Abstract
Using data of Japanese electronics firms that have foreign direct investment (FDI) in the United States and Canada, this study employed a causal modeling framework to test hypotheses regarding the influence of firms' strategic advantages on the scale of their foreign subsidiaries. Our results showed that, in the United States, both strategic advantages and international management capabilities of parent firms influenced the scale of their subsidiaries. In Canada, only international management capabilities of parent firms directly influenced the scale of their subsidiaries. The paper concludes with a discussion of the policy and strategic implications of the results of the study.
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