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Category Article
Author Itoh, Ryo: Kentaro Nakajima
Article Title Do sourcing networks make firms global? Microlevel evidence from firm-to-firm transaction networks
Institution The Japanese Economic Review
Volume Vol. 72
Number Issue 1
Page pp. 65-96
Date 2020/11/16
Abstract This study investigates how the structure of a domestic firm-to-firm transaction network influences the foreign direct investment (FDI) decisions of embedded firms in the network. We theoretically describe firms’ FDI decisions using an incomplete information game that considers the firm-to-firm transactions of intermediate inputs and in which firms have an incentive to collocate with their trading partners in foreign markets. We show that the probability of a firm engaging in FDI increases with its Katz–Bonacich centrality, which is defined as aggregated accessibility to all other firms and represents expected profit gained from colocation with its partners. We empirically show that this prediction is supported using disaggregated inter-firm transaction network data on Japanese firms. We also extended both theoretical and empirical frameworks to consider the dynamic aspect of FDI. When we consider existing foreign affiliates, accessibility to prior investors in the transaction network, named Katz–Bonacich accessibility, positively influences FDI as well as Katz–Bonacich centrality.
Notes
URL https://link.springer.com/article/10.1007/s42973-020-00061-9
Label 経済学
Register date 2020/11/16

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