PLATFORM INVESTMENTS AND VOLATILE EXCHANGE-RATES - DIRECT-INVESTMENT IN THE US BY JAPANESE ELECTRONIC COMPANIES

This study examines the effects of previous entry on the subsequent de cisions of Japanese electronics companies to invest in the United Stat es. By gathering data at the firm level, the empirical analysis provid es a fine-grain sorting out of firm and industry effects on foreign di rect investment decisions. The findings show that investment behavior is highly heterogeneous across firms and reflects their individual tec hnological capabilities and their history of previous investments in t he United States. Real exchange rate levels are also important. The re sults suggest that initial investments serve as platforms for subseque nt entry, with the timing of entry triggered by movements in real exch ange rates.