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Japanese Investors' Choice of Joint Ventures Versus Wholly-owned Subsidiaries in the US: The Role of Market Barriers and Firm Capabilities

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  • Shih-Fen S Chen

    (Brandeis University)

  • Jean-Francois Hennart

    (Tilburg University)

Abstract

This study analyzes how market barriers and firm capabilities affect multinationals' choice of joint ventures versus wholly-owned subsidiaries abroad. In the study, we compile a vector of variables that distinguish between industry-specific barriers and firm-specific capabilities to analyze Japanese investors' ownership decisions in the US. Our results in general support the hypothesis that Japanese investors facing high market barriers in the target industry are more likely to choose joint ventures, while those possessing strong competitive capabilities are more likely to set up wholly-owned subsidiaries. Specifically, marketing variables are more influential than technological factors in determining the choice of partial versus full ownership. These findings, however, vary across sub samples that represent low- versus high-tech industries and consumer versus industrial products.© 2002 JIBS. Journal of International Business Studies (2002) 33, 1–18

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Bibliographic Info

Article provided by Palgrave Macmillan in its journal Journal of International Business Studies.

Volume (Year): 33 (2002)
Issue (Month): 1 (March)
Pages: 1-18

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Handle: RePEc:pal:jintbs:v:33:y:2002:i:1:p:1-18

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Cited by:
  1. Slangen, Arjen H.L. & van Tulder, Rob J.M., 2009. "Cultural distance, political risk, or governance quality? Towards a more accurate conceptualization and measurement of external uncertainty in foreign entry mode research," International Business Review, Elsevier, Elsevier, vol. 18(3), pages 276-291, June.
  2. Chang Oh & Alan Rugman, 2007. "Regional multinationals and the Korean cosmetics industry," Asia Pacific Journal of Management, Springer, Springer, vol. 24(1), pages 27-42, March.
  3. Yang, Monica & Hyland, MaryAnne, 2012. "Similarity in Cross-border Mergers and Acquisitions: Imitation, Uncertainty and Experience among Chinese Firms, 1985–2006," Journal of International Management, Elsevier, Elsevier, vol. 18(4), pages 352-365.
  4. Ahmad Arslan, 2012. "Impacts of institutional pressures and the strength of market supporting institutions in the host country on the ownership strategy of multinational enterprises: theoretical discussion and proposition," Journal of Management and Governance, Springer, Springer, vol. 16(1), pages 107-124, February.
  5. Paloma Almodóvar & José Emilio Navas López & Patricia Huerta Riveros, 2009. "La tipología estratégica como factor determinante de la empresa conjunta internacional," Investigaciones Economicas, Fundación SEPI, Fundación SEPI, vol. 33(3), pages 407-438, September.
  6. Pak, Yong Suhk & Park, Young-Ryeol, 2005. "Characteristics of Japanese FDI in the East and the West: Understanding the strategic motives of Japanese investment," Journal of World Business, Elsevier, Elsevier, vol. 40(3), pages 254-266, August.
  7. Peng, George Z. & Beamish, Paul W., 2014. "MNC subsidiary size and expatriate control: Resource-dependence and learning perspectives," Journal of World Business, Elsevier, Elsevier, vol. 49(1), pages 51-62.
  8. Melnyk, Valentyna & Giarratana, Marco & Torres, Anna, 2014. "Marking your trade: Cultural factors in the prolongation of trademarks," Journal of Business Research, Elsevier, Elsevier, vol. 67(4), pages 478-485.
  9. Gomez-Selemeneva, D., 2009. "Factores Claves para la Sostenibilidad de las Alianzas Inter-organizativas: Un caso de Estrategias de Cooperación
    [Key Factors for Sustainability of Inter-organizational Alliances: A Case for Coop
    ," MPRA Paper 31274, University Library of Munich, Germany.
  10. Petrou, Andreas, 2007. "Multinational banks from developing versus developed countries: Competing in the same arena?," Journal of International Management, Elsevier, Elsevier, vol. 13(3), pages 376-397, September.
  11. Chen, Ming-Yuan & Chang, Jing-Yun, 2011. "The choice of foreign market entry mode: An analysis of the dynamic probit model," Economic Modelling, Elsevier, Elsevier, vol. 28(1-2), pages 439-450, January.
  12. Duanmu, Jing-Lin, 2011. "The effect of corruption distance and market orientation on the ownership choice of MNEs: Evidence from China," Journal of International Management, Elsevier, Elsevier, vol. 17(2), pages 162-174, June.
  13. Dimitratos, Pavlos & Liouka, Ioanna & Young, Stephen, 2009. "Regional location of multinational corporation subsidiaries and economic development contribution: Evidence from the UK," Journal of World Business, Elsevier, Elsevier, vol. 44(2), pages 180-191, April.
  14. Canabal, Anne & White III, George O., 2008. "Entry mode research: Past and future," International Business Review, Elsevier, Elsevier, vol. 17(3), pages 267-284, June.

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