Entry modes and performance of foreign direct investment in China

How does a firm choose a proper model of foreign direct investment (FDI) for entering a foreign market? Which mode of entry performs better? What are the performance implications of joint venture (JV) ownership structure? These important questions face a multinational enterprise (MNE) that decides to enter a foreign market. However, few studies have been conducted on such issues, and no consistent or conclusive findings are generated, especially with respect to China. It’s composed of five chapters, providing corresponding answers to the questions given above. Specifically, Chapter One is an overall introductory chapter. Chapter Two is about the choice of entry mode of FDI in China. Chapter Three examines the relationship between four main entry modes and performance. Chapter Four explores the performance implications of JV ownership structure. Chapter Five is an overall concluding chapter. These empirical studies are based on the most recent and richest data that has never been explored in previous studies. It contains information on 11,765 foreign-invested enterprises in China in seven manufacturing industries in 2000, 10,757 in 1999, and 10,666 in 1998. The four FDI entry modes examined include wholly-owned enterprises (WOEs), equity joint ventures (EJVs), contractual joint ventures (CJVs), and joint stock companies (JSCs). In Chapter Two, a multinominal logit model is established, and techniques of multiple linear regression analysis are employed in Chapter Three and Four. It was found that MNEs, under the conditions of a good investment environment, large capital commitment and small cultural distance, prefer the WOE strategy. If these conditions are not met, the EJV mode would be of greater use. The relative propensity to pursue the CJV mode increases with a good investment environment, small capital commitment, and small cultural distance. JSCs are not favoured by MNEs when the investment environment improves and when affiliates are located in the coastal areas. MNEs have been found to have a greater preference for an EJV as a mode of entry into the Chinese market in all industries. It is also found that in terms of return on assets (ROA) and asset turnover, WOEs perform the best, followed by EJVs, CJVs, and JSCs. Finally, minority-owned EJVs or JSCs are found to outperform their majority-owned counterparts in terms of ROA and asset turnover.

A Generic model for the design and analysis of production systems

This dissertation studies the process of operations systems design within the context of the manufacturing organization. Using the DRAMA (Design Routine for Adopting Modular Assembly) model as developed by a team from the IDOM Research Unit at Aston University as a starting point, the research employed empirically based fieldwork and a survey to investigate the process of production systems design and implementation within four UK manufacturing industries: electronics assembly, electrical engineering, mechanical engineering and carpet manufacturing. The intention was to validate the basic DRAMA model as a framework for research enquiry within the electronics industry, where the initial IDOM work was conducted, and then to test its generic applicability, further developing the model where appropriate, within the other industries selected. The thesis contains a review of production systems design theory and practice prior to presenting thirteen industrial case studies of production systems design from the four industry sectors. The results and analysis of the postal survey into production systems design are then presented. The strategic decisions of manufacturing and their relationship to production systems design, and the detailed process of production systems design and operation are then discussed. These analyses are used to develop the generic model of production systems design entitled DRAMA II (Decision Rules for Analysing Manufacturing Activities). The model contains three main constituent parts: the basic DRAMA model, the extended DRAMA II model showing the imperatives and relationships within the design process, and a benchmark generic approach for the design and analysis of each component in the design process. DRAMA II is primarily intended for use by researchers as an analytical framework of enquiry, but is also seen as having application for manufacturing practitioners.

Demand side management within a regional electricity company

The work presented in this thesis concerns itself with the application of Demand Side Management (DSM) by industrial subsector as applied to the UK electricity industry. A review of the origins of DSM in the US and the relevance of experience gained to the UK electricity industry is made. Reviews are also made of the current status of the UK electricity industry, the regulatory system, and the potential role of DSM within the prevalent industry environment. A financial appraisal of DSM in respect of the distribution business of a Regional Electricity Company (REC) is also made. This financial appraisal highlights the economic viability of DSM within the context of the current UK electricity industry. The background of the work presented above is then followed by the construction of a framework detailing the necessary requirements for expanding the commercial role of DSM to encompass benefits for the supply business of a REC. The derived framework is then applied, in part, to the UK ceramics manufacturing industry, and in full to the UK sanitaryware manufacturing industry. The application of the framework to the UK sanitaryware manufacturing industry has required the undertaking of a unique first-order energy audit of every such manufacturing site in the UK. As such the audit has revealed previously unknown data on the timings and magnitude of electricity demand and consumption attributable to end-use manufacturing technologies and processes. The audit also served to reveal the disparity in the attitudes toward energy services, and thus by implication towards DSM, of manufacturers within the same Standard Industrial Classification (SIC) code. In response to this, attempt is made to identify the underlying drivers which could cause this variation in attitude. A novel approach to the market segmentation of the companies within the UK ceramics manufacturing sector has been utilised to classify these companies in terms of their likelihood to participate in DSM programmes through the derived Energy Services approach. The market segmentation technique, although requiring further development to progress from a research based concept, highlights the necessity to look beyond the purely energy based needs of manufacturing industries when considering the utilisation of the Energy Services approach to facilitate DSM programs.

