Cultural distance and the pattern of equity ownership structure in international joint ventures

Yamin, Mo; Golesorkhi, Sougand

doi:10.1016/j.ibusrev.2009.11.004

Cited by 50 publications

(33 citation statements)

References 53 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Specifically, with growing cultural distance, parent firms lack Bsocial knowledge^to interpret behavior of local stakeholders and thus may face considerable obstacles in predicting their social patterns (Sohn, 1994). Scholars emphasize that this understanding of the host culture cannot be acquired in advance because of its tacit nature (Yamin & Golesorkhi, 2010). Therefore, we suggest that the parent firm's lack of social knowledge in culturally distant locations makes it difficult to verify claims from stakeholders, increasing the level of uncertainty associated with WoS.…”

Section: The Moderating Effect Of Cultural Distancementioning

confidence: 96%

Ownership mode, cultural distance, and the extent of parent firms’ strategic control over subsidiaries in the PRC

et al. 2016

View full text Add to dashboard Cite

Previous studies often associated a specific type of ownership mode with the extent of control a parent firm may have over (strategic) decision-making in a foreign subsidiary, suggesting that parent firms should have higher control over wholly-owned subsidiaries (WoS) than international joint ventures (IJVs). Building on principal agent theory, we argue that in the Chinese context higher ownership levels do not necessarily have a positive effect on the extent of control over the foreign subsidiary. We further argue that cultural distance between the parent firm and the subsidiary moderates this relationship. We test our hypotheses using data from a sample of 156 foreign subsidiaries in the People's Republic of China (PRC) and find strong support for our arguments. Our findings show that in WoS parent firms reduce their extent of control, while in IJVs parent firms increase their extent of control. Moreover, we find that extent of control over WoS (IJVs) declines (increases) when cultural distance increases. Our results have significant theoretical implications for international business (IB) research as they challenge existing views with regard to the relationship between ownership mode and control as well as the moderating effect of cultural distance.

show abstract

Section: The Moderating Effect Of Cultural Distancementioning

confidence: 96%

Ownership mode, cultural distance, and the extent of parent firms’ strategic control over subsidiaries in the PRC

et al. 2016

View full text Add to dashboard Cite

show abstract

“…However, cultural distance may increase the costs of communication, monitoring, transmission of goals, etc. with local partners as well as the perceived risk by foreign investors (Yamin, Golesorkhi 2010). In this case, it can also be viewed as an opposite relationship: as country differences increase, the incorporation of local partners is expected to reduce (for example Hennart and Zeng (2002), conclude that cross-cultural differences between partners reduce the longevity of foreign subsidiaries in the US, Jiang et al 2011 do the same for subsidiaries in China).…”

Section: The Role Of the Host Countrymentioning

confidence: 99%

Capital Structure of Foreign Affiliates and the Investment Decision: Two Questions to Consider

Lucas

2013

Journal of Business Economics and Management

View full text Add to dashboard Cite

Abstract. This paper analyses the ownership structure of foreign affiliates of Spanish firms. In contrast to previous studies on the participation degree, the paper highlights the importance of the previous decision to invest abroad. To do so, an econometric model with a limited dependent variable helps to show that to ignore the previous decision modifies the conclusions of the empirical analyses that raise an empirical model over a sample of firms with foreign affiliates. Additionally, the paper analyses in detail the importance of the cultural and political-legal differences between home and host countries that justify a different type of participation in equity of foreign affiliates. A clear implication for future research in this field is the need to reconsider the econometric approach to include the investment decision. As the paper has shown, a double-hurdle model provides notably different results than the usual approaches, which in this case are closer to the theoretical literature insights.

show abstract

“…Numerous prior studies have examined the effects of parent dissimilarities, particularly with respect to culture (e.g., Hanvanich, Miller, Richards & Cavusgil, 2003;Brouthers & Bamossy, 2006;Yamin & Golesorkhi, 2010), generally finding negative effects, although Mohr and Puck (2005) focus on functional diversity. However, for partners to benefit from associating with each other, it is essential that each partner brings a distinct contribution to the IJV.…”

Section: Functional Differentiation and Ijv Autonomymentioning

confidence: 99%

“…Dissimilarities in parents' goals, especially the existence of contradictory goals of a hidden agenda type, can create serious IJV management problems and disrupt daily activities, since they distract IJV management from their pursuit of an IJV's stated objectives (Yeheskel, et al, 2001;Luo, Shenkar & Nyaw, 2001). Other studies focus on other dissimilarities as a source of problematic effects on IJVs (e.g., Yamin & Golesorkhi, 2010;Brouthers, Brouthers & Wilkinson, 1995). For example, Kabiraj, et al (2005) found that country specific cultural characteristics and partner asymmetry are the fundamental cause of joint ventures instability and breakdown.…”

Section: Fig 1 Basic Study Modelmentioning

confidence: 99%

“…Third, this study builds upon literature examining the effects of dissimilarities between IJV parents in general (e.g., Parkhe, 1991;Yeheskel, et al, 2001) and regarding selected specific variables (e.g., Beamish & Jung, 2005;Yamin & Golesorkhi, 2010) by applying the concept of parent company dissimilarity to an important IJV management area. In doing so, the manuscript further refined this theoretical area by specifying conditions under which functional and dysfunctional differentiation between IJV parents vary in their impact on IJV effectiveness.…”

Section: Academic Contributions and Implicationsmentioning

confidence: 99%

See 1 more Smart Citation

Predicting IJVs’ effectiveness based on their autonomy levels and the characteristics of their parent companies

2010

CBR

View full text Add to dashboard Cite

Separate research streams have identified relationships between IJV autonomy and IJV effectiveness, and between functional/dysfunctional parent-company differentiation and IJV effectiveness. This study attempts to integrate these two literature streams by examining how these two sets of independent variables interact in terms of predicting IJV effectiveness. Results partially support our hypotheses that the autonomy-effectiveness relationship is less positive with greater functional differentiation and more positive with greater dysfunctional differentiation. The results provide strong support for our hypotheses that activities closer to the local operating environment will influence these relationships such that autonomy becomes more important to effectiveness when an activity has strong local ties.

show abstract

Cultural distance and the pattern of equity ownership structure in international joint ventures

Cited by 50 publications

References 53 publications

Ownership mode, cultural distance, and the extent of parent firms’ strategic control over subsidiaries in the PRC

Ownership mode, cultural distance, and the extent of parent firms’ strategic control over subsidiaries in the PRC

Capital Structure of Foreign Affiliates and the Investment Decision: Two Questions to Consider

Predicting IJVs’ effectiveness based on their autonomy levels and the characteristics of their parent companies

Contact Info

Product

Resources

About