Industry evolution and internationalization processes of firms from a newly industrialized economy

Patterns of internationalization processes in industrializing countries seem to differ from the pattern in developed countries as they are reflected in the Uppsala and Innovation models. This study investigates the internationalization process of firms from a newly industrialized economy (NIE) in a mature product sector. The study employs two theoretical perspectives derived from (1) location-centered economic development theories and (2) the firm-centered theories of foreign direct investment (FDI). It explains why firms with few product-oriented specific ownership advantages in an industrializing economy successfully engage in production-related FDI (even from their start-up), and why the elapsed time from start-up to FDI is becoming shorter as the local sector develops. The paper also examines production location choices, showing that tolerance to psychic (cultural) distance increases with successive investments. The hypotheses derived are tested using FDI data from the garment industry of Hong Kong. (C) 2002 Elsevier Science Inc. All rights reserved.