The New “American Challenge”: Foreign Multinationals in the United States

Robock Stefan H. , “The Rise and Decline of U.S. International Business: 1950–1980,” in Grub Philip D. Ghadar Fariborz Khambata Data , eds., The Multinational Enterprise in Transition, 2nd edition (Princeton, NJ: The Darwin Press, 1984), p. 44.

For a treatment of Japanese direct investment in the United States, see Wilkins Mira , “Japanese Multinationals in the United States: Continuity and Change, 1879–1990,” Business History Review, 64 (Winter 1990): 585–629.

The reasons are several, including shifts in relative currency values that have made investment in the U.S. more affordable, an imperative for firms in many industries to gain global scale economies, improvements in transportation and communication that facilitated the creation and control of foreign affiliates, and a growing similarity of consumer tastes that stimulated demand for trade and investment. Another explanation is simply regression toward the mean: The huge lead held by American firms can be understood as an aberration reflecting the imbalance of industrial strength following Second World War, which quite naturally began to recede as countries such as Germany and France recovered their former positions of prominence.

For a discussion of the various measures, such as market value and book value, see Graham Edward M. Krugman Paul R. , Foreign Direct Investment in the United States, Second edition (Washington, D.C.: Institute for International Economics, 1991).

Quoted by Evan-Pritchard Ambrose , “Saturn's lift-off blasts myth of Japanese cars,” Daily Telegraph, May 16, 1993, p.22

Bezirganian Steve D. , “U.S. Affiliates of Foreign Companies: Operations in 1991,” Survey of Current Business (May 1993), p. 91.

Landefeld J. Steven Lawson Ann M. Weinberg Douglas B. , “Rates of Return on Direct Investment.” Survey of Current Business (August 1992), p. 79.

Agren Lars , Swedish Direct Investment in the U.S., Institute of International Business, Stockholm School of Economics, 1990.

Harvey-Jones John Sir . Making it Happen: Reflections on Leadership (London: HarperCollins, 1988).

See, for example. Globalisation of Industrial Activities (Paris: OECD, 1992).

Agren , op. cit.

For a discussion of the intensity of domestic competition in Japan, see Abegglen James C. Stalk George Jr. , Kaisha: The Japanese Corporation (New York, NY: Basic Books Inc., 1985). Akio Morita, too, notes that Japanese products which have succeeded in the U.S. because of their high quality and low price are “the survivors of the competition in the Japanese marketplace,” in Made In Japan (New York, NY: E.P. Dutton, 1986), p. 229.

Bouchikhi Hamid Kimberly John R. , “Clausewitz contre Sun-Tzu: La Conquête du Marché Américain,” Gérer et Comprendre, June 23, 1991.

For an empirical investigation, see Kogut Bruce Singh Harbir . “The Effects of National Culture on Choice of Entry Mode,” Journal of International Business Studies, 49 (1988): 411–432. Some have made the same point in stronger terms: William Davidson notes that “the Japanese have a fanatical preference for starting from scratch. In doing that, they are able to build in the kind of the system and worker attitude they want to see.” Quoted in Frantz Douglas Collins Catherine , Selling Out (Chicago, IL: Contemporary Books, 1989), p. 309. In recent years. Japanese firms have become more active in acquiring U.S. firms, making many small purchases as well as notable acquisitions (including Bridgestone's purchase of Firestone and Matsushita's acquisition of MCA), but these represent recent departures from the traditional preference for greenfield investment.

This practice has been well-documented by Tung Rosalie , “Human Resource Planning in Japanese Multinationals: A Model for U.S. Firms?” Journal of International Business Studies (Fall 1984): 139–149.

Lightfoot Robert W , “Philips and Matsushita: A Portrait of Two Evolving Companies,” Harvard Business School case #9-392-156. 1992.

Bartlett Christopher A. Yoshihara Hideki , “New Challenges for Japanese Multinationals: Is Organizational Adaptation their Achilles Heel?” Human Resource Management, 27/1 (1988): 19–43.

Several books have been written about these concerns, including Fucini James J. Fucini Suzy , Working for the Japanese (New York, NY: The Free Press, 1990); Lanier Alison R. , The Rising Sun on Main Street: Working with the Japanese (New York, NY: International Information Associates, Inc., 1992); and Laurie Dennis , Yankee Samurai (New York, NY: Harper Business, 1992).

Agren , op. cit.

A recent discussion which suggests that perceptions of cultural differences may often be the result of other variables is provided by Kanter Rosabeth Moss Corn Richard Ian , “Do Cultural Differences Make a Business Difference?: Contextual Factors Affecting Cross-Cultural Relationship Success,” Harvard Business School Working Paper, 1993.

Interview with Henry Wendt on Marketplace, National Public Radio, July 3, 1990.

For a discussion of these distinct American features, see Hall Edward T. Hall Mildred Reed , Understanding Cultural Differences: Germans, French, and Americans, (Yarmouth, ME: Intercultural Press, 1990).

Both descriptions are found in Lightfoot, op. cit.

Harvey-Jones , op. cit., pp. 160–161.

Taylor William , “The Logic of Global Business: An Interview with Percy Barnevik,” Harvard Business Review (March/April 1991).

American multinational firms, too, have learned this lesson. For example. Hewlett-Packard Company initially relied on American expatriates to manage its foreign affiliates, but made a concerted effort to attract, hire, and retain local nationals and to phase out expatriates. Reliance on local nationals has proven advantageous for several reasons: It makes use of local knowledge and contacts, it brings about greater stability and continuity, and it is less expensive.

Taylor , op. cit.