Essay Wholly-Owned Subsidiaries and Joint Ventures

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GLOBAL JOURNAL OF BUSINESS RESEARCH ♦ VOLUME 3 ♦ NUMBER 2 ♦ 2009

AN EMPIRICAL STUDY OF WHOLLY-OWNED SUBSIDIARIES AND JOINT VENTURES FOR ENTRY INTO CHINA MARKETS
Yung-Heng Lee, Northwestern Polytechnic University, USA Yann-Haur Huang, Northwestern Polytechnic University, USA Mei-Jane Chan, Northwestern Polytechnic University, USA ABSTRACT The aim of this study is to empirically investigate the effectiveness of The Eclectic Theory in explaining the entry mode choices of Taiwanese Electronic Components firms in China markets during the time period from 2003 to 2005. The annual data includes as many as 267, 324, and 283 firms respectively. This study explores how the ownership, location, and internalization advantages( OLI advantages)
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country Risk 2.location Familiarity 3.demand Conditions 4.volatility of Competition 5.value of firm-specific know-how 6.tacit Nature of know-how 7.extent of national differences 8.extent of scale economics 9.global concentration This table summarizes previous research regarding OLI. Scholar Agarwal, Sanjeev, Ramaswami, Sridhar N..(1992) Entry Mode exporting, licensing, joint venture, and sole venture

Wholly owned, joint venture, licensing or franchising, exporting.

high control entry mode, low control entry mode

Table 2: Entry Mode Determinants in Previous Studies and Predicted Effects
IV Firm size (number of employees) International experience Reference Leung et al. (2003); Nakos and Brouthers (2002); Evans( 2002) Reuber and Fisher (2003); Evans( 2002); King and Tucci (2002); Nakos and Brouthers (2002) Firm –specific assets Market potential Cultural distance Production Cost Host Government regulations Country Risk and environmental uncertainty Hill et al. (1990); Hennart (1991); Erramilli and Rao, (1993); Madhok, (1998) Nakos and Brouthers 2002; Eicher and Kang 2002; Chung and Enderwick (2001) Leung et al. (2003); Evans (2002); Cristina and Esteban (2002) Jiang and Fuming (2002); Cui, Jiang,and Stening (2007) Brouthers ( 2002 ); Mutinelli and Piscitello (1998); Cui, Jiang and Stening (2007) Cristina and Esteban (2002); Brouthers and Brouthers ( 2000); Tahir and Larimo (2006) R & D intensity Scale economies Larimo ( 2000); Tahir and Larimo (2006);

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