Shared Ownership in the International Make or Buy Dilemma

Charlie Joyez

No 2019-04, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: The traditional Grossman-Hart-Moore Property Right Theory of the firm and subsequent works do not consider shared ownership as an optimal solution because of the incentives losses it would carry. This paper provides an extension of Antràs & Helpman (2008) international integration dilemma under partially incomplete contracts to joint-ventures (JVs), and identifies several cases where JVs are optimal for foreign investors.The model insists on the interaction between firm-level and country-level parameters, with higher productivity giving increasing access to higher control in countries with stronger contractual enforceability, consistent with empirical observations. Potential heterogeneous spillovers effects can be deduced from this framework.

Keywords: Property Right Theory; International Joint Ventures; Contracting Institutions; Firms Heterogeneity; Multinational Enterprises (search for similar items in EconPapers)
JEL-codes: D23 F23 L23 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2019-02
New Economics Papers: this item is included in nep-cta and nep-int
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