Managing Host Country Environmental Challenges with Market Linking Capability: Effects on Foreign Ownership Choice

International business academicians and practitioners have long acknowledged that when investing abroad, multinational enterprises (MNEs) are bound to face location-specific disadvantages relative to indigenous incumbents due to unfamiliarity with the host country’s environments, specifically market and institutional forces. For these MNEs, how to successfully combat such inherent external difficulties and outperform local counterparts is one of the foremost priorities on their agenda. Towards this end, theorists have resorted to different theoretical approaches and suggested opposing foreign ownership choices, for instance, wholly-owned subsidiary (full ownership) versus joint venture (partial ownership), in order to assist MNEs in reducing uncertainty and hazards in their foreign operations.