Japanese foreign direct investment in Thailand: Promoting an ‘interactive’ institutional approach

In this chapter, we seek to promote consideration of the responsiveness of Japanese firms to regulatory and policy regimes for foreign direct investment (FDI) within the setting of institutions at home, institutions in the host country, and their interplay. The context of this study is Thailand, where FDI plays a major role in the country’s economic development. Japanese firms have responded to Thai government initiates to attract FDI. This has led to a significant presence of Japanese Multinational Enterprises (JMNEs) in Thailand. We develop a conceptual framework that allows for a sophisticated, integrative analysis of institutions within which trends in Japanese investment behavior can be investigated over time. We find that the discrepant environments in Japan and Thailand intersect to create the basic institutional conditions for organizational investments. We also found how economic policy formulations both at home and abroad - and constraints on (or opportunities for) investment that flow from them - influence the engagement of JMNEs with the Thai economy. Our interactive considerations of institutional influence on investment provide useful insights into how Japanese firms configure their presence in response to the fabric of policy adjustments.