Overseas Entry Decision and Ownership Strategy of Japanese Companies: Institution and Corporate Governance
AbstractUsing 20-year panel data, this paper tests Japanese companies' sequential decisions: (1) to invest abroad or not and (2) if so, what ownership strategy for that local company to be employed. In addition to transaction advantage emphasized by traditional studies on FDI, the focus is the role of corporate governance of the parent companies and institutional environment of the host countries. Through Heckman's two-step estimation, corporate governance is found to play an important role for entry decision but not for ownership strategy. Transaction cost approach has been well supported for entry decision. Most importantly, an institutional environment favorable to MNEs leads to higher level of ownership of local companies. Firm size plays a significant role for FDI decision as well as for ownership decision
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Bibliographic InfoPaper provided by Econometric Society in its series Econometric Society 2004 Far Eastern Meetings with number 587.
Date of creation: 11 Aug 2004
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Sample selection bias; Entry decision; Ownership strategy; Corporate governance; Institution;
Find related papers by JEL classification:
- F2 - International Economics - - International Factor Movements and International Business
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
- C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
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