Introduction

Japan was until 2010 the world’s second largest national economy and remains the thirdlargest, and it has long been a significant energy-importer from the Gulf States. In light of Japan’s economic, political and technological weight in the international economic and political system, Japanese multinational corporations are potentially important partners in transnational knowledge relations for the Gulf. My research shows that the pursuit of foreign partnerships by J-MNCs represents an opportunity for outside firms – as in the Gulf – to engage with J-MNCs and benefit from potential knowledge spillovers both in technology and business practices, where Japan has unique characteristics. There is a strong tradition for collaboration among Japanese companies. Interlinked firms “pervade much of the Japanese economy” (Gerlach, 1992: xiv). Japanese network organization was seen as a driver for the remarkable competitiveness of J-MNCs in the 1980s, yet many argue today that they advanced in spite of it (Lincoln and Gerlach, 2004). As the world is turning into a ‘global village’ with economic activity becoming more interdependent (Dunning, 1997), successful integration into global value chains is crucial for MNCs (Pudelko, 2005) Many J-MNCs have indeed found that limiting their partnerships to domestic ones no longer suffices (Teramoto and Benton, 2005). Therefore, two cases of J-MNC transnational partnering are discussed and analyzed in this chapter: a joint venture between Mitsubishi Heavy Industries and Vestas in Denmark, and a joint venture between SBI Pharmaceuticals and Dawani in Bahrain.

J-MNCs breaking with their Japanese business groups to better integrate into the ‘global village’ represents an opportunity for Gulf and other foreign firms and organizations at large capable of offering assets that can help to advance the business of J-MNCs. There is evidence of foreign partners benefitting from knowledge spillovers in partnerships with J-MNCs (Kantei, 2013); Toyota Motor Corporation, for example, supports the Saudi- Japanese Automobile High Institute in Saudi Arabia which up until now has trained more than a thousand automotive engineers. Most of the graduates become employed by Saudi distributors and dealers of Japanese automobiles. The institute helps to advance the level of automotive technology in Saudi Arabia and contributes to the Saudi-Japan Industrial Cooperation (Toyota, 2015).