FDI by firms from newly industrialized economies in emerging markets: corporate governance, entry mode and location.

Filatotchev, Igor, Strange, Roger, Piesse, Jenifer and Lien, Yung-Chih (2007) FDI by firms from newly industrialized economies in emerging markets: corporate governance, entry mode and location. Journal of International Business Studies, 38 (4). pp. 556-572.

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Abstract

Previous studies emphasise that the foreign direct investment (FDI) strategies of firms from newly industrialised economies (NIEs) are different from the FDI strategies of firms from developed economies. It has also been shown that NIE firms are often controlled by founding families who make key strategic decisions, and that they rely heavily on network linkages when developing their FDI strategies. What is less clear, however, is how the corporate governance factors in NIEs, the risk preferences of the main shareholder constituencies, and the network-based business culture affect the decision to undertake FDI in emerging markets. This paper explores the entry mode and location choices of firms from an Asian NIE (Taiwan) in an emerging market (the People's Republic of China). It shows that the choice of equity stake in an affiliate depends upon the extent of family and institutional share ownerships in the parent company. High-commitment entry is found to be positively associated with the affiliate being located in areas with strong economic, cultural and historic links with the parent company. Furthermore, the entry mode and location decisions appear to be interrelated, with the parent's equity stake in the affiliate depending inter alia upon the location within China, and the favoured location depending inter alia upon the equity stake

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Business and Management
Depositing User: Roger Strange
Date Deposited: 06 Feb 2012 19:34
Last Modified: 23 Mar 2012 11:59
URI: http://sro.sussex.ac.uk/id/eprint/21306
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