The extent and impact of outsourcing:evidence from Germany

The authors use data from several sources, including plant-level data from the manufacturing sector in Germany, to expand the literature on outsourcing. They find that, in Germany, the extent of outsourcing among manufacturing industries is higher than among service industries and that the outsourcing intensity of these industries did not change much between 1995 and 2005. They also find a statistically significantly positive impact of industry-level outsourcing intensity on German plant-level labor productivity for both 2000 and 2005. The estimated economic impact of outsourcing on plant-level productivity is also fairly significant.

Foreign direct investment and employment in Central Europe

This article investigates the effects of foreign direct investment on employment generation in Central Europe. Foreign affiliates operate as a buffer to reductions in overall employment and show significant cross-country differences. A model analyzing the contribution of foreign direct investment to restructuring is developed. This model helps interpret the empirical evidence on the link between foreign direct investment and employment in Central Europe. Increasing differentiation in employment between manufacturing industries dominated by foreign affiliates suggests the importance of diversified sources of foreign direct investment for employment generation and preservation. A disaggregate analysis indeed reveals a much more complex and differentiated role of foreign direct investment in employment preservation, employment generation and structural change than the aggregate picture would suggest. This diversity has important policy implications for attracting and upgrading foreign direct investment.

Do R&D strategies in high-tech sectors differ from those in low-tech sectors? An alternative approach to testing the pooling assumption

Most studies investigating the determinants of R&D investment consider pooled estimates. However, if the parameters are heterogeneous, pooled coefficients may not provide reliable estimates of individual industry effects. Hence pooled parameters may conceal valuable information that may help target government tools more efficiently across heterogeneous industries. There is little evidence to date on the decomposition of the determinants of R&D investment by industry. Moreover, the existing work does not distinguish between those R&D determinants for which pooling may be valid and those for which it is not. In this paper, we test the pooling assumption for a panel of manufacturing industries and find that pooling is valid only for output fluctuations, adjustment costs and interest rates. Implementing the test results into our model, we find government funding is significant only for low-tech R&D. Foreign R&D and skilled labour matter only in high-tech sectors. These results suggest important implications for R&D policy.

Measurability characteristics mapping for large volume metrology instruments selection

Measurement and verification of products and processes during the early design is attracting increasing interest from high value manufacturing industries. Measurement planning is deemed as an effective means to facilitate the integration of the metrology activity into a wider range of production processes. However, the literature reveals that there are very few research efforts in this field, especially regarding large volume metrology. This paper presents a novel approach to accomplish instruments selection, the first stage of measurement planning process, by mapping measurability characteristics between specific measurement assignments and instruments.

Large volume metrology process model:measurability analysis with integration of metrology classification model and feature-based selection model

Aircraft manufacturing industries are looking for solutions in order to increase their productivity. One of the solutions is to apply the metrology systems during the production and assembly processes. Metrology Process Model (MPM) (Maropoulos et al, 2007) has been introduced which emphasises metrology applications with assembly planning, manufacturing processes and product designing. Measurability analysis is part of the MPM and the aim of this analysis is to check the feasibility for measuring the designed large scale components. Measurability Analysis has been integrated in order to provide an efficient matching system. Metrology database is structured by developing the Metrology Classification Model. Furthermore, the feature-based selection model is also explained. By combining two classification models, a novel approach and selection processes for integrated measurability analysis system (MAS) are introduced and such integrated MAS could provide much more meaningful matching results for the operators. © Springer-Verlag Berlin Heidelberg 2010.

Foreign manufacturing, regional agglomeration and technical efficiency in UK industries: a stochastic production frontier approach

The paper examines howfar foreign manufacturing investment in UK industries, together with the spatial agglomeration of those industries, affect technical efficiency. The paper links research on the estimation of technical efficiency,with those literatures demonstrating the economies associated with foreign direct investment and spatial agglomeration. The methodology involves estimation of a stochastic production frontier with random components associated with industry technical inefficiency, and a standard error. The paper also explores whether the degree of foreign involvement has a greater impact on technical efficiency where the domestic industry sector is characterized by comparatively high productivity and spatial agglomeration. The policy implications of the analysis are discussed.

