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Wholly-Owned Subsidiaries Versus Joint Ventures: The Determinant Factors in the Catalan Multinational Manufacturing Case

  • Montserrat Álvarez


    (Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB))

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    The aim of this paper is to investigate the factors influencing the choice between establishing a wholly-owned subsidiary (WOS) or entering into a joint venture (JV) as made by Catalan manufacturing firms investing abroad. The validity of certain key transaction-cost hypotheses in this case is tested using binomial logistic regression. Results indicate that a Catalan manufacturing firm is more likely to set up a wholly-owned subsidiary if the firm is sufficiently large, has had substantial experience in the host country geographical region, but is young and possesses little general experience in the international sphere. On the other hand, a Catalan firm is more likely to invest via a WOS if the firm possesses intangible or tacit assets and operates within a technologically advanced sector. Finally, a joint venture is preferred by a Catalan firm if the potential host country is perceived to imply a high degree of instability and risk or has a high rate of growth.

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    Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2003/5.

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    Length: 27 pages
    Date of creation: 2003
    Date of revision:
    Handle: RePEc:ieb:wpaper:112255art138
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