Fdi Ownership Strategy: A Japanese-Us Mne Comparison

Zusammenfassung

---

Much of the extant literature characterizes international joint venture (IJV) as a less stable and less successful form of organization. In this view, the IJV is considered a suboptimal ownership strategy, one where the firm lacks control over its operations, compared to wholly-owned subsidiary (WOS). This article tested this widespread view on IJV and WOS by analyzing a large, longitudinal sample of Japanese MNEs, comparing the results to those from US MNEs reported in Desai et al. (2004a) and Gomes-Casseres/Jenkins (2003). Japanese MNEs showed a stronger preference for IJVs over the last two decades as compared to US MNEs. IJV performance exceeded WOS among Japanese firms in most sample years, while WOSs outperformed IJVs among US subsidiaries in all sample years. Clear boundaries exist along the line of country-of-origin, with respect to the generalizability of the extant view toward IJVs.

Siehe den Gesamtinhalt dieses Dokumentes

Auszug

---

Fdi Ownership Strategy: A Japanese-Us Mne Comparison

Introduction

International joint ventures (IJVs) and wholly-owned subsidiaries (WOSs) are two central ownership strategies of multinational enterprises (MNEs). Much of the extant literature characterizes the IJV as a less stable and less successful form of organization (Li 1995). With an IJV there is the danger of partner firm's opportunistic behavior without offering sufficient control to minimize the hazard (Delios/Beamish 1999, Gatignon/Anderson 1988, Steensma/Lyles 2000, Luo 2007). As a result, MNEs may use an IJV to achieve temporary objectives; once they have achieved their specific goals, MNEs can either dissolve IJV or sell their equity (Cuypers/Martin 2007, Kogut 1988, 1991). In this sense, some authors have viewed the IJV as a suboptimal ownership strategy.

Recent studies have found support for this widespread view on WOS versus IJV (Kaynak/Demirbag/Tatoglu 2007, Desai/Foley/Hines 2004a, 2004b, Gomes-Casseres/Jenkins 2003). Desai et al. (2004a), for example, reported that the use of IJVs had significantly decreased among US subsidiaries between 1982 and 1997. Based on their findings, Desai et al. (2004b) recommend limiting shared equity ownership to only those subsidiaries whose focus is strictly local. Similarly, Gomes-Casseres and Jenkins (2003) showed that US IJVs were substantially and systematically less profitable than US WOSs during the 1977-1998 period1.

We find in both Desai et al. (2004a) and Gomes-Casseres and Jenkins (2003), however, that their exclusive focus on US MNEs is a critical limitation. These studies did not consider the possible influence of an MNE's home country background. Yet, international business scholars have suggested that an MNE's country-of-origin can significantly affect its ownership strategies (Hennart/Larimo 1998, Makino/Neupert 2000, Pan 1997). For example, a recent meta-analysis found that country-of-origin moderates the effects of entry mode determinants (Zhao/Luo/Suh 2004). Therefore, an examination of the effect of country-of-origin may suggest the existence of boundary conditions to the extant view on the nature of foreign direct investment (FDI) ownership.

The effect of country-of-origin is closely related to the debate on organizational convergence and divergence. This literature is concerned with the extent to which firms that originate in different countries are similar in terms of operations and management. It asks whether specific cultural...

Siehe den Gesamtinhalt dieses Dokumentes

---