| Abstract: | Abstract Many Mid dle East ern and North Af ri can (MENA) coun -tries are mak ing val iant ef forts to re form their eco nomic sys tems to boost growth and liv ing stan dards. Mul ti na tional Com panies (MNCs) are generally thought to have a ma jor part to play in help ing these coun tries to de velop. The prob lems caused by gov ern men tal sys tems that placed legal and bu reau cratic ob sta cles and pro hi bi tions in the way of For eign Direct In vest ment (FDI) ac tiv i ties are un der at tack in many coun tries. The World Bank (WB) and the In ter na tional Mon e tary Fund (IMF) in sist on the adop tion of busi ness-friendly pol i cies for those coun tries that seek their aid. More over, mem ber ship of the World Trade Or ga ni za tion (WTO) also re quires coun tries to re form their gov ern men tal sys tems. The prize at the end of the pain ful re form pro cess is higher growth of ten driven by FDI ac tiv i ties. In re cent years, FDI to de vel op ing and for mer com mu nist coun tries has con sid er ably in creased. How ever, some de vel -op ing coun tries (no ta bly, Af rica and large parts of the Mid dle East) have not bene fited to the same ex tent as many Asian and Cen tral and East Euro pean coun tries. More over, MNCs have fo cused on In ter na tional Joint Ven tures (IJVs) as the main means of en ter ing these coun tries. This form of en try may not be the best method to trans fer tech nol ogy and to ob tain the best re sults of the in ter ac tion be tween MNCs and host coun tries. This pa per seeks to ex plore this is sue by use of a qual i ta tive study of IJVs in Jor dan. The pa per uses a new in stitutional eco nomic framework that high lights the im por tance of in for mal in sti tu tional sys tems for the de cision on mode of en try. The re sults of the study in di cate that MNCs in Jordan would pre fer to use fully-owned sub sid iar ies, but the char ac ter is tics of the in for mal in sti tu tional sys tem in Jor dan re sults in high trans ac tion costs that can best be re duced by the use of IJVs. Thus al though Jor dan has un der gone sig nif i cant re form to her eco nomic sys tem, the prob lems caused by the na ture of in for mal in sti tu tional sys tems have lim ited the growth of what might have been more ben e fi cial FDI. [Ar ti cle cop ie s available for a fee from The Haworth Doc u ment De liv ery Ser vice |
