IDEAS home Printed from https://ideas.repec.org/a/bla/reviec/v9y2001i1p163-180.html
   My bibliography  Save this article

Joint Ventures versus Fully Owned Subsidiaries: Multinational Strategies in Liberalizing Economies

Author

Listed:
  • Arijit Mukherjee
  • Sarbajit Sengupta

Abstract

As ceilings on foreign shareholdings are withdrawn during liberalization, multinationals enter through fully owned subsidiaries that compete with their own joint ventures, unless local partners permit them to raise their stakes. In a framework of quantity competition, this paper demonstrates that an entry threat is more credible when joint venture investment is reversible, the units are independently managed and the local stake is high. Further, profitability of horizontal merger between the units encourages a share reallocation, while its absence favours a new subsidiary. Under irreversible investment, the threat is less credible and both share reallocations or new subsidiaries are less likely.

Suggested Citation

  • Arijit Mukherjee & Sarbajit Sengupta, 2001. "Joint Ventures versus Fully Owned Subsidiaries: Multinational Strategies in Liberalizing Economies," Review of International Economics, Wiley Blackwell, vol. 9(1), pages 163-180, February.
    • Handle: RePEc:bla:reviec:v:9:y:2001:i:1:p:163-180
    DOI: 10.1111/1467-9396.00271
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1467-9396.00271
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1467-9396.00271?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kasuga, Hidefumi, 2003. "Capital market imperfections and forms of foreign operations," International Journal of Industrial Organization, Elsevier, vol. 21(7), pages 1043-1064, September.
    2. Onur Koska, 2009. "A Model of Competition Between Multinational Firms," Working Papers 0911, University of Otago, Department of Economics, revised Oct 2009.
    3. Kabiraj, Tarun & Sengupta, Sarbajit, 2018. "A theory of joint venture instability under inter-partner learning," Research in International Business and Finance, Elsevier, vol. 46(C), pages 363-372.
    4. Banerjee, Shantanu & Mukherjee, Arijit, 2010. "Joint venture instability in developing countries under entry," International Review of Economics & Finance, Elsevier, vol. 19(4), pages 603-614, October.
    5. Marjit, Sugata & Chowdhury, Prabal Roy, 2004. "Asymmetric capacity costs and joint venture buy-outs," Journal of Economic Behavior & Organization, Elsevier, vol. 54(3), pages 425-438, July.
    6. Koska, Onur A., 2014. "A Model of Competition between Multinationals," MPRA Paper 68024, University Library of Munich, Germany.
    7. Hamid Beladi & Sugata Marjit & Avik Chakrabarti, 2009. "Tariff Jumping and Joint Ventures," Southern Economic Journal, John Wiley & Sons, vol. 75(4), pages 1256-1269, April.
    8. Arijit Mukherjee, 2023. "Losses from cross-holdings in a duopoly with convex cost and strategic input price determination," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(1), pages 81-91, April.
    9. Onur Koska, 2009. "Foreign Direct Investment For Sale," Working Papers 0910, University of Otago, Department of Economics, revised Oct 2009.
    10. Duanmu, Jing-Lin & Lawton, Thomas, 2021. "Foreign buyout of international equity joint ventures in China: When does performance improve?," Journal of World Business, Elsevier, vol. 56(5).
    11. Rituparna Kaushik & Sourabh Bikas Paul, 2021. "Strategic Interactions, Bargaining Power and Stability of Joint Venture in an Emerging Nation," Journal of Industry, Competition and Trade, Springer, vol. 21(4), pages 543-564, December.
    12. Hamid Beladi & Sugata Marjit & Avik Chakrabarti, 2006. "Tariff Jumping and Joint Ventures," Working Papers 0002, College of Business, University of Texas at San Antonio.
    13. Jota Ishikawa & Yoichi Sugita & Laixun Zhao, 2009. "Corporate Control, Foreign Ownership Regulations and Technology Transfer," The Economic Record, The Economic Society of Australia, vol. 85(269), pages 197-209, June.
    14. Prabal Roy Chowdhury, 2003. "Joint venture instability and monitoring," Discussion Papers 04-09, Indian Statistical Institute, Delhi.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:reviec:v:9:y:2001:i:1:p:163-180. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.