Japanese Investors' Choice of Joint Ventures Versus Wholly-owned Subsidiaries in the US: The Role of Market Barriers and Firm Capabilities

Shih-Fen S Chen and Jean-Francois Hennart
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Shih-Fen S Chen: Brandeis University

Journal of International Business Studies, 2002, vol. 33, issue 1, 18 pages

Abstract: This study analyzes how market barriers and firm capabilities affect multinationals' choice of joint ventures versus wholly-owned subsidiaries abroad. In the study, we compile a vector of variables that distinguish between industry-specific barriers and firm-specific capabilities to analyze Japanese investors' ownership decisions in the US. Our results in general support the hypothesis that Japanese investors facing high market barriers in the target industry are more likely to choose joint ventures, while those possessing strong competitive capabilities are more likely to set up wholly-owned subsidiaries. Specifically, marketing variables are more influential than technological factors in determining the choice of partial versus full ownership. These findings, however, vary across sub samples that represent low- versus high-tech industries and consumer versus industrial products.© 2002 JIBS. Journal of International Business Studies (2002) 33, 1–18

Date: 2002
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