This article integrates institutional theory and organizational learning perspective and proposes a contingency framework on the relationship between ownership strategies and subsidiary performance. Using a sample of Japanese subsidiaries worldwide, the article finds important main effects of ownership, institutional distance, and host country experience on subsidiary survival. Furthermore, the effect of ownership is contingent on institutional distance and host country experience. In institutionally distant countries, subsidiaries have better survival chances if foreign parents have more ownership. Host country experience has a negative impact on subsidiary survival, but the effect is weaker if foreign parents have larger ownership positions in the subsidiaries.
AustraliaThis study examines and extends the resource dependence logic of diversification for a better understanding of outward foreign direct investment (OFDI) activities by emerging market firms. We contend that the diversification logic is bounded by state ownership, an important but less considered component of interdependence. Our empirical results, based on panel data analysis of Chinese listed firms, suggest that the level of interdependence between Chinese and foreign firms in China in multiple forms, including symbiotic, competitive, and partner interdependencies, is positively associated with the level of the Chinese firms' OFDI activities. However, Chinese firms with higher levels of state ownership are less susceptible to the pressures imposed by foreign firms to invest abroad.(Numbers in parentheses are robust standard errors, based on a Huber-White sandwich estimator); [marginal effects in square brackets];{standard errors of marginal effects in curly brackets}.
This paper compares the predictions of transaction cost and institutional theories in an empirical study of the entry mode choice for 1,194 Japanese foreign subsidiaries. The findings indicate the institutional model adds significant explanatorypower over and above the predictions of the transaction cost model. Using the concepts of frequency-based, trait-based and out-T he entry mode choice is an important decision in international strategy because of its relationships to the performance and survival of a firm's foreign subsidiaries (Stopford and Wells, 1972; Beamish and Makino, 1998). The major stream of research in the entry mode field has emphasized relationships between a firm's assets, and its need for control and ownership, as it modeled the entry mode choice from an economic perspective (Anderson and Gatignon, 1986). Theorists have emphasized that come-based imitation, I find support for institutional isomorphism, as later entrants tended to follow the entry mode patterns established by earlier entrants. Isomorphic behavior was also present within a firm, as firms exhibited consistency in entry mode choices across time. Further, a firm's investment experience moderated institutional influences on entry mode choice. the entry mode choice stemmed from two asset-based influences. High-control modes (for example, wholly-owned subsidiaries) are used when there is a need to control and safeguard a parent firm's contributed assets in its foreign subsidiaries (Gatignon and Anderson, 1988; Hennart and Park, 1993). Low-control modes (for example, joint ventures) are used when a foreign firm requires access to complementary assets for international expansion (Beamish and Banks,
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