How family control influences FDI entry mode choice

Ming-Sung Kao*, Anthony Kuo, Yi-Chieh Chang

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

11 Scopus citations

Abstract

This study investigates how family control influences entry mode choice between joint ventures and wholly owned subsidiaries. Based on past studies revealing family-controlled firms' unique concerns regarding the preservation of socioemotional wealth, the researchers posit that, firms with higher family control respond more drastically to perceived environmental uncertainty when choosing their entry mode. The researchers hypothesize that, when perceiving high environmental uncertainty, firms with higher versus lower family control are more likely to choose joint ventures. However, when perceiving low environmental uncertainty, firms with higher versus lower family control tend to choose wholly owned subsidiaries. The empirical results obtained from a sample of 1,644 investments undertaken by publicly listed companies in Taiwan support the hypotheses.

Original languageEnglish
Pages (from-to)367-385
Number of pages19
JournalJournal of management & organization
Volume19
Issue number4
DOIs
StatePublished - Jul 2013

Keywords

  • corporate governance
  • entry mode
  • family business
  • family control
  • FDI
  • FOREIGN DIRECT-INVESTMENT
  • PERCEIVED ENVIRONMENTAL UNCERTAINTY
  • WHOLLY OWNED SUBSIDIARY
  • OWNERSHIP STRUCTURE
  • TRANSACTION COSTS
  • CONTROLLED FIRMS
  • EMERGING MARKET
  • BUSINESS GROUPS
  • JAPANESE FIRMS
  • JOINT VENTURES

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