Chapter 3 Research Methodology
3.2 Research Procedure
This study adopts a hybrid MCDM model combined with DEMATEL and ANP. This method is applied to analyze and form the relationship of cause and effect among evaluation criteria (Ou-Yang et al., 2008).
3.2.1 Set up Research Architecture
This study classifies five categories of motives for Japanese enterprises to invest in Taiwan. The first four motives, namely market seeking, efficiency seeking, resource seeking, and strategic-asset seeking, follow from Dunning (1993). The fifth network seeking motive is newly created by this study to catch the Taiwan-Japan historical ties.
The determinants in each motive are concluded from past literature survey and interview with five experts who are senior managers of Japanese enterprises work in Taiwan.
3.2.2 Select the Candidate Determinants
This study firstly surveys the concerning past literature and select potential candidate determinants. The researcher had an interview with a university professor, Ministry of Economy, Trade and Industry of manager and Japanese MNEs Taiwan branch of manager
. After interviewing with experts, the additional potential candidate
determinants are collected and rearranged opinions from interview records as: (1) Market size – Although Taiwan’s domestic salary income is about 40% of Japanese origin, it still retains a satisfactory purchasing power; (2) Human resource – Taiwan’s18
well education system results in part of the skilled labor forces and knowledge workers are globally competitive; (3) A strategic geographical location – Taiwan is located in the middle of Eastern Asia. Average distance from Taiwan to ASEAN countries, Hong Kong, China, Japan, and South Korea is relatively short. It takes about 3 hours to Tokyo or Shanghai, 1 hour to Hong Kong. Taiwan situated as an economic portal to China and to the ASEAN markets; (4) Tax Incentives – Taiwan provides preferential tax incentives and subsidies to MNEs in Taiwan and aims at improving the overall investment environment for recruiting and attracting MNEs; (5) Infrastructure – Infrastructure is able to attract Japanese investment with good physical infrastructure such as water supply, electricity, traffic, communication, etc.; (6) Clustering – Most Japanese MNEs are attracted by Taiwan’s industry clustering, especially, Export Processing Zones and Science Parks Zones becoming important components for attracting Japanese MNEs to invest in Taiwan; (7) Innovation and R&D – Taiwan’s patents per million people ranks first, total patents ranks fourth in the world. Taiwan’s R&D performance can consistently be expected from local research institutes and national universities; and, (8) History – Since Japan had occupied Taiwan for 50 years before World War II, many educated Taiwanese can speak and write Japanese fluently. Japanese MNEs have no difficulty in communication with Taiwanese employees and trading partners. Therefore, Taiwan-Japan historical ties serve as a critical factor for Japanese MNEs’ decision to invest in Taiwan.
While collects and rearranges potential candidate determinants from literature survey and export opinions, this study concludes the determinants that are affecting Japanese MNEs to invest in Taiwan and pigeonholes each of those determinants into the five motives categories respectively, showing as Table 3.1.
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Table 3.1 Determinants description
Motives
Categories Determinants Description Source
A. Market Seeking
a1 Population The number of domestic residents in Taiwan Loungani et al. (2002), Makino et al. (2002) a2 Market size The domestic market capacity in Taiwan Herzer et al. (2008), Chan et
al. (2013), Expert 1 a3 GDP The gross domestic product (GDP) in Taiwan Kolstad et al. (2012), Castro
et al. (2013), Experts 1,3 a4 Market potential The possibility to expand sales amount in
Taiwan in the near future
Buckley et al. (2007) B. Resource
Seeking
b1 Raw material Domestic natural resource: agriculture, forest, fishery, pasture, and mineral products, etc. in Taiwan
Deng (2004), Kolstad et al.
(2012), Ramasamy et al.
(2004) b2 Human resource The supply of domestic skilled labors and
knowledge workers in Taiwan
Zhang (2005), Bellak et al.
