Exploring location-specific assets and exploiting firm-specific advantages: An integrative perspective on foreign ownership decisions

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Abstract

Exploiting existing assets and exploring new assets are two major and often concurrent forces driving firms to invest abroad. Moving beyond prior attention to their separate effects on foreign ownership decisions, this study examines their integrative impact. I develop hypotheses aligning a set of firm-specific advantages with asset-seeking motives, and test these relationships on a sample of Taiwanese overseas investments. I find that wholly-owned subsidiaries are preferred to joint ventures when multinationals are able to tap into host innovatory dynamism by employing extant technological capabilities and to access local natural resources by leveraging corporate scales. Nonetheless, multinationals face difficulties in deploying marketing knowledge in different contexts and thus are more likely to choose joint ventures for an aggressive foreign market entry.

Original languageEnglish
Pages (from-to)120-134
Number of pages15
JournalCanadian Journal of Administrative Sciences
Volume24
Issue number2
DOIs
Publication statusPublished - 2007 Jun 1

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All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Public Administration
  • Marketing
  • Management of Technology and Innovation

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