Economics & Finance / Business & Management / Corporate Strategy & Governance

Why Japanese Firms Copy Competitors (Not Allies) When Choosing Factory Locations

Witold J. Henisz, Andrew Delios

In 2001, Witold J. Henisz and Andrew Delios published a groundbreaking study in Administrative Science Quarterly analyzing 2,705 factory location decisions by 1,658 Japanese multinationals across 155 countries from 1990 to 1996. They uncovered a counterintuitive truth: when facing uncertainty about new markets, companies don't just rely on data—they mimic their industry rivals, even ignoring allies in their own corporate groups. But here's the twist: this imitation only works for uncertainty you can learn from. Political instability—like unpredictable government policies—kills the urge to copy. No amount of experience can fix that. This video breaks down the research, revealing how firms balance social proof and risk, and why your own experience matters 4x more than others' choices. Perfect for entrepreneurs, investors, and anyone curious about how businesses really decide where to build.