Learning from sequential investments and their impact on subsidiary performance: The case of Japanese firms

This study investigates the impact of Sequential Foreign Direct Investments (SFDI) on subsidiary performance, emphasizing the role of operational and length of learning. The research challenges conventional strategies for making initial investment decisions based on country-specific factors during internationalization. The study draws insights from a sample comprising subsidiaries of Japanese electronics firms. Utilizing multiple regression models, we analyze the impact of SFDI at three distinct location levels: local, regional, and international. Contrary to conventional wisdom, our findings challenge the notion of a direct correlation between the total number of SFDI at different levels and subsidiary performance. Instead, our results underscore the critical importance of learning through SFDI experiences over time. Our study identifies that accumulating the length of learning at regional and international levels enhances subsidiary performance. This length of learning effect at the regional level manifests prominently in larger economies. Although operational learning negatively affects performance, it impacts subsidiaries in countries with higher Gross Domestic Product (GDP). We recommend further exploration, including incorporating additional control variables, consideration of diverse learning modalities, and continued investigation into the complex relationship between SFDI and subsidiary performance.