Japanese LMEs and internationalisation: a study of the internationalisation behaviour of Japanese leading medium-sized enterprises in the context of globalisation.

This thesis is about globalisation and the firm. Specifically it concerns a particular type of firm called here a 'leading medium-sized enterprise'. or LME. This term is derived from the Japanese 'chuken kigyo’ which is used in Japan to distinguish the LME from small and medium-sized firms on the one hand and large firms on the other. LMEs are not exclusive to Japan, but they thrive there. The thesis establishes the importance of the LME as a (hitherto neglected) concept and business type, and analyses the conditions in Japan that have favoured the emergence of such firms there. Subsequently the investigation employs the Japanese LME to illustrate the approach to globalisation o f this particular kind of firm. Apart from being medium sized and a leader in its self-determined area of business, the LME is characterised by being independent and highly specialised in its core competence, to which it has devoted considerable time and effort. Deriving from and substantiating its particular character is a mode of operation and strategic philosophy called here 'articulation', which is an incremental approach applied first to the LME's domestic development and subsequently to internationalisation.
The type of firm discussed here is the manufacturing LME and the form of internationalisation analysed is foreign direct investment (FDI). In contrast to the large transnational corporation (TNC), the smaller LME is hypothesised to be more
prone to favour proximity in its inaugural FDI endeavours. So the adjacent multinational region of East Asia is introduced as the potential initiating location for FDI by Japanese LMEs. Within this region, Taiwan is posited as the representative of 'super proximity' because of the high degree of complementarity it is deemed to have with internationalising Japanese LMEs. An aggregate sample of 110 Japanese LMEs which have invested in Taiwan are compiled and analysed to see how this investment has contributed to shaping their globalisation strategies. From this
aggregate sample, five case study LMEs are abstracted for more detailed examination of the motives, strategies and regional impacts (contribution to globalisation) of internationalising LMEs.
In order of priority, this research has been conducted in Japanese, English. Chinese and French. In fact, it could not have been started without knowledge of at least written Japanese and Chinese. The first contribution to knowledge of this thesis, therefore, is that it brings to light information and materials not readily available to Westerners not conversant with these languages. In addition, the concepts of the LME and articulation have been introduced into accounts of the internationalisation of the firm, and also employed as analytical tools to show that the process of internationalisation by the smaller, specialised firm (as opposed to the large, multifunctional TNC) is accomplished in a manner distinctive to itself, because of its assertive concentration on its core competence, and despite the constraints of size and scope imposed upon it. This thesis also demonstrates that Japanese LMEs make a distinctive contribution to the on-going process o f globalisation, by their (generally positive) impacts on the overseas locations in which they operate, and by helping to shape the economic integration of the East Asian region.

Thesis submitted in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Business Studies.