Abstract

The last decade has seen an upsurge in Japanese foreign direct investment in the U.S. manufacturing sector. A substantial number of these investments have been joint ventures with American partners. These joint ventures are of four types. The first type involves a Japanese firm acquiring an equity position in an entrepreneurial high-technology company that needs expansion financing. The second type occurs when a Japanese firm assumes an equity position in an ailing division of a large American firm. The third type is the case of two parents which together spawn a new separate entity, typically as a venture in some incipient market. The fourth type are those which evolve out of a buyer-supplier relationship. In-depth interviews with top managers in twenty-one joint ventures found that these four types of joint ventures differ in terms of the relative size of the partners, their relative power in the relationship, the strategic contribution each partner makes, and the territorial constraints placed on the joint venture's marketing activities.