Efforts towards adaptability enhancement:how manufacturing and service industries can learn from each other

This paper discusses the recent emerging efforts for adaptability enhancement of Japanese industries to cope with a volatile demand environment. It is based on an analysis of data obtained from respondent companies. The analysis is focused on both manufacturing and manufacturing- related service industries such as construction/maintenance, software supply, manufacturing consultation and logistics industries to highlight their current situation, the sense of crisis in Japanese companies and possible future directions in relation to the two industry sectors. The principal conclusion is that for most companies consideration of a revision or modification to its cost structure is an essential requirement for survival in the global competitive environment.

Phoenix industries and open innovation? The Midlands advanced automotive manufacturing and engineering industry

This paper explores the links between open innovation and the emergence of a ‘phoenix industry’ centred on the UK’s traditional automotive heartland, the West Midlands, which has developed a significant presence in automotive design and engineering, particularly among small and niche firms. Drawing on case study research, the paper investigates whether this can be considered as a phoenix industry, and to what extent open innovation has been important in the industry’s development. The paper considers relationships between firms and impacts in terms of changing economic and labour market conditions. The paper concludes by examining the role that public policy has played to date and might play in the future in supporting an emerging phoenix industry with open innovation features.

Industrial performance, agglomeration, and foreign manufacturing investment in the UK

This paper examines the relationship between the comparative advantage of UK industries, and new inward investment into these industries. The paper demonstrates that the extent of foreign manufacturing investment in an industry, and the spatial agglomeration of that industry, are significant determinants of industry comparative advantage, thus providing evidence of agglomeration benefits to both domestic and foreign firms. The paper then shows that industry comparative advantage itself, toegther with a series of industry specific characteristics, are important determinants of new foreigh manufacturing investment, thus providing evidence of the dynamic benefits of foreign direct investment in the UK economy.

Who gains from whom? Spillovers, competition and technology sourcing in the foreign-owned sector of UK manufacturing

There is a growing literature explaining foreign direct investment flows in terms of 'technology sourcing', whereby multinational firms invest in certain locations not to exploit their firm-specific assets in the host environment, but to access technology that is generated by host country firms. However, it is far from clear whether the literature has found significant evidence of such activity beyond a few isolated examples. This paper extends this work by allowing for the possibility of multinational enterprises (MNEs) sourcing technology not only from host country firms but also from each other within a host economy. The paper demonstrates that MNEs in the UK do indeed appropriate spillovers both from indigenous firms and from other foreign investors, but that there are also significant competition effects that act to reduce productivity in certain industries. The paper also explores which countries' affiliates gain most from technology sourcing in the UK, and which generate the greatest spillovers within the foreign-owned sector. © Scottish Economic Society 2005.

A process framework for selecting supply system architecture in manufacturing supply chains and networks

The process framework comprises three phases, as follows: scope the supply chain/network; identify the options for supply system architecture and select supply system architecture. It facilitates a structured approach that analyses the supply chain/network contextual characteristics, in order to ensure alignment with the appropriate supply system architecture. The process framework was derived from comprehensive literature review and archival case study analysis. The review led to the classification of supply system architectures according to their orientation, whether integrated; partially integrated; co-ordinated or independent. The classification was combined with the characteristics that influence the selection of supply system architecture to encapsulate the conceptual framework. It builds upon existing frameworks and methodologies by focusing on structured procedure; supporting project management; facilitating participation and clarifying point of entry. The process framework was initially tested in three case study applications from the food, automobile and hand tool industries. A variety of industrial settings was chosen to illustrate transferability. The case study applications indicate that the process framework is a valid approach to the problem; however, further testing is required. In particular, the use of group support system technologies to support the process and the steps involving the participation of software vendors need further testing. However, the process framework can be followed due to the clarity of its presentation. It considers the issue of timing by including alternative decision-making techniques, dependent on the constraints. It is useful for ensuring a sound business case is developed, with supporting documentation and analysis that identifies the strategic and functional requirements of supply system architecture.

A rule based model for the objective determination of the e-business requirements of a manufacturing organisation

The starting point of this research was the belief that manufacturing and similar industries need help with the concept of e-business, especially in assessing the relevance of possible e-business initiatives. The research hypotheses was that it should be possible to produce a systematic model that defines, at a useful level of detail, the probable e-business requirements of an organisation based on objective criteria with an accuracy of 85%-90%. This thesis describes the development and validation of such a model. A preliminary model was developed from a variety of sources, including a survey of current and planned e-business activity and representative examples of e-business material produced by e-business solution providers. The model was subject to a process of testing and refinement based on recursive case studies, with controls over the improving accuracy and stability of the model. Useful conclusions were also possible as to the relevance of e-business functions to the case study participants themselves. Techniques were evolved to synthesise the e-business requirements of an organisation and present them at a management summary level of detail. The results of applying these techniques to all the case studies used in this research were discussed. The conclusion of the research was that the case study methodology employed was successful. A model was achieved suitable for practical application in a manufacturing organisation requiring help with a requirements definition process.