Internal capital market and the growth and survival of Japanese plants in the United States

This article examines the growth and survival of foreign plants based on a cross-section of Japanese plants in the United States. Results show that plant turnovers are significantly related to plant age and size in a manner highly consistent with the Bayesian learning model of firm dynamics (e.g. Jovanovic [Econometrica 50 (1982) 649]). They also indicate that financial conditions prevailing at the Japanese parent affect plant dynamics importantly, suggesting the working of internal capital markets across the Pacific. Results, however, are ambiguous with regard to the efficiency of internal capital allocation. J. Japanese Int. Economies19 (3) (2005) 366-385.