Journal
JOURNAL OF WORLD BUSINESS
Volume 44, Issue 4, Pages 434-444Publisher
ELSEVIER SCIENCE INC
DOI: 10.1016/j.jwb.2008.11.004
Keywords
Foreign direct investment; Entry mode; Chinese firms; Strategic behavior perspective; Wholly owned subsidiary; Joint venture
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This study investigates the determinants of foreign direct investment (FDI) entry mode choice between a wholly owned subsidiary and a joint venture by Chinese firms that invest overseas. We argue that the FDI entry mode choice of a Chinese firm is primarily influenced by the variables related to the firm's strategic fit in host industry and its strategic intent of conducting FDI. Using survey data of a sample of 138 Chinese firms, the results suggest that a Chinese firm prefers wholly owned subsidiary entry mode when it adopts a global strategy, faces severe host industry competition, and emphasizes assets seeking purposes in its FDI. A joint venture is preferred when the firm is investing in a high growth host market. (C) 2008 Elsevier Inc. All rights reserved.
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