(2008), Experts 1, 2, 4 C. Efficiency
Seeking
c1 Geography distance
The distance from Taiwan to ASEAN nations, China, South Korea, and Japan
Buckley et al. (2007), Experts 1, 2, 3, 4, 5 c2 Infrastructure The level of domestic infrastructure: water
supply, electricity, traffic, communication, etc.
in Taiwan
Yamin et al. (2009), Sun et al.
(2010), Backar et al. (2012) Experts 1, 2, 4, 5
c3 Cluster The level of similar industries centered at a specific area in Taiwan
Tuan and Linda (2004), Chen (2009) , Experts 1, 2, 4 c4 Tax Tax incentives provided by Taiwan government Experts 1, 4
c5 Political risk The possibility of political turbulence in Taiwan Busse and Hefeker (2006), Experts 1, 3
D.
Strategic-asset Seeking
d1 Technology The level of domestic technology in Taiwan Li and Zhong (2003), Minin et al. (2012)
d2 Protection of Intellectual property right
The level of enforcement for protecting intellectual property right in Taiwan
Experts 1, 5
E. Network seeking
e1 Ethnic ties The ethnic relationship perceived by Taiwanese and Japanese
Jean et al. (2011), Zaheer et al. (2009), Experts 1, 3, 5 e2 History The historical relationship between Taiwan
and Japan
Experts 1, 2, 3, 4, 5 e3 Step stone The strategic thinking to invest in Taiwan as a
prelude for expanding to a third county
Experts 1, 2, 3
3.2.3 Create the DEMATEL Questionnaires
First, this study creates the DEMATEL questionnaire for collecting the cause-effect relationship among the five categories motives while interviewing with selected senior managers of the seven Japanese MNEs. The questionnaires employ a 5-point Likert scale (0 ~ 4) with (0) equaling “No influence”, (1) “Low influence”, (2) “Medium influence”, (3) “High influence”, and (4) “Very high influence”, respectively.
The example of the DEMATEL questionnaires and how to fill the comparison of the impact of the five motives categories is shown as Table 3.2.
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Table 3.2 Example of the DEMATEL questionnaire
※Please fill out the compared level of the five motives categories in the following table effect
Cause
A. Market Seeking
B. Resource Seeking
C. Efficiency Seeking
D. Strategic-asset Seeking
E. Network Seeking A. Market
Seeking
3 B. Resource
Seeking C. Efficiency
Seeking
D. Strategic-asset Seeking
E. Network Seeking
3.2.4 Create the ANP Questionnaires
The ANP questionnaires are designed to measure the relative importance between two
determinants
by pair-wise comparison. After completing DEMATEL questionnaire, interviewee implements ANP questionnaire with the same respondent of the seven Japanese MNEs to collect the relative importance of the dyad determinants while interviewing with selected senior managers of the seven Japanese MNEs. The example of ANP questionnaires is shown as Table 3.3.21
Table 3.3 Example of ANP questionnaire
※Considering the importance of the determinants, fill in 9:1 to 1:9
Determinant
i
pairwise comparison Determinant
9:1 8:1 7:1 6:1 5:1 4:1 3:1 2:1 1:1 1:2 1:3 1:4 1:5 1:6 1:7 1:8 1:9
j
a1
✓a2
a1
✓a3
……
a1
✓b1
(1 = “Equally Important”, 3 = “Moderately Important”, 5 = “Strongly Important”, 7 = “Very Strongly Important”, and 9 = “Extremely Important”.
2, 4, 5, and 6 indicated intermediate preferences)
3.2.5 Data Collection
This study designs a self-structured questionnaire (see Appendix) for the pairwise comparison of each determinant in each motive. The respondents are focused on the senior managers of seven Japanese MNEs who are all in charge in FDI affairs in Taiwan.
The basic information of the seven Japanese MNEs and the profile of every respondent in the seven Japanese MNEs are shown as Table 3.4 and Table 3.5, respectively.