Convergence or differentiation? American and Japanese transnational corporations in the Asia Pacific

Abstract

As the global economic environment becomes increasingly driven by the activities of transnational corporations (TNCs) from different national origins, the question of convergence as opposed to differentiation in patterns of internationalization among TNCs has begun to intrigue a number of researchers. In this paper, we examine the extent to which the strategic functions of Japanese and American TNCs in the Asia Pacific have converged over time. We draw from a recent survey of TNCs conducted in Hong Kong and Singapore. Detailed analysis of TNC functions in both the manufacturing and non-manufacturing sectors suggests that convergence between Japanese and American TNCs has occurred most in the area of control-coordination functions among manufacturing firms, arising from a premium placed on intra-TNC organizational stability and isomorphism. On the other hand, substantial differentiation has occurred in functions that are associated with upstream and downstream processes, with Japanese TNCs emphasizing integration in marketing and manufacturing processes as well as forward integration. In contrast, American TNCs tend to focus on business and product development functions that enable them to exploit product and service differentiation.