The Role of FDI Motives in the Link between Institutional Distance and Subsidiary Ownership Choice by Emerging Market Multinational Enterprises

Jie Wu; Nan  Zhou; Seung Ho Park; Zaheer Khan; Martin Meyer

doi:10.1111/1467-8551.12508

The Role of FDI Motives in the Link between Institutional Distance and Subsidiary Ownership Choice by Emerging Market Multinational Enterprises

Jie Wu, Nan Zhou, Seung Ho Park, Zaheer Khan^* (Corresponding Author), Martin Meyer

^*Corresponding author for this work

Business Management

Research output: Contribution to journal › Article › peer-review

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Abstract

This study advances the limited generalizability of previous studies that have focused on developed market multinational enterprises (DMNEs) and explores the link between institutional distance and ownership choice of emerging market multinational enterprises (EMNEs). Such studies in the EMNE context have been rare, and we provide key theoretical explanations for EMNEs’ distinct FDI motives to act as important contingencies in the link between institutional distance and EMNEs’ ownership choices. Analyses of longitudinal data of Chinese firms’ internationalization from 2001 to 2017 reveals that the higher the institutional distance, the lower the level of EMNE subsidiary ownership control with market-seeking motives; while the higher the institutional distance, the higher the level of EMNE subsidiary ownership control with knowledge-seeking motives.

Original language	English
Pages (from-to)	1371-1394
Number of pages	24
Journal	British Journal of Management
Volume	33
Issue number	3
Early online date	7 May 2021
DOIs	https://doi.org/10.1111/1467-8551.12508
Publication status	Published - 5 Jul 2022

Keywords

FDI Motives
Institutional distance
Subsidiary Equity ownership
emerging market multinational enterprises
Entry mode
China

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10.1111/1467-8551.12508Licence: CC BY

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© 2021 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited. https://creativecommons.org/licenses/by/4.0/
Final published version, 446 KBLicence: CC BY

Lessons For Leaders From Rapidly Internationalizing Firms
Jie Wu & Zaheer Khan
8/02/22
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title = "The Role of FDI Motives in the Link between Institutional Distance and Subsidiary Ownership Choice by Emerging Market Multinational Enterprises",

abstract = "This study advances the limited generalizability of previous studies that have focused on developed market multinational enterprises (DMNEs) and explores the link between institutional distance and ownership choice of emerging market multinational enterprises (EMNEs). Such studies in the EMNE context have been rare, and we provide key theoretical explanations for EMNEs{\textquoteright} distinct FDI motives to act as important contingencies in the link between institutional distance and EMNEs{\textquoteright} ownership choices. Analyses of longitudinal data of Chinese firms{\textquoteright} internationalization from 2001 to 2017 reveals that the higher the institutional distance, the lower the level of EMNE subsidiary ownership control with market-seeking motives; while the higher the institutional distance, the higher the level of EMNE subsidiary ownership control with knowledge-seeking motives.",

keywords = "FDI Motives, Institutional distance, Subsidiary Equity ownership, emerging market multinational enterprises, Entry mode, China",

author = "Jie Wu and Nan Zhou and Park, {Seung Ho} and Zaheer Khan and Martin Meyer",

note = "Funding This research was supported by National Natural Science Foundation of China (Project number: 72122016, 71902091).",

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AU - Khan, Zaheer

AU - Meyer, Martin

N1 - Funding This research was supported by National Natural Science Foundation of China (Project number: 72122016, 71902091).

PY - 2022/7/5

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N2 - This study advances the limited generalizability of previous studies that have focused on developed market multinational enterprises (DMNEs) and explores the link between institutional distance and ownership choice of emerging market multinational enterprises (EMNEs). Such studies in the EMNE context have been rare, and we provide key theoretical explanations for EMNEs’ distinct FDI motives to act as important contingencies in the link between institutional distance and EMNEs’ ownership choices. Analyses of longitudinal data of Chinese firms’ internationalization from 2001 to 2017 reveals that the higher the institutional distance, the lower the level of EMNE subsidiary ownership control with market-seeking motives; while the higher the institutional distance, the higher the level of EMNE subsidiary ownership control with knowledge-seeking motives.

AB - This study advances the limited generalizability of previous studies that have focused on developed market multinational enterprises (DMNEs) and explores the link between institutional distance and ownership choice of emerging market multinational enterprises (EMNEs). Such studies in the EMNE context have been rare, and we provide key theoretical explanations for EMNEs’ distinct FDI motives to act as important contingencies in the link between institutional distance and EMNEs’ ownership choices. Analyses of longitudinal data of Chinese firms’ internationalization from 2001 to 2017 reveals that the higher the institutional distance, the lower the level of EMNE subsidiary ownership control with market-seeking motives; while the higher the institutional distance, the higher the level of EMNE subsidiary ownership control with knowledge-seeking motives.

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KW - Entry mode

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The Role of FDI Motives in the Link between Institutional Distance and Subsidiary Ownership Choice by Emerging Market Multinational Enterprises

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Lessons For Leaders From Rapidly Internationalizing Firms

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