Family Firms and the Choice Between Wholly Owned Subsidiaries and Joint Ventures: A Transaction Costs Perspective

Maria Cristina Sestu*, Antonio Majocchi

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

6 Citations (Scopus)

Abstract

We examine the effects of family control on entry mode choice by integrating Transaction Costs Economics with the family business literature. Using a dataset of 951 foreign investments, we investigate the role of family involvement on entry modes. After controlling for endogeneity, we find that if both the investing and the local firm are family firms, forming a joint venture is preferred, while if only the investing firm is a family firm, a wholly owned subsidiary is more likely. Results show that family control has an important impact on entry modes, an hypothesis that has not yet been fully explored.
Original languageEnglish
Pages (from-to)211-232
Number of pages22
JournalEntrepeneurship Theory and Practice
Volume44
Issue number2
Early online date10-Sep-2018
DOIs
Publication statusPublished - Mar-2020
Externally publishedYes

Keywords

  • Family firms
  • Entry mode
  • Transaction cost economics
  • wholly owned subsidiary
  • joint venture

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