Abstract
This study examines the possible heterogeneity of governance quality's influence on entry mode decisions made by firms with different degrees of family control. When entering a country with low governance quality, ceding control of the subsidiary in exchange for local partners' help enables foreign firms to tackle institutional flaws. However, such a motivation diminishes as governance quality increases. This study thus hypothesizes that firms tend to choose WOSs over JVs when entering a host country with high governance quality.
Firms controlled by family members, due to concerns regarding the preservation of socioemotional wealth, prefer to maintain high ownership levels of their affiliates. This study thus hypothesizes that firms with a higher degree of family control are even more likely to choose WOSs when entering a country with high governance quality. The results support the hypotheses. (C) 2014 Elsevier Ltd. All rights reserved.
| Original language | English |
|---|---|
| Pages (from-to) | 1008-1020 |
| Number of pages | 13 |
| Journal | International business review |
| Volume | 23 |
| Issue number | 5 |
| DOIs | |
| State | Published - Oct 2014 |
Keywords
- Entry mode
- Family control
- Governance quality
- Joint venture
- Wholly owned subsidiary
- FOREIGN DIRECT-INVESTMENT
- RESEARCH-AND-DEVELOPMENT
- JAPANESE FIRMS
- INSTITUTIONAL ENVIRONMENT
- INTERNATIONAL EXPANSION
- FINANCIAL PERFORMANCE
- POLITICAL RISK
- JOINT VENTURES
- OWNERSHIP
- STRATEGY
