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Withdrawal of overseas subsidiaries from Asia: the case of the Japanese food industry

Daisuke Takahashi (Faculty of Political Science and Economics, Waseda University, Tokyo, Japan)
Tsaiyu Chang (Graduate School of Agricultural and Life Science, The University of Tokyo, Tokyo, Japan)

British Food Journal

ISSN: 0007-070X

Article publication date: 5 June 2017

Abstract

Purpose

The purpose of this paper is to analyze the factors that have influenced the withdrawal of Japanese overseas food industry subsidiaries from Asia.

Design/methodology/approach

The data refer to Asian subsidiaries of Japanese companies engaged in food production activities. The data set covers 545 overseas subsidiaries from 2003 to 2014, and the total number of observations is 3,513. A linear probability model examines the factors influencing the probability of a subsidiary withdrawing.

Findings

The results show that strong relationships between parent companies and overseas subsidiaries, specifically in terms of personnel and capital, reduce the likelihood of withdrawal. The number of years in business has a positive effect on withdrawal. Additionally, investment aims, such as the establishment of an international production network and acquisition of host country markets, affect the probability of withdrawal. The results are similar for subsidiaries in China and other countries, but there are differences regarding subsidiaries’ histories and investment aims.

Originality/value

There is limited research on food companies withdrawing from overseas markets. This study bridges the gap in the literature by compiling micro-level data and conducting a quantitative analysis of such withdrawals from overseas markets. The originality of this study is that it shows the effects of investment aims on subsidiary withdrawal, representing various aspects of overseas subsidiaries, and compares the estimation results with the recent trends in food markets in Asia.

Keywords

Acknowledgements

This is a revised and extended version of the paper presented at the Annual Meeting of the Agricultural Economics Society of Japan in 2016. The authors thank the participants of this meeting, especially Keijiro Otsuka and Masayoshi Honma for their helpful comments. The authors also thank Kuo-I Chang for the contribution to an earlier version of this paper. This paper is a part of the outcome of research performed under a Waseda University Grant for Special Research Projects (Project number: 2013A-803).

Citation

Takahashi, D. and Chang, T. (2017), "Withdrawal of overseas subsidiaries from Asia: the case of the Japanese food industry", British Food Journal, Vol. 119 No. 6, pp. 1394-1408. https://doi.org/10.1108/BFJ-08-2016-0357

Publisher

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Emerald Publishing Limited

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