activities and the rate of survival: Panel data analysis on Japanese firms",
abstract = "This paper conducts a Cox-type survival analysis of Japanese corporate firms using census-coverage data collected by METI. A study of exiting firms confirmed several characteristics of Japanese firms in the 1990s. First, excessive internalization in the corporate structure and activities is harmful to corporate survival. Having too many establishments and affiliates weakens corporate performance. Efficient concentration on core competences increases the probability of survival. Second, global commitment helps Japanese firms be more competitive and more likely to survive. However, the channels of a firm's global commitment must be carefully selected. Small firms can benefit from exporting activities, though having foreign affiliates or conducting foreign outsourcing might aggravate their performance. Large firms, on the other hand, can conduct foreign direct investment and foreign outsourcing to possibly enhance the probability of their survival. Third, while corporate performance affects the choice of exits for affiliate firms, it does not affect the survival/exit of independent firms; suggesting the possible malfunctioning of the market mechanisms in the exits of independent firms. Fourth, we do not find any statistically significant evidence that firms with foreign shareholders are more likely to exit; there is little evidence of foot-loose behavior among foreign companies.",
author = "Fukunari Kimura and Takamune Fujii",
year = "2003",
month = "12",
doi = "10.1016/j.jjie.2003.08.003",
language = "English",
volume = "17",
pages = "538--560",
journal = "Journal of the Japanese and International Economies",
issn = "0889-1583",
publisher = "Academic Press Inc.",
number = "4",

}

TY - JOUR

T1 - Globalizing activities and the rate of survival

T2 - Panel data analysis on Japanese firms

AU - Kimura, Fukunari

AU - Fujii, Takamune

PY - 2003/12

Y1 - 2003/12

N2 - This paper conducts a Cox-type survival analysis of Japanese corporate firms using census-coverage data collected by METI. A study of exiting firms confirmed several characteristics of Japanese firms in the 1990s. First, excessive internalization in the corporate structure and activities is harmful to corporate survival. Having too many establishments and affiliates weakens corporate performance. Efficient concentration on core competences increases the probability of survival. Second, global commitment helps Japanese firms be more competitive and more likely to survive. However, the channels of a firm's global commitment must be carefully selected. Small firms can benefit from exporting activities, though having foreign affiliates or conducting foreign outsourcing might aggravate their performance. Large firms, on the other hand, can conduct foreign direct investment and foreign outsourcing to possibly enhance the probability of their survival. Third, while corporate performance affects the choice of exits for affiliate firms, it does not affect the survival/exit of independent firms; suggesting the possible malfunctioning of the market mechanisms in the exits of independent firms. Fourth, we do not find any statistically significant evidence that firms with foreign shareholders are more likely to exit; there is little evidence of foot-loose behavior among foreign companies.

AB - This paper conducts a Cox-type survival analysis of Japanese corporate firms using census-coverage data collected by METI. A study of exiting firms confirmed several characteristics of Japanese firms in the 1990s. First, excessive internalization in the corporate structure and activities is harmful to corporate survival. Having too many establishments and affiliates weakens corporate performance. Efficient concentration on core competences increases the probability of survival. Second, global commitment helps Japanese firms be more competitive and more likely to survive. However, the channels of a firm's global commitment must be carefully selected. Small firms can benefit from exporting activities, though having foreign affiliates or conducting foreign outsourcing might aggravate their performance. Large firms, on the other hand, can conduct foreign direct investment and foreign outsourcing to possibly enhance the probability of their survival. Third, while corporate performance affects the choice of exits for affiliate firms, it does not affect the survival/exit of independent firms; suggesting the possible malfunctioning of the market mechanisms in the exits of independent firms. Fourth, we do not find any statistically significant evidence that firms with foreign shareholders are more likely to exit; there is little evidence of foot-loose behavior among foreign companies.

UR - http://www.scopus.com/inward/record.url?scp=0346961523&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=0346961523&partnerID=8YFLogxK

U2 - 10.1016/j.jjie.2003.08.003

DO - 10.1016/j.jjie.2003.08.003

M3 - Article

AN - SCOPUS:0346961523

VL - 17

SP - 538

EP - 560

JO - Journal of the Japanese and International Economies

JF - Journal of the Japanese and International Economies

SN - 0889-1583

IS - 4

ER -