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How family control influences FDI entry mode choice

Published online by Cambridge University Press:  16 January 2014

Ming-Sung Kao ,
Anthony Kuo  and
Yi-Chieh Chang
Ming-Sung Kao*
Affiliation:
Department of Finance and International Business, Fu Jen Catholic University, Taipei, Taiwan
Anthony Kuo
Affiliation:
Department of Finance and International Business, Fu Jen Catholic University, Taipei, Taiwan
Yi-Chieh Chang
Affiliation:
Department of Business Administration, St. John's University, Taipei Campus, Taiwan
*
Corresponding author: Ming-Sung Kao ([email protected])
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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.

Keywords

corporate governanceentry modefamily businessfamily controlFDI
Type
Research Article
Information
Journal of Management & Organization , Volume 19 , Issue 4 , July 2013 , pp. 367 - 385
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2013 

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