The influences of governance quality on equity-based entry mode choice: The strengthening role of family control |
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| Affiliation: | 1. Department of Finance and International Business, Fu Jen Catholic University, 510 Chung Cheng Road, Hsinchuang, New Taipei City 24205, Taiwan;2. MBA Program in International Management, Fu Jen Catholic University, 510 Chung Cheng Road, Hsinchuang, New Taipei City 24205, Taiwan;3. Department of Business Administration, St. John''s University/Taipei Campus, 499, Sec. 4, Tam King Road, Tamsui, New Taipei City, Taiwan;1. School of Business and Economics, Loughborough University, Loughborough, LE11 3TU, United Kingdom;2. Business School, University of Glasgow, Glasgow G12 8QQ, United Kingdom;1. Warwick Business School, University of Warwick, Coventry CV4 7AL, UK;2. Queens’ College, University of Cambridge, Cambridge CB3 9ET, UK;1. Aalto University School of Business, Department of Management Studies, Finland;2. Stockholm School of Economics, Department of Marketing and Strategy, Sweden;1. University of Seville (Spain), Avda San Francisco Javier s/n, 41018 Seville, Spain;2. University of Seville (Spain), Avda Ramón y Cajal, 1, 41018 Seville, Spain;1. Goodman School Business, Brock University, St. Catharines, ON L2S3A1, Canada;2. Carlson School of Management, University of Minnesota, Minneapolis, MN 55455, United States;1. Management and Global Business Department, Rutgers Business School, Rutgers University, 1 Washington Park, Newark, NJ 07102-1897, USA;2. Management and Quantitative Methods Department, College of Business, Illinois State University, Normal, IL 61790-5580, USA;3. College of Business Administration, Florida International University, 11200 SW 8 Street, RB 345 B, Miami, FL 33199, USA |
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| Abstract: | This study examines the possible heterogeneity of governance quality's influence on entry mode decisions made by firms with different degrees of family control. When entering a country with low governance quality, ceding control of the subsidiary in exchange for local partners’ help enables foreign firms to tackle institutional flaws. However, such a motivation diminishes as governance quality increases. This study thus hypothesizes that firms tend to choose WOSs over JVs when entering a host country with high governance quality.Firms controlled by family members, due to concerns regarding the preservation of socioemotional wealth, prefer to maintain high ownership levels of their affiliates. This study thus hypothesizes that firms with a higher degree of family control are even more likely to choose WOSs when entering a country with high governance quality. The results support the hypotheses. |
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| Keywords: | Entry mode Family control Governance quality Joint venture Wholly owned subsidiary |
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