The Role of Experiential Knowledge and Subsequent Investment Decisions on the Profitability of Japanese Companies in Brazil (Report‪)‬

Introduction Rapid globalization of the world economy has brought intense changes in the way of conducting business. Firms face increasing international competition and try to take advantage of the growing opportunities offered by the international market. As a result, multinational companies have expanded the field of their business activities in different countries and cultures, which requires some capabilities to access and operate successfully in these markets. Usually, a multinational company faces uncertainty and risk, and is subject to the liability of foreignness (Hymer, 1976), which is associated with the cost of doing business in a different market from its home country. As the multinational enterprise increases know-how through experience by operating in international markets (Barkema, Bell, & Pennings, 1996), building relations with customers and local suppliers, dealing with governmental agencies and recruiting local employees, its liability for foreignness should decline (Chang & Rosenzweig, 1998) and perhaps even disappear (Zaheer, 